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Business Analytics Midterm 1 Solutions

This sample midterm exam for an operations management course contains 3 problems testing concepts like linear programming, shadow prices, and optimal solutions. Problem 1 provides an example solution to a linear programming problem. Problem 2 presents 4 sub-questions analyzing changes to constraints and objective function coefficients. Problem 3 fully defines a linear programming model to maximize profits from allocating crops across 5 parcels with constraints for water, sales, and acreage availability.

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Kathya Silva
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319 views3 pages

Business Analytics Midterm 1 Solutions

This sample midterm exam for an operations management course contains 3 problems testing concepts like linear programming, shadow prices, and optimal solutions. Problem 1 provides an example solution to a linear programming problem. Problem 2 presents 4 sub-questions analyzing changes to constraints and objective function coefficients. Problem 3 fully defines a linear programming model to maximize profits from allocating crops across 5 parcels with constraints for water, sales, and acreage availability.

Uploaded by

Kathya Silva
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© © All Rights Reserved
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Download as DOC, PDF, TXT or read online on Scribd
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SOLUTIONS SAMPLE MIDTERM EXAM #1

ADM 2302

Problem #1

X1= 4, X2 = 2 (intersection of constraint 2 with constraint 3)

Z = 18
Problem #2:

a) If it costs $70 to produce 1000 tools at plant 1 and ship them to customer 1, what would be
the new solution to the problem and the profit? ( 1 point)

This corresponds to a decrease in the objective function coefficient of X11 from $140 (=
200 – 60) to $130 (=200 – 70). A decrease of $10 is within the allowable decrease of 20
thus the optimal solution will not change however the profit will decrease.
The optimal decision calls for the production of 10,000 tools at plant 1 and shipped to
customer 1 (X11 = 10) and the production of 11,670 tools at plant 2 and shipped to
customer 2 (X22 = 11.67). The profit will decrease by $100 and will be $2,233.33 (=
130(10) + 80(11.67))

b) If the price of an additional hour of labor were reduced to $4, would the company purchase
any additional labor? (1 point)

This corresponds to a change in the objective function coefficient of the decision variable
L. The objective function coefficient originally at -20 is now at -4. That represents an
INCREASE of 16. An increase of 16 units is within the allowable increase of 19.73, thus
the optimal solution will not change (L = 0) and the company will not purchase any
additional hour of labor.

c) A consultant offers to increase plant 1’s production capacity by 5000 tools for a cost of
$400. Should the company take the offer? (1 point)

This corresponds to an increase of 5 to the right hand side of the first constraint, C1.
Since this increase is within the allowable increase 17.5 the value of the shadow price of
86.67 will remain valid.

The maximum price that the company is willing to pay for 1000 tools is $86.67. However
the consultant is offering the 1000 tools at a price of $80(= 400/5). Thus the company
should take the offer (they will be gaining $6.67 per 1000 tools for a total of $33.35 for the
additional 5000 tools)

Alternative solution: A capacity increase of 5000 tools will increase profit by: 5*86.67 = .
433.35, which is greater than the cost of $400 (a profit of 33.35). Thus the company
should take the offer.

d) If the company were given 5 extra hours of labor, what would the profit become? (1 point)

This corresponds to an increase of 5 hours to the right hand of the third constraint, C3.
Since this increase is within the allowable increase of 100, the value of the shadow price
of 0.27 will remain valid.

The profit will increase by: (5)*(0.27) = $1.35. The new profit: 2,333.33 + 1.35 =
$2,334.68
Problem # 3:

Let Xi,j _ acres of crop i planted on parcel j


where i =1 for wheat, 2 for alfalfa, 3 for barley and
j = 1 to 5 for SE, N, NW, W, and SW parcels

5 5 5

Max Z =  $2(50bushels) X 1 j   $40(1.5tons) X 2 j   $50(2.2tons) X 3 j


j 1 j 1 j 1

Subject to
Irrigation limits:
1.6X11 + 2.9X21 + 3.5X31 <= 3,200 acre-feet in SE
1.6X12 + 2.9X22 +3.5X32 <=3,400 acre-feet in N
1.6X13 + 2.9X23 + 3.5X33 <=800 acre-feet in NW
1.6X14 + 2.9X24 +3.5X34 <= 500 acre-feet in W
1.6X15 + 2.9X25 + 3.5X35 <= 600 acre-feet in SW

5 5 5

1.6 X 1 j   2.9 X 2 j  3.5 X 3 j <= 7,400 water acre-feet total


j 1 j 1 j 1

Sales limits:
X11 + X12 + X13 + X14 + X15 <= 2,200 wheat in acres
(=110,000 bushels)
X21+ X22 + X23 + X24 + X25 <= 1,200 alfalfa in acres
(= 1,800 tons)
X31+ X32 + X33 +X34 + X35 <= 1,000 barley in acres
(= 2,200 tons)
Acreage availability:
X11 + X21 + X31 <= 2,000 acres in SE parcel
X12 + X22 + X32 <= 2,300 acres in N parcel
X13 + X23 + X33 <= 600 acres in NW parcel
X14 + X24 + X34 <= 1,100 acres in W parcel
X15 + X25 + X35 <= 500 acres in SW parcel

All Xij >= 0 i= 1, 2, 3 and j= 1, 2, 3, 4

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