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Lecture20aa

# Lecture20aa - Lecture 1 LP Formulation Examples a Summary...

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Lecture 03/05/08 1. LP Formulation Examples a. Summary on Solver Usage b. Blending Problems

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The Steps in Implementing an LP Model in a Spreadsheet 1 . Organize the data on the spreadsheet. 2. Reserve separate cells for each decision variable. 3. Create a formula in a cell corresponding to objective function. 1. For each constraint, create a formula in a separate cell corresponding to LHS of the constraint. 2. If all decision variables are non-negative, the Assume Non-Negative box should be checked in the Solver’s Option window.
How Solver Views the Model Target cell - cell representing the objective function Changing cells - represents the decision variables Constraint cells - represents the LHS formulas of the constraints

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Financial Model Formulation Projected Rate of Return i Investment (%) 1 Atlantic Oil 7.3 2 Pacific Oil 10.3 3 Midwest Steel 6.4 4 Huber Steel 7.5 5 Government bonds 4.5 Definition of decision variables Let x i = fraction of available funds allotted to investment i (i=1,2..,5) Objective Function: Maximize annual yield = .073x 1 +.103x 2 +.064x 3 +.075 x 4 +.045 x 5
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