In-Lab Worksheet 1

# In-Lab Worksheet 1 - BUSI 410 Lab Session#1 As we discussed...

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BUSI 410 Lab Session #1 As we discussed in class, creating a business plan using linear programming requires two steps: Develop a mathematical representation of the problem Enter the objective function and constraints from your mathematical formulation into Excel, and let Solver find the optimal solution and perhaps conduct some sensitivity analysis. This lab practice exercise uses two applications – Picasso Frames, Ltd. and Bammo Manufacturing – to lead you through this process. Both are small examples of how companies use linear programming for manufacturing planning. Picasso Frames, Ltd. Picasso Frames, Ltd. produces four types of picture frames which differ with respect to size, shape, and materials used. Each type of frame requires a certain amount of skilled labor, metal, and glass, as shown in the table below: Skilled Labor Metal Glass Selling Price Frame 1 2 4 6 \$28.50 Frame 2 1 2 2 \$12.50 Frame 3 3 1 1 \$29.25 Frame 4 2 2 2 \$21.50 This table also lists the unit selling price Picasso charges for each type of frame. During the coming week, Picasso can purchase up to 4,000 hours of skilled labor, 6,000 ounces of metal, and 10,000 ounces of glass. The unit costs are \$8.00 per labor hour, \$0.50 per ounce of metal, and \$0.75 per ounce of glass. Also, it is impossible to sell more than 1,000 type 1 frames, 2,000 type 2 frames, 500 type 3 frames, and 1,000 type 4 frames. Picasso wishes to determine how many of each type of frame to produce to maximize contribution. As you learned in CJ’s course, contribution is selling price minus variable costs. Including the costs of skilled labor, metal and glass, what is the variable cost for each Frame 1? __________ What is the contribution to profit for each Frame 1? ___________ What are the contributions to profit for: Frame 2: __________ Frame 3: __________ Frame 4: __________

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To develop the mathematical formulation for Picasso’s problem, you need to determine the decision variables, the objective function, and the constraints. Define the decision variables you would choose for this problem: Using the decision variables you selected above, what linear expression would you use for the objective function for this problem? (Remember the goal is to maximize overall contribution.) The value of this objective function should be
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## This note was uploaded on 04/06/2010 for the course BUSI 410 taught by Professor Massa during the Fall '09 term at UNC.

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In-Lab Worksheet 1 - BUSI 410 Lab Session#1 As we discussed...

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