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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View Full DocumentTo 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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 Fall '09
 MASSA
 Business, Operations Research, Optimization, objective function, linear expression, Picasso Frames, Ltd., change Contribution increases

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