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Fall 2007
Linear and Nonlinear Optimization
Sep 27, 2007
Prof. Yinyu Ye
Homework Assignment 1: Due 3:15pm Tuesday, Oct 9
There is a homework collecting box outside of professor Ye’s oﬃce (Terman 316) for you to
submit your homework. No late homework accepted!
Problem 1
1
The Primo Insurance Company is introducing two new product lines: special
risk insurance and mortgages. The expected proﬁt is $5 per unit on special risk insurance
and $2 per unit on mortgages.
Management wishes to establish sales quotas for the product lines to maximize total expected
proﬁt. The work requirements are as follows:
work hours per unit
Department
special risk
mortgage
work hours available
underwriting
3
2
2400
administration
0
1
800
claims
2
0
1200
a) Formulate a linear programming model for the problem.
b) Use the graphical method to solve the model.
c) Solve the linear program by Excel (or any Software) to verify your answer by the
graphical method.
Problem 2 (School Selection)
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 Fall '07
 YINYUYE

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