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Unformatted text preview: COMMERCE 290 HOMEWORK #2 Complete by: September 30, 2010 This homework is for practice only and is NOT to be handed in. However, students should have
completed this by the date indicated above Note: As you know from the course outline, some homework assignments are completed
individually and others are completed in groups. This homework is to be completed by
individual students only. Students are reminded not to work in groups, not to discuss your
homework with others and this includes using the Course Discussion Forum as a means of
communication for this homework. This is NOT a group work homework. DIRECTIONS: 1. For Problem #1, write all your answers in the indicated spaces and show
all work on this paper. No additional pages will be accepted. For
Problem #2 and 3, please staple the pages to the end of Problem #1.
2. Show all work on this homework paper. No credit for answers only! 3. Be sure to include your units in each answer. éa iu‘i‘t/M I Last Name: ' First Name: Student Number: Signature: Excel Lab Number: Problem Maximum Possible Marks Awarded 37 Problem 1 (37 marks) Save—On Taxes is a Vancouver ﬁrm specializing in preparing Canadian lncome Tax forms for their
individual and corporate clients. SaveOn processes only two types of income tax returns; the T1
Return for individual clients and the Corporate Return for corporate clients. Each return, whether it
is a T1 or a Corporate Return, is checked by three separate departments within SaveOn Tax.
These departments are called the Deductions, income and Arithmetic departments and have
respectively 1,168 hours, 952 hours and 362 hours of labour hours available each processing cycle. Returns not completed during one processing cycle are completed during the next processing
cycle. Management requires that the company process at least 25, T1 Returns each processing
cycle. The proﬁt contributions for each T1 and Corporate Return processed by SaveOn Tax are $10 and $20 respectively. A complete and correct formulation and an incomplete graph are shown below. Using the following
decision variables: T = number of T1 Returns to process each processing cycle
C = number of Corporate Returns to process each processing cycle answer the remaining questions below. max Profit) 1OT + 200 st Deductions) T + 9C <= 1168
Income) 4T + 5C <= 952
Arithmetic) 2T + C <=362
MinDem) T >= 25
Non—Negativity T, C >= 0 (a) (1 mark) In the Deduction constraint, describe what the “9" measures. I 53¢“ COVPVV>+6 wé'ﬁ/rt/L ‘l‘zKcs ﬂ (4&an M W (b) (2 marks) The Boss at Save On Taxes has said that the company should only prepare
Corporate returns since each Corporate return translates into $20 profit, whereas each T—1
Return only provides $10 per return. Without referring to the, yet unknown, optimal solution, how would you respond to this argument? 1/‘3&$§ :5 lynarqu 1466464 “4/ Dan I144) Artrt’tv Page 2 of 8 (C) (5 marks) The partially completed graph below correctly identifies the Deductions constraint
and eitherthe income or Arithmetic constraint.
(l) Add any missing constraints.
(ii) Label all the constraints by name.
(iii) Shade and identify the feasible region.
(iv) Draw and identify the isoproﬁt line on this graph showing where the optimal
solution is located.
(v) identify at which intersection the optimal solution exists. MW DEM
? Arum
180
2160; 17m: §a7l~.
I—
; 1407;
n: 1 ‘ Dedictions
m I /
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3 100 J \
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=11: 40* ‘ I /
20 I Cé‘ﬁag
O 7' l7 V" l I V ’ V ‘ 7 l7 V V 7 < l H
0 20 4O 60 80100120140160180203220240260 #of T1 Retw'ns (d) (2 marks) SaveOn management is hoping to produce 120 T1 Returns and 110 Corporate
Returns the next processing cycle. Comment on their plans. I Wﬂ+ P09511016 ‘ au+§LJéL PK ) WM
Wu. Page 3 of 8 (e) ( 2 marks) What is the optimal solution? 1337+ 01¢ :. we? =5 wT—r‘BOC‘ 407’?“ I)*T+5&= “[52. :5 “T4' g‘: 4”" 3! z, :: 3120 #7 Your Answer: (f) (1 mark) lfthis problem was formulated in Excel, what would be the value of the target cell? MAX mTi Zia lob”) 4.2061sz 5; Your Answer: 3‘ 2' 9 p (g) (1 mark) How many hours will SaveOn use in the Arithmetic Department? A) 2T+¢=? 2(79 + :20 :2 20!?
2447 (4009‘) Your Answer: (h) (2 marks) What is the allowable increase and allowable crease for the Arithmetic
constraint?  Allaw ‘5
NW” A) 2.1“? (/5 392
1(79) +1257: 24% 67¢ Your Answer: Page 4 of 8 (i) (J) (k) (3 marks) FOR THIS QUESTION ONLY, suppose the MinDem constraint was changed so
that the minimum was now 40 units. {Circle the correct responses.) No (I) Would the feasible region change? (ii) Would the optimal solution change? Yes
(iii) Would the set of binding constraints change? Yes GI? (4 marks) Determine the allowable increase and allowable decrease on the objective
function coefficient for Corporate Returns. ,L{ L —10 4 .__L
f . A; at _. q A. i& “.12 .5: "J"
‘2’ H 721 '6; a!
‘1‘ > L2. x(r£z> (4433.12 ,2 —L 2:67 6‘)
‘2’ «62, 2 0‘
Lf¢z 2 {0 010 3 '6’;
,cz ,2 12. 50
z ’6 5' an Alltu/ 1‘ = 9'”
12, {0 — 2 ‘5 g 9‘ {
Allrw " ’
YourAnswer: (3 marks) Determine the allowable decrease on the Income constraint. , Mpvt 'lv Your Answer: Page 5 of 8 (l) (4 marks) Set up, but, DO NOT SOLVE, all the equations you would need to determine the
shadow price for the Deductions constraint. DO NOT SOLVE. s. l
b\'r+qc H994 %
mumrm = “’3’” paw Pfd¢t+ “1 "6‘
. a (J Puﬂpl+637r5¢> ancl : 51/»;Jyu/ P/lC/é (m) (4 marks) The Save—On problem was correctly formulated and solved in Excel with the
following partial sensitivity report output. Decreas Increase R H Side Ded Outputw _ ’ Inc Output Suppose SaveOn can secur up to an additional 600 ours in either the Deductions or
Income department, but not be . In which depart ent, Deductions or Income, would you
recommend purchasing extra time? Circle the cor ect response and provide convincing
evidence. " ' Deductions lncome Evidence: WZ/ 0&‘4 54" ﬂwaM W 7yal°141 kept“ (WW 5+‘vam’l‘s Reva sl/wclvd/ Pond; :ﬂ
wéyymcl «f’cuélf Alba” *1 5'1 V14”9+ /
Ana/we W Wm tux/‘1: CW we Oine'b’m’r. 13> . 49?? x
I) 34mg, : 7/3??.‘78' 2.2;?! x Ila/37"}: ﬁ£?/a cum” :3) sumo {WW/l? 7 ﬂex. :1? Page 6 of 8 (n) (3 marks) FOR THIS QUESTION ONLY, suppose revenue and cost savings could be
realized that would change the objective function to Max 20T + 100 (from the current Max
10T + 200). What effect(s) , if any, would this change have on the optimal solution? No
calculations are required. , Wax/u pp+zMe( 9&[u’hﬂ‘4 (ti/164% an swag 05%
14M 7V2PI/ZH’I7 4415 néw 190 prawnF (two Please do not write below this line. Page 7 of 8 Problem 2 ( 43 marks) Use the Textbook Problem 61 (Chapter 4, Steelco) to answer only the following questions:
Hint: Please note that you are determining how to minimize the cost of producing ONE ton
of steel. (a) What are the two decisions that need to be made? (b) What is the objective or target for these decisions? (c) Set up the above problem in Excel using the style that we used in class. Make sure that
your spreadsheet model is logical, well organized and easy to understand. in building
formulas, use the sumproduct function where appropriate. (d) Solve the problem using Solver. What would be your recommendation to management
in terms of the decisions that need to be made? (e) What will be the Total Cost of producing 5 tons of steel? (f) After observing the model and its solver output, (1) What is the tensile strength of the finished steel?
(2) Which constraints are binding?
(3) What is the percentage of nickel in the steel produced ? (Q) There was a requirement that it was necessary to produce 1 ton of steel. if that
restriction was removed from the problem, would the total cost increase, decrease or
stay the same? Explain. (h) You will notice that the Solver model shows a decimal answer for several of the
changing cells. Briefly comment on the correct way to interpret these decimal numbers. (i) Place a text box on your model page which includes information regarding the optimal
decision. (j) Print out your spreadsheet model on one page in landscape orientation and include it
with your answers. (k) Print out the cell formulas on one page in landscape orientation showing Row and
Column Headings and include it with your answers. (1) Formulate the above model algebraically. Be sure to clearly define your decision
variables and show your complete linear programming formulation. DO NOT SOLVE. Problem 3 (10 marks) List (but do not describe) the four reasons given in the textbook for studying management
science. Page 8 of 8 Question 2 ( 43 marks)
Steelco, Question 61‘, Chapter 4 (a) The 2 decisions facing Steelco are:
How many tons of Alloy 1 to use in the production of 1 ton of steel
How many tons of Alloy 2 to use in the production of 1 ton of steel
2 marks (b) The target is Minimize Total Cost (Total Cost) } 1 mark c) See attached Model2 } 10 marks (d) The 1 ton of steel should consist of
62.5% of Alloy 1 and 37.5% of Alloy2
or
625 pounds of Alloy1 and 375 pounds of Alloy2 2 marks if students assumed that the tons
listed in the problem were metric
tons, then pounds would be replaced with kilograms (e) $968.75 ($193.75 x 5) } 1 mark 0‘)
(1) 45,000 psi 1 mark
(2) There are 2 Binding constraints: Tensile Strength and Amount produced must equal 1 ton 1 mark
(3) 1.1875% 1 mark
(9) Total cost would DECREASE to $0.00 2 marks
because this constraint is binding 1 mark and removing it makes the constraints easier to meet, therefor less cost 1 mark (In this case, you would produce no steel to achieve min cost) (h) Decimal numbers are OK because # tons needed can be fractional 2 marks
There is no practical reason to restrict the changing cells to be integers (i) See Model2 for textbox ] 1 mark (j) See Model2 } 2 marks
(k) See FormulasZ } 3 marks
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6% B :2 r E :a 9 :22 B 22 3, u E m: 8285 .v 3320 .8 .5325 <va gasses“. 295mm? Question 3 ( 10 marks) List ( but do NOT describe) the four reasons given in the
textbook for studyingmanagement science. Answer: 1. Development of Logical Modeling Skills 2. Development of Quantitative Skills 3. Development of Spreadsheet Skills 4. Development of Intuition Source: Page 1516 Custom Publication for Commerce 290 Marking key: 10 marks Although we would expect that students would understand
the details under each of these steps, this question asks
them only to "list" the 4 reasons, not provide explanations,
descriptions or details. if they do provide correct details or explanations, do NOT
deduct any marks. Question 3 ...
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This note was uploaded on 01/19/2011 for the course COMMERCE 290 taught by Professor Brianogram during the Winter '09 term at The University of British Columbia.
 Winter '09
 BRIANOGRAM

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