MGMT 306 – Quiz 2, Fall 2010
Name:
Section: ___________________________
1.
NonLinear Optimization
a.
(1 point) True/False
__
False
__ A maximization nonlinear program with a convex objective
function and linear constraints can be solved to optimality in Excel.
b.
(2 points) Caterpillar, the large construction and mining equipment
manufacturer, needs to set a price for a new bulldozer ready to enter the
market at the beginning of next year.
Historical data indicates a nonlinear
demand function with constant 250,000 and a price elasticity of 3.2.
The new
bulldozer costs $40,000 to produce.
Let:
P
= the price of the new bulldozer.
If the goal of the nonlinear optimization problem is to maximize total profits,
what is the objective function?
Constant = 250,000
Elasticity = 3.2
Cost = $40,000
Goal: Max
(P40,000)*(250,000*P^(3.2))
(Profit)
1
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MultiPeriod Production and Inventory Planning
Googsoft, a cuttingedge technology company, recently received funding to
launch two new products: Widgets and Gizmos.
The firm would like to forecast a
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 Spring '08
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 Management, Optimization, $40,000, 2%, five days, 10 20 G, 40 35 W

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