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Quiz 2_2010F - Solution

# Quiz 2_2010F - Solution - MGMT 306 Quiz 2 Fall 2010 Name...

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MGMT 306 – Quiz 2, Fall 2010 Name: Section: ___________________________ 1. Non-Linear Optimization a. (1 point) True/False __ False __ A maximization non-linear 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 non-linear 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 non-linear optimization problem is to maximize total profits, what is the objective function? Constant = 250,000 Elasticity = -3.2 Cost = \$40,000 Goal: Max (P-40,000)*(250,000*P^(-3.2)) (Profit) 1

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2. Multi-Period Production and Inventory Planning Googsoft, a cutting-edge technology company, recently received funding to launch two new products: Widgets and Gizmos. The firm would like to forecast a
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Quiz 2_2010F - Solution - MGMT 306 Quiz 2 Fall 2010 Name...

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