Excel-Solver-1

Excel-Solver-1 - BMGT301 Spring 2012 Decision Making Using...

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BMGT 301: INTRODUCTION TO INFORMATION SYSTEMS SPRING 2012 BMGT301 Spring 2012 Decision Making Using Excel's Solver In this exercise we will learn about how to use Spreadsheets for business decision making. For illustrative purposes, we will use the following example. Example: A firm manufactures two types of markers -- dry erase and permanent. Each is made from the following components: ink and plastic. A dry erase marker requires 0.1 fl. oz. of ink, 0.8 oz. of plastic and sells for $0.25. A permanent marker requires 0.25 fl. oz. of ink, 1 oz. of plastic and sells for $0.40. The firm has 5000 oz. of plastic and 1000 fl. oz. of ink available. All markers manufactured will be sold. How many of each type of marker should the firm manufacture to maximize their revenues? The major requirements are: (a) The firm must have a well defined objective to achieve. For instance, in our example, the firm wishes to maximize its revenues. What are some alternative objectives? (b) There must be more than one alternative course of action . Each course of action is represented by a set of different values for the decision variables of the problem . (c) The objective of the firm, and the limitations (constraints) it faces (in our example, caused by the limited supply of its resources), must be expressible as mathematical equations or inequalities , and these are typically linear equations or inequalities. Setting up a linear program Here's good sequence of steps for setting up a linear program. (a) Identify the parameters of the problem. A parameter is simply a factor whose value affects the decision to be made. The parameters of our example are listed in the table on the next page: Parameter Value 1. The price of a dry-erase marker $ 0.25 2. The price of a permanent marker $ 0.40 3. Plastic needed to make a dry-erase marker 0.8 oz.
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2 4. Plastic needed to make a permanent marker 1 oz. 5. Ink needed to make a dry-erase marker 0.1 fl. oz. 6. Ink needed to make a permanent marker 0.25 fl. oz. 7. Amount of plastic the firm has 5000 oz. 8.
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This note was uploaded on 02/28/2012 for the course BMGT 301 taught by Professor Wang during the Spring '08 term at Maryland.

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Excel-Solver-1 - BMGT301 Spring 2012 Decision Making Using...

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