2(d)
(5 points) Solve Challenge 3 defined on slide 18 of Lecture 8.
3. Solve the following problems on modeling. For each of the following problems, your answer
should include the following: (1) definition of decision variables, (2) complete model formu-
lation, (3) screenshots of computer programming codes and outputs (your choice of Gusek,
Matlab, or Octave), and (4) interpretation of the optimal solution in plain language (e.g.,
how would you explain your optimal solution to Farmer McDonald, who may not understand
the Gusek/Matlab/Octave output?)
3(a)
(10 points) Solve the “Arbitrage in currency exchange” problem defined in Lecture 10.
3(b)
(10 points) Solve the “Turning junk into treasure” problem defined in Lecture 10.
3(c)
(10 points) Solve the “Old McDonald had a farm” problem defined in Lecture 10.
3(d)
(10 points) Solve the following modified version of the “Old McDonald had a farm”
problem defined in Lecture 10.
Suppose we know for sure that next year will be an
average year, but the two prices for beans are swapped: the first 6000 tons must be sold
at $10/ton, but excess amounts can be sold at $36/ton.
2

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