JOHN LOUIE B.

MURING SECTION A
ACT 170
1. The X Company produces inexpensive beds and doors. The production process for each is
similar in that both require a certain number of hours of carpentry work and a certain number of
labor hours in the painting and varnishing department. Each bed takes 3 hours of carpentry and
1 hour in the painting and varnishing shop. Each door requires 3 hours in carpentry and 1 hour
in painting and varnishing. During the current production period, 360 hours of carpentry time are
available and 150 hours in painting and Varnishing time are available. Each bed sold yields a
profit of P150; each door produced is sold for a P80 profit. X Company’s problem is to determine
the best possible combination of beds and tables to manufacture in order to reach the maximum
profit. The firm would like this production mix situation formulated as an LP problem. Provide the
complete mathematical statement of the LP problem (including constraints).
(Note: B = Beds; D= Doors) (5 points)

Solution:
Maximize Profit = P150B + P80D

3B + 3D ≤ 360 (1st Constraint)

1B + 1D ≤ 150 (2nd Constraint)

B ≥ 0 (first nonnegativity constraint

D ≥ 0 (second nonnegativity constraint)

2. Elaborate this premise: Each LP problem that has a feasible region has an infinite number of
solutions. (5 points)
Answer:
This holds true for linear programming problems with multiple decision variables. The
feasible region consists of all potential solutions that meet the problem's constraints. If
this region is not a single point, it will include an infinite number of points, each
corresponding to a distinct solution.

3. The production manager of a large Cincinnati manufacturing firm once made the statement, “I
would like to use LP, but it’s a technique that operates under conditions of certainty. My plant
doesn’t have that certainty; it’s a world of uncertainty. So, LP can’t be used here.” Do you think
this statement has any merit? Explain why the manager may have said it. (5 points)
Answer:
The production manager’s statement holds some merit. First of all, LP problems assume
that its parameters are known with certainty. However, its parameters in the real world,
such as supply and demand, or resource availability are uncertain to know. The
statement only reflects that LP models are sensitive to change in its parameters.
Therefore, LP models’ optimal solution may or may not be accurate.
4. (Production problem) Winkler Furniture manufacture two different types of china cabinets: a
French Provincial model and a Danish Modern model. Each cabinet produced must go through
three departments: carpentry, painting, and finishing. The table below contains all relevant
information concerning production times per cabinet produced and production capacities for
each operation per day, along with net revenue per unit produced. The firm has a contract with
an Indiana distributor to produce a minimum of 300 of each cabinet per week (or 60 cabinets
per day). Owner Bob Winkler would like to determine a product mix to maximize his daily
revenue. Formulate as an LP problem. (5 points)

Solution:
Maximize Revenue = $28F + $25D
Where:
F = Number of French Provincial cabinets produced
D = Number of Danish Modern cabinets produced

3F + 2D ≤ 360 (1st constraint, Carpentry)

1.5F + D ≤ 200 (2nd Constraint, Painting)
0.75F + 0.75D ≤ 125 (3rd Constraint, finishing)
F ≥ 60, D ≥ 60 (Minimum production constraint)
F ≥ 0, D ≥ 0 (Non-negativity constraints)

5. Using LP to maximize audience exposure in an advertising campaign is an example of the

type of LP
application known as
a. marketing research. d. media budgeting
b. media selection. e. all of the above
c. portfolio assessment.
Answer: b.

6. When applying LP to diet problems, the objective function is usually designed to

a. maximize profits from blends of nutrients.
b. maximize ingredient blends.
c. minimize production losses.
d. maximize the number of products to be produced.
e. minimize the costs of nutrient blends.
Answer: e.

7. A typical transportation problem has 4 sources and 3 destinations. How many constraints
would there be in the linear program for this?
a. 3 b. 4 c. 7 d. 12
Answer: c.

8. The selection of specific investments from among a wide variety of alternatives is the type of
LP problem known as
a. the product mix problem.
b. the investment banker problem.
c. the portfolio selection problem.
d. the Wall Street problem.
e. none of the above.
Answer: c.

9. A typical transportation problem has 4 sources and 3 destinations. How many decision
variables would there be in the linear program for this?
a. 3 b. 4 c. 7 d. 12
Answer: d.

10. The Heinlein and Krampf Brokerage firm has just been instructed by one of its clients to
invest $250,000 other money obtained recently through the sale of land holdings in Ohio. The
client has a good deal of trust in the investment house, but she also has her own ideas about
the distribution of the funds being invested. In Particular, she requests that the firm select
whatever stocks and bonds they believe are well rated, but within the following guidelines:
(a) Municipal bonds should constitute at least 20% of the investment.
(b) At least 40% of the funds should be placed in a combination of electronic firms, aerospace
firms, and drug manufacturers.
(c) No more than 50% of the amount invested in municipal bonds should be placed in a
high-risk, high-yield nursing home stock. Subject to these restraints, the client’s goal is to
maximize projected return on investments. The analysts at Heinlein and Krampf, aware of these
guidelines, prepare a list of high-quality stocks and bonds and their corresponding rates of
return: Formulate this portfolio selection problem using LP. (5 points)
Objective Function: Maximize Return = 0.053M + 0.068T + 0.049U + 0.084P + 0.118H
Where:
M = Amount invested in Los Angeles municipal bonds
T = Amount invested in Thompson Electronics, Inc.
U = Amount invested in United Aerospace Corp.
P = Amount invested in Palmer Drugs
H = Amount invested in Happy Days Nursing Homes

M + T + U + P + H = 250,000 (Total investment constraint)

M ≥ 0.20 * 250,000 (Municipal bond constraint)
T + U + P ≥ 0.40 * 250,000 (Electronic, aerospace, and drug manufacturers constraint)
H ≤ 0.50 * M (Nursing home stock constraint)
M ≥ 0, T ≥ 0, U ≥ 0, P ≥ 0, H ≥ 0 (Non-negativity constraints)

11. Is the transportation model an example of decision making under certainty or decision
making under uncertainty? Why?
The transportation model is an example of decision making under certainty. The reason
is that the model assumes that its parameters are known with certainty. However, in real
life problems, such parameters like supply, demand can be uncertain. Despite that, the
model ignores this uncertainty.

12. If the total demand equals the total supply in a transportation problem, the problem is
a. degenerate. b. balanced. c. unbalanced. d. Infeasible.
Answer: b.

13. If the total demand is greater than the total capacity in a transportation problem, then
a. the optimal solution will be degenerate.
b. a dummy source must be added.
c. a dummy destination must be added.
d. both a dummy source and a dummy destination must be added.
Answer: b.
14. An assignment problem can be viewed as a special type of transportation problem with
which of the following features?
a. the capacity for each source and the demand for each destination is equal to one
b. the number of rows is equal to the number of columns
c. the cost for each shipping route is equal to one
d. all of the above
Answer: a.

15. What is a balanced transportation problem? Describe the approach you would use to solve
an unbalanced problem.

A balanced transportation problem occurs when the total supply from all sources
matches the total demand at all destinations, ensuring a feasible solution where all
supply meets demand. For an unbalanced transportation problem, you can add a dummy
source or destination to balance it (1)if total demand exceeds total supply, add a dummy
source with a supply equal to the shortfall. (2)If total supply exceeds total demand, add a
dummy destination with a demand equal to the surplus.

Once balanced, you can solve the problem using standard transportation methods like
the Northwest Corner Rule, Least Cost Method, or Vogel’s Approximation Method to find
the optimal solution.