Mathematics 235

Robert Gross
Homework 4
Answers

1. Sunjuice sells bags of orange and orange juice to wholesale companies. The oranges are
graded on a scale of 1 (bad) to 10 (excellent). At present, Sunjuice has in stock 200,000
pounds of grade 9 oranges and 120,000 pounds of grade 6 oranges. The average quality of
oranges sold in bags must be at least 7, and the average quality of oranges used for juice
must be at least 8. Each pound of bagged oranges yields a revenue of $1.50, while a pound of
oranges can be used to make juice that sells for $2.00. A pound of oranges used for juice
has a marginal cost of $1.05, while a pound of oranges sold in a bag has a marginal cost of
$0.70. (Both of these costs are independent of the cost of the oranges, which have already
been purchased.) All of the oranges need not be used.
(a) Formulate a linear program to help Sunjuice maximize profit.
(b) Use Excel and Solver to find the optimal solution. Be sure to state your solution in
full sentences, including the maximum profit.
Using the sensitivity report produced by Solver, answer the following two independent
questions, as best as possible. It is conceivable that they cannot be answered.
(c) Suppose that 10,000 pounds of grade 6 oranges were found to be rotten and unusable.
What happens to the optimal solution and maximum profit?
(d) Suppose that an additional 10,000 pounds of grade 9 oranges were found in the
warehouse, at no additional cost. What happens to the optimal solution and maximum
profit?
Answer: (a) Let
xb6 = number of pounds of grade 6 oranges used in bags
xb9 = number of pounds of grade 9 oranges used in bags
xj6 = number of pounds of grade 6 oranges used in juice
xj9 = number of pounds of grade 9 oranges used in juice
We need to maximize
1.50(xb6 + xb9 ) + 2.00(xj6 + xj9 ) − 0.70(xb6 + xb9 ) − 1.05(xj6 + xj9 )
given
Grade 6 oranges available: xb6 + xj6 ≤ 120000
Grade 9 oranges available: xb9 + xj9 ≤ 200000
Minimum quality of bagged oranges: 2xb9 ≥ xb6
Minimum quality of juice oranges: xj9 ≥ 2xj6
(b) Excel and Solver report that the optimal solution is to put 26,666.67 pounds of grade
6 oranges and 13,333.33 pounds of grade 9 oranges in bags, and use 93,333.33 pounds of
grade 6 oranges and 186,666.67 pounds of grade 9 oranges to make juice, for a total profit of
$298000.
(c) The allowable decrease on the total quantity of grade 6 oranges is 20,000, and therefore
losing 10,000 pounds is within the allowable range. The total profit would decrease by
10000 · 0.65 = $6500.00, and the quantities of oranges used in juice and bags would change
unpredictably.
 (d) The allowable increase on grade 9 oranges is 40,000, so this increase is within the
allowable range. The total profit would increase by 10000 · 1.1 = $11000.00, and quantities of
oranges used in juice and bags would change unpredictably.

2. Bremer Agricultural Products blends a silicon compound and a nitrogen compound

to create two different types of fertilizer. Mir-Gro must be composed of at least 40% of the
nitrogen compound, and sells for $70/lb. Super-Green must be composed of at least 70% of
the silicon compound, and sells for $40/lb. Bremer can purchase up to 8,000 pounds of the
nitrogen compound at $15/lb, and up to 10,000 pounds of the silicon compound at $10/lb.
Bremer is confident that it can sell as much of each compound as it can produce.
(a) Formulate a linear program to help Bremer maximize profit.
(b) Use Excel and Solver to find the optimal solution. Be sure to state your solution in
full sentences, including the maximum profit.
Answer: (a) Let
xnm = number of pounds of nitrogen in Mir-Gro
xsm = number of pounds of silicon in Mir-Gro
xng = number of pounds of nitrogen in Super-Green
xsg = number of pounds of silicon in Super-Green
We need to maximize
70(xnm + xsm ) + 40(xng + xsg ) − 15(xnm + xng ) − 10(xsm + xsg )
given
Mir-Gro 40% min. N: xnm ≥ 0.40(xnm + xsm )
Super-Green 70% min. Si: xsg ≥ 0.70(xsg + xng )
8000 lb of N: xng + xnm ≤ 8000
10000 lb of Si: xsg + xsm ≤ 10000

(b) Excel and Solver report that the optimal solution is to manufacture only Mir-Gro, using
10,000 pounds of silicon and 8,000 pounds of nitrogen, for a total profit of $1,040,000.00.

3. Time-Rite manufactures clocks by hand. At present, they sell two models, with the
following requirements:
Time required

Task Grandfather Clock Wall Clock Available

Assembly (hrs) 6 4 40
Carving (hrs) 8 4 40
Packing/Shipping (hrs) 3 3 20
Material cost/clock $100 $50
Revenue/clock $500 $300
Maximum demand 15 20
Time-Rite can also purchase clocks from an outside supplier. The cost of a purchased
grandfather clock is $400, and the cost of a purchased wall clock is $150. Time-Rite can
purchase a maximum of 5 clocks from the outside supplier.
(a) Formulate a linear program to help Time-Rite maximize profit.
 (b) Use Excel and Solver to find the optimal solution. Be sure to state your solution in
full sentences, including the maximum profit.
Answer: (a) Let
xg = number of grandfather clocks made
xw = number of wall clocks made
yg = number of grandfather clocks purchased
yw = number of wall clocks purchased
We need to maximize
500(xg + yg ) + 300(xw + yw ) − 100xg − 50xw − 400yg − 150yw
given
Assembly: 6xg + 4xw ≤ 40
Carving: 8xg + 4xw ≤ 40
Pack/Ship: 3xg + 3xw ≤ 20
Grand. dem.: xg + y g ≤ 15
Wall dem.: xw + yw ≤ 20
Outside supplier max.: yg + yw ≤5
(b) Excel and Solver report that the optimal solution is to make 3.33 grandfather clocks
and 3.33 wall clocks, and purchase 5 wall clocks, for a total profit of $2,916.67.

4. As part of the settlement for a class action suit involving the sale of rotten food, Leon’s
Deli Meats must provide sufficient cash to make the following annual payments (in thousands
of dollars):
Year 1 2 3 4 5 6
Payment 110 125 430 385 215 110
The annual payments must be made at the beginning of each year. The judge will approve
an amount that, along with earnings on its investments, will cover the annual payments.
Investment of the funds will be limited to savings (at 2% annually) and government securities.
Both types securities have a par value (face value) of $1000, and have the following terms:
Security Current Price Rate (%) Years to Maturity
1 $1025 5.250 2
2 $1015 4.525 3
Each security can be bought at the same terms at the start of each of the next 6 years.
Funds not invested in these securities will be placed in savings. Assume that interest is paid
annually at the end of each year. The plan will be submitted to the judge and, if approved,
Leon’s will be required to pay a trustee the amount that will be required to fund the plan.
Use linear programming to find the minimum cash settlement and bond purchase schedule
necessary to fund the annual payments.
Answer: (a) Let
s0 = savings at end of year i, i = 0, . . . , 5, in thousands of dollars
ai = bonds of type 1 bought at start of year i, i = 1, . . . , 4
bi = bonds of type 2 bought at start of year i, i = 1, . . . , 3
We need to minimize s0 , given that
Year 1: s0 − 110 − 1.025a1 − 1.015b1 = s1
Year 2: 1.02s1 − 125 − 1.025a2 − 1.015b2 + 0.05250a1 + 0.04525b1 = s2
Year 3: 1.02s2 − 430 − 1.025a3 − 1.015b3 + 0.05250(a1 + a2 ) + 0.04525(b1 + b2 ) + a1 = s3
Year 4: 1.02s3 − 385 − 1.025a4 + 0.05250(a2 + a3 ) + 0.04525(b1 + b2 + b3 ) + a2 + b1 = s4
Year 5: 1.02s4 − 215 + 0.05250(a3 + a4 ) + 0.04525(b2 + b3 ) + a3 + b2 = s5
Year 6: 1.02s5 − 110 + 0.05250a4 + 0.04525b3 + a4 + b3 ≥ 0
(b) Excel and Solver report that the optimal solution is to start with $1,247,019.22, purchase
582.60 bonds of type 1 and 460.82 bonds of type 2 in year 1, and also purchase 199.06 bonds
of type 1 in year 3 and 104.51 bonds of type 1 in year 4.