Appendix E  Self-Test Solutions and

Answers to Even-Numbered Problems

Chapter 1 12. a. TC 5 2000 1 60x

b. P 5 80x 2 (2000 1 60x) 5 20x 2 2000
  2. Define the problem; identify the alternatives; determine the c. Break even when P 5 0
criteria; evaluate the alternatives; choose an alternative. Thus,   20x 2 2000 5 0
 4. A quantitative approach should be considered because the 20x 5 2000
problem is large, complex, important, new, and repetitive.  x 5 100
 6. Quicker to formulate, easier to solve, and/or more easily 14. a. 4000
understood. b. Loss of $8000
c. $48.11
 8. a. Max 10x 1 5y
d. $10,810 profit
s.t.
 5x 1 2y # 40 16. a. Max 6x 1 4y
  x $ 0, y $ 0 b. 50x 1 30y # 800,000
b. Controllable inputs: x and y 50x  # 500,000
Uncontrollable inputs: profit (10, 5), labor-hours (5, 2), 30y # 450,000
and labor-hour availability (40) 18. a. max 2.80x1 1 2.90y1 1 2.70x2 1 2.80y2 1 2.62x3 1
c. See Figure E1.8c. 2.72y3
d. x 5 0, y 5 20; Profit 5 $100 (solution by trial and error) b. (1) x1 1 y1 # 12,000
e. Deterministic (2) x2 1 y2 # 20,000
10. a. Total units received 5 x 1 y (3) x3 1 y3 # 24,000
b. Total cost 5 0.20x 1 0.25y c. .65x1 2.35x2 2.35x3 $ 0
c. x 1 y 5 5000 2.50x1 1 .50x2 2.50x3 # 0
d. x # 4000 Kansas City 2.15x1 2.15x2 1 .85x3 $ 0
y # 3000 Minneapolis .80y1 2.20y2 2.20y3 $ 0
e. Min  0.20x 1 0.25y 2.30y1 1 .70y2 2.30y3 $ 0
s.t. 2.40y1 2.40y2 1.60y3 # 0
x 1 y 5 5000 x1 1 x2 1 x3 $ 20,000
x # 4000 y1 1 y2 1 y3 $ 20,000
y # 3000 20. a. max 7000x 1 4000y
x, y $ 0 b. 500x 1 250y # 100,000
c. x # 20
d. y $ 50
FIGURE E1.8c  SOLUTION e. 2/3x 2 1/3y $ 0
f. If the number of television ads purchased (x) must be
less than or equal to 20 and the number of Internet ads
Profit: $10/unit for x
$5/unit for y purchased (y) must be at least 50, the producers’ desire
Labor-hours: 5/unit for x
that at least one-third of all ads will be placed on televi-
2/unit for y sion cannot be satisfied.
40 labor-hour capacity
Uncontrollable Inputs
Chapter 2
Max 10x + 5y Projected profit and
 1. (a), (b), and (e) are acceptable linear programming rela-
Production quantities
x and y
s.t. check on production tionships.
5x + 2y ≤ 40 time constraint
x ≥0 (c) is not acceptable because of 22x22.
Controllable y≥0
Output (d) is not acceptable because of 3Ïx1.
Input
Mathematical (f) is not acceptable because of 1x1x2.
Model
(c), (d), and (f) could not be found in a linear programming
model because they contain nonlinear terms.

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 A-2 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

 2. a. B c.
B
(10, 25)
8 (0, 8)

4 Note: Point shown was

used to locate position of
(4, 0) the constraint line
A
0 4 8

b. B A
0
8
 6. 7A 1 10B 5 420
6A 1   4B 5 420
4  24A 1   7B 5 420
B
100
A
0 4 8
80
c. B 60
(b)
(c) 40
8
Points on
line are only 20 (a)
feasible points
4 A
–100 –80 –60 –40 –20 0 40 50 60 80 100

 7.  B
A
0 4 8
100
 4. a. B

50

A
0 50 100 150 200 250

(20, 0)
A  8.
B

200

(0, –15)

1331/3 (100, 200)

b. B

A
–200 –100 0 100 200
(0, 12)

(–10, 0)
A

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-3

10. B 14. a. Let F 5 number of tons of fuel additive

S 5 number of tons of solvent base
6
Max 40F 1 30S
s.t.
5
2/5F 1 1/2 S # 20  Material 1
1/5 S #   5  Material 2
4
Optimal solution 3/5F 1 3/10 S # 21  Material 3
A = 12/7, B = 15/7 F, S $ 0
3 b. F 5 25, S 5 20
Value of Objective Function = c. Material 2:4 tons are used; 1 ton is unused.
2 2(12/7) + 3(15/7) = 69/7 d. No redundant constraints
A+ 16. a. 3S 1 9D
1 2B
=6 b. (0, 540)
c. 90, 150, 348, 0
A
0 1 2 3 4 5 6 17. Max  5A 1 2B 1 0s1 1 0s2 1 0s3
5A

s.t.
+3

1A 2 2B 1 1s1  5 420
B=

2A 1 3B 2 1 1s2  5 610

15

6A 2 1B 1 1 1s3 5 125

A, B, s1, s2, s3 $ 0
  A 1   2B 5   6 (1)
5A 1   3B 5  15(2) 18. b. A 5 18y7, B 5 15y7
Equation (1) times 5: 5A 1 10B 5  30 (3) c. 0, 0, 4y7
Equation (2) minus equation (3): 27B 5 215
20. b. A 5 3.43, B 5 3.43
B 5 15y7
c. 2.86, 0, 1.43, 0
From equation (1):   A 5 6 2 2(15y7)
   5 6 2 30y7 5 12y7 22. b.
12. a. A 5 3, B 5 1.5; value of optimal solution 5 13.5 Extreme Point Coordinates Profit ($)
b. A 5 0, B 5 3; value of optimal solution 5 18 1 (0, 0)    0
c. Four: (0, 0), (4, 0), (3, 1.5), and (0.3) 2 (1700, 0) 8500
13. a. B 3 (1400, 600) 9400
4 (800, 1200) 8800
5 (0, 1680) 6720
8

Extreme point 3 generates the highest profit.

6 c. A 5 1400, C 5 600
Feasible region d. Cutting and dyeing constraint and the packaging
consists of this ­constraint
4 line segment only e. A 5 800, C 5 1200; profit 5 $9200
24. a. Let R 5 number of units of regular model
2
C 5 number of units of catcher’s model
 Max 5R 1 8C
A 1R 1 3/2C # 900   Cutting and sewing
0 2 4 6 8
1/2R 1 1/3C # 300  Finishing
b. The extreme points are (5, 1) and (2, 4). 1/8R 1 1/4C # 100   Packaging and shipping
c. B R, C $ 0

6 Optimal solution
A = 2, B = 4

4
A+
2B
=1
0
2

A
0 2 4 6 8

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 A-4 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

b. C 31. B
900

800

700
6
F
Catcher’s model

600 Feasible
C&
S region
500
4
400
P&
300 S Optimal solution
R = 500, C = 150 2
200

100 A
2 4 6 8
R
0 100 200 300 400 500 600 700 800 900
Regular model Optimal solution
A = 3, B = 1 3A + 4B = 13

c. 5(500) 1 8(150) 5 $3700

Objective function value 5 13
d. C & S 1(500) 1 3/2(150) 5 725
F 1/2(500) 1 1/3(150) 5 300 32.
P & S 1/8(500) 1 1/4(150) 5 100
e.
Objective Surplus Slack
Extreme Function Surplus Total Processing
Department Capacity Usage Slack Points Value Demand Production Time
Cutting and sewing 900 725 175 hours (250, 100)   800 125 — —
Finishing 300 300   0 hours ( 125, 225)   925 — — 125
Packaging and shipping 100 100    0 hours (125, 350) 1300 — 125 —

26. a. Max 50D 1 80R 34. a. B

s.t.
D 1    R 5 1000 4
D  $   250 Feasible
R $   250 3 region
D 2   2R $    0 (21/4, 9/4)
D, R $ 0 2
b. D 5 666.67, R 5 333.33; Audience exposure 5 60,000
1
28. a. Max 1W 1 1.25M (4, 1)
s.t. A
0 1 2 3 4 5 6
5W 1 7M # 4480
3W 1 1M # 2080
2W 1 2M # 1600 b. The two extreme points are
W, M $ 0 (A 5 4, B 5 1)  and  (A 5 21/4, B 5 9/4)
c. The optimal solution (see part (a)) is A 5 4, B 5 1.
b. W 5 560, M 5 240; Profit 5 860
30. a. Max 15E 1 18C 35. a. Min  6A 1 4B 1 0s1 1 0s2 1 0s3
s.t. s.t.
40E 1 25C # 50,000 2A 1 1B 2   s1  5 12
40E  $ 15,000 1A 1 1B  2 s2  5 10
25C $ 10,000 1B  1   s3 5   4
25C # 25,000   A,  B,  s1,  s2,  s3 $ 0
  E, C $ 0 b. The optimal solution is A 5 6, B 5 4.
c. s1 5 4, s2 5 0, s3 5 0
c. (375, 400); (1000, 400); (625, 1000); (375, 1000)
d. E 5 625, C 5 1000 36. a. Min  10,000T 1 8,000P
Total return 5 $27,375 s.t.
 T  $   8
 P $ 10
 T 1  P $ 25
3T 1  2P # 84

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-5

c. (15, 10); (21.33, 10); (8, 30); (8, 17) 56. No, this could not make the problem infeasible. Changing
d. T 5 8, P 5 17 an equality constraint to an inequality constraint can only
Total cost 5 $216,000 make the feasible region larger, not smaller. No solutions
have been eliminated and anything that was feasible before
38. a. Min   7.50S 1 9.00P is still feasible.
s.t.
0.10S 1 0.30P #   6 58. The statement by the boss shows a fundamental misunder-
0.06S 1 0.12P #   3 standing of optimization models. If there were an optimal
    S 1     P 5 30 solution with 15 or less products, the model would find
    S, P $ 0 it, because it is trying to minimize. If there is no solution
c. Optional solution is S 5 15, P 5 15. with 15 or less, adding this constraint will make the model
d. No ­infeasible.
e. Yes
40. P1 5 30, P2 5 25; Cost 5 $55 Chapter 3
42. B  1. a. B
A = 4, B = 6
10
10 Satisfies constraint #2

3(
7)
8

+2
(3
)=
Infeasibility 6 optimal solution

27
6
A = 7, B = 3

4 4
Satisfies constraint #1
2 2

A
2 4 6 8 10
A
0 2 4 6 8 10
43. B
4 Unbounded b. The same extreme point, A 5 7 and B 5 3, remains
optimal; value of the objective function becomes 5(7) 1
3 Feasible 2(3) 5 41.
region
c. A new extreme point, A 5 4 and B 5 6, becomes op-
2 timal; value of the objective function becomes 3(4) 1
4(6) 5 36.
1
d. The objective coefficient range for variable A is 2 to 6;
the optimal solution, A 5 7 and B 5 3, does not change.
A
0 1 2 3 4 5 The objective coefficient range for variable B is 1 to 3;
re-solve the problem to find the new optimal solution.
44. a. A 5 30/16, B 5 30/16; Value of optimal solution 5 60/16
 2. a. The feasible region becomes larger with the new
b. A 5 0, B 5 3; Value of optimal solution 5 6
­optimal solution of A 5 6.5 and B 5 4.5.
46. a. 180, 20 b. Value of the optimal solution to the revised problem
b. Alternative optimal solutions is 3(6.5) 1 2(4.5) 5 28.5; the one-unit increase in the
c. 120, 80 right-hand side of constraint 1 improves the value of the
48. No feasible solution optimal solution by 28.5 2 27 5 1.5; therefore, the dual
value for constraint 1 is 1.5.
50. M 5 65.45, R 5 261.82; Profit 5 $45,818
c. The right-hand-side range for constraint 1 is 8 to 11.2;
52. S 5 384, O 5 80 as long as the right-hand side stays within this range, the
54. a. Max 160M1 1 345M2 dual value of 1.5 is applicable.
s.t. d. The improvement in the value of the optimal solution
 M1 #   15 will be 0.5 for every unit increase in the right-hand side
 M2 #   10 of constraint 2 as long as the right-hand side is between
 M1  $    5 18 and 30.
 M2 $    5
 4. a. X 5 2.5, Y 5 2.5
40M1 1 50M2 # 1000
b. 2
 M1, M2 $ 0
c. 5 to 11
b. M1 5 12.5, M2 5 10 d. 3 between 9 and 18

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 A-6 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

 5. a. Regular glove 5 500; Catcher’s mitt 5 150; b. The optimal solution does not change, but the change in
Value 5 3700 total profit will be:
b. The finishing, packaging, and shipping constraints are E 80 units @ 1$6 5  $480
binding; there is no slack. S 120 units @ 2$2 5 2240
c. Cutting and sewing 5 0
Finishing 5 3 $240
Packaging and shipping 5 28 Therefore, profit = $16,440 1 240 5 16,680.
Additional finishing time is worth $3 per unit, and ad- [ Profit 5 $16,440 1 $240 5 $16,680
ditional packaging and shipping time is worth $28 per c. Range of feasibility
unit. Constraint 1 160 to 280
d. In the packaging and shipping department, each addi- Constraint 2 200 to 400
tional hour is worth $28. Constraint 3 2080 to No upper limit
 6. a. 4 to 12 d. Yes, the dual value will change since 100 is greater than
3.33 to 10 the allowable increase of 80.
b. As long as the profit contribution for the regular glove 14. a. Manufacture 100 cases of A and 60 cases of B, and
is between $4.00 and $12.00, the current solution is op- purchase 90 cases of B; Total cost 5 $2170
timal; as long as the profit contribution for the catcher’s b. Demand for A, demand for B, assembly time
mitt stays between $3.33 and $10.00, the current solu- c. 212.25, 29.0, 0, 0.375
tion is optimal; the optimal solution is not sensitive to d. Assembly time constraint
small changes in the profit contributions for the gloves.
16. a. 100 suits, 150 sport coats
c. The dual values for the resources are applicable over the
Profit 5 $40,900
following ranges:
40 hours of cutting overtime
b. Optimal solution will not change.
Right-Hand- c. Consider ordering additional material; $34.50 is the
Constraint Side Range maximum price.
Cutting and sewing 725 to No upper limit d. Profit will improve by $875.
Finishing 133.33 to 400 18. a. The linear programming model is as follows:
Packaging and shipping 75 to 135 Min 30AN 1 50AO 1 25BN 1 40BO
s.t.
d. Amount of increase 5 (28)(20) 5 $560    AN 1    AO $ 50,000
BN 1    BO $ 70,000
 8. a. More than $7.00   AN  1    BN  # 80,000
b. More than $3.50 AO 1    BO # 60,000
c. None   AN, AO, BN, BO $ 0
10. a. S 5 4000, M 5 10,000; Total risk 5 62,000 b. Optimal solution
b.
Variable Objective Coefficient Range
New Line Old Line
S 3.75 to No upper limit
Model A 50,000      0
M No lower limit to 6.4
Model B 30,000 40,000
Total cost: $3,850,000
c. 5(4000) 1 4(10,000) 5 $60,000
d. 60,000/1,200,000 5 0.05 or 5%
e. 0.057 risk units c. The first three constraints are binding.
f. 0.057(100) 5 5.7% d. Because the dual value is negative, increasing the right-
hand side of constraint 3 will decrease (improve) the
12. a. E 5 80, S 5 120, D 5 0 solution; thus, an increase in capacity for the new pro-
Profit 5 $16,440 duction line is desirable.
b. Fan motors and cooling coils e. Because constraint 4 is not a binding constraint, any
c. Labor hours; 320 hours available increase in the production line capacity of the old
­
d. Objective function coefficient range of optimality production line will have no effect on the optimal solu-
No lower limit to 159 tion; thus, increasing the capacity of the old production
Because $150 is in this range, the optimal solution line results in no benefit.
would not change. f. The reduced cost for model A made on the old produc-
13. a. Range of optimality tion line is 5; thus, the cost would have to decrease by at
E 47.5 to 75 least $5 before any units of model A would be produced
S 87 to 126 on the old production line.
D No lower limit to 159 g. The right hand side range for constraint 2 shows an
allowable decrease of 20,000. Thus, if the minimum

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-7

production requirement is reduced 10,000 units to c. The dual value associated with the rate of return con-
60,000, the dual value of 40 is applicable. Thus, total straint is 0.833. If the firm requires a 10% rate of return,
cost would decrease by 10,000(40) 5 $400,000. this will increase the right-hand side of this constraint
to 0.1*200,000 5 20,000, which is an increase of 2000
20. a. Max 0.07H 1 0.12P 1 0.09A units. Because this increase is within the right-hand-
s.t. side range, this means that we would expect the objec-
 H 1 P 1  A 5 1,000,000 tive function to increase by 2000*0.833 5 1666 units.
0.6H 2  0.4P 2  0.4A $ 0 In other words, the increased rate of return would result
P 2  0.6A # 0 in an increase in risk of 1660 units.
H, P, A $ 0
26. a. Let M1 5 units of component 1 manufactured
b. H 5 $400,000, P 5 $225,000, A 5 $375,000 M2 5 units of component 2 manufactured
Total annual return 5 $88,750 M3 5 units of component 3 manufactured
Annual percentage return 5 8.875% P1 5 units of component 1 purchased
c. No change P2 5 units of component 2 purchased
d. Increase of $890 P3 5 units of component 3 purchased
e. Increase of $312.50, or 0.031%
Min  4.50M1 1 5.00M2 1 2.75M3 1 6.50P1 1 8.80P2 1 7.00P3
s.t.
22. a. Min     30L 1  25D 1   18S
  2M1 1   3M2 1 4M3  # 21,600  Production
s.t.   1M1 1 1.5M2 1 3M3  # 15,000  Assembly
L 1  D 1  S 5 100 1.5M1 1   2M2 1 5M3  # 18,000   Testing & Packaging
0.6L 2  0.4D  $   0   1M1  1 1P1 5  6,000  Component 1
20.15L 2 0.15D 1 0.85S $   0 1M2  1 1P2 5  4,000  Component 2
1M3  1 1P3 5  3,500  Component 3
20.25L 2 0.25D 1  S #   0    M1, M2, M3, P1, P2, P3 $ 0
L  #   50
L, D, S $ 0 b.
b. L 5 48, D 5 72, S 5 30
Total cost 5 $3780
c. No change Component Component Component
d. No change Source 1 2 3
Manufacture 2000 4000 1400
24. Let A 5 number of shares of stock A Purchase 4000 2100
B 5 number of shares of stock B
C 5 number of shares of stock C Total cost 5 $73,550
D 5 number of shares of stock D 
a. To get data on a per share basis multiply price by rate c. Production: $54.36 per hour
of return or risk measure value. Testing & Packaging: $7.50 per hour
d. Dual value 5 $7.969; so it will cost Benson $7.969 to
Min 10A 13.5B 1 4C 1 3.2D add a unit of component 2.
s.t.
100A 1 50B 1 80C 1 40D 5 200,000 28. b. G 5 120,000; S 5 30,000; M 5 150,000
12A 1 4B 1 4.8C 1 4D $ 18,000 (9% of 200,000) c. 0.15 to 0.60; No lower limit to 0.122; 0.02 to 0.20
100A # 100,000 d. 4668
50B # 100,000 e. G 5 48,000; S 5 192,000; M 5 60,000
80C # 100,000 f.  The client’s risk index and the amount of funds
40D # 100,000 available
g. W ith the new yield estimates, Pfeiffer would solve
A, B, C, D  $ 0 a new linear program to find the optimal portfolio
Solution: A 5 333.3, B 5 0, C 5 833.3, D 5 2500 mix for each client. Then by summing across all
Risk: 14,666.7 50 clients he would determine the total amount that
Return: 18,000 (9%) from constraint 2 should be placed in a growth fund, an income fund,
b. and a money market fund. Pfeiffer then would
make the necessary switches to have the correct
Variable Objective Coefficient Range total amount in each account. There would be no
actual switching of funds for individual clients.
A 9.5 to 11
B 3.33 to no upper limit 30. a. L 5 3, N 5 7, W 5 5, S 5 5
C 3.2 to 4.4 b. Each additional minute of broadcast time increases cost
D no lower limit to 3.33 by $100.
c. If local coverage is increased by 1 minute, total cost will
Individual changes in the risk measure coefficients increase by $100.
within these ranges will not cause a change in the d. If the time devoted to local and national news is in-
optimal investment decisions. creased by 1 minute, total cost will increase by $100.

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 A-8 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

e. Increasing the sports by 1 minute will have no effect b. The dual value for the budget constraint is 51.30, mean-
because the dual value is 0. ing a $100 increase in the budget should provide an
32. a. Let P1 5 number of PT-100 battery packs produced at ­increase in audience coverage of approximately 5130;
the Philippines plant the right-hand-side range for the budget constraint will
P2 5 number of PT-200 battery packs produced at show that this interpretation is correct.
the Philippines plant  2. a. x1 5 77.89, x2 5 63.16, $3284.21
P3 5 number of PT-300 battery packs produced at b. Department A $15.79; Department B $47.37
the Philippines plant c. x1 5 87.21, x2 5 65.12, $3341.34
M1 5 number of PT-100 battery packs produced at Department A 10 hours; Department B 3.2 hours
the Mexico plant
M2 5 number of PT-200 battery packs produced at  4. a. x1 5 500, x2 5 300, x3 5 200, $550
the Mexico plant b. $0.55
M3 5 number of PT-300 battery packs produced at c. Aroma, 75; Taste 84.4
the Mexico plant d. 2$0.60
Min 1.13P1 1 1.16P2 1 1.52P3 1 1.08M1 1 1.16M2 1 1.25M3
s.t.  6. 50 units of product 1; 0 units of product 2; 300 hours de-
    P1 1      M1 5 200,000 partment A; 600 hours department B
    P2 1      M2 5 100,000
    P3 1      M3 5 150,000  8. Schedule 19 officers as follows:
    P1 1     P2  # 175,000 3 begin at 8:00 a.m.; 3 begin at noon; 7 begin at 4:00 p.m.;
    M1 1     M2  # 160,000 4 begin at midnight, 2 begin at 4:00 a.m.
    P3 #  75,000
    M3 # 100,000  9. Let Xi 5 the number of call-center employees who start
    P1, P2, P3, M1, M2, M3 $ 0
work on day i
b. The optimal solution is as follows: (i 5 1 5 Monday, i 5 2 5 Tuesday …)
Min  X1 1 X2 1 X3 1 X4 1 X5 1 X6 1 X7
Philippines Mexico
s.t.
PT-100  40,000 160,000 X1 1  X4 1 X5 1 X6 1 X7 $ 75
PT-200 100,000       0
X1 1 X2 1  X5 1 X6 1 X7 $ 50
PT-300  50,000 100,000
X1 1 X2 1 X3 1  X6 1 X7 $ 45

Total production and transportation cost is $535,000. X1 1 X2 1 X3 1 X4  1 X7 $ 60
c. The range of optimality for the objective function coef- X1 1 X2 1 X3 1 X4 1 X5  $ 90
ficient for P1 shows a lower limit of $1.08; thus, the X2 1 X3 1 X4 1 X5 1 X6  $ 75
production and/or shipping cost would have to decrease X3 1  X4 1 X5 1 X6 1 X7 $ 45
by at least 5 cents per unit. X1, X2, X3, X4, X5, X6, X7 $ 0
d. The range of optimality for the objective function coef- Solution: X1 5 20, X2 5 20, X3 5 0, X4 5 45, X5 5 5,
ficient for M1 shows a lower limit of $1.11; thus, the X6 5 5, X7 5 0
production and/or shipping cost would have to decrease Total number of employees 5 95
by at least 5 cents per unit. Excess employees: Thursday  5 25, Sunday 5 10, all
others 5 0.
Chapter 4
10. a. 40.9%, 14.5%, 14.5%, 30.0%
 1. a. Let T 5 number of television advertisements
Annual return 5 5.4%
R 5 number of radio advertisements
b. 0.0%, 36.0%, 36.0%, 28.0%
N 5 number of online advertisements
Annual return 5 2.52%
Max  100,000T 1 18,000R 1 40,000N c. 75.0%, 0.0%, 15.0%, 10.0%
s.t. Annual return 5 8.2%
2000T 1 300R 1 600N # 18,200 Budget d. Yes
T #     10 Max TV e. Defining the decision variables as proportions means
R  #     20 Max radio the investment advisor can use the linear programming
N #     10 Max online model for any investor, regardless of the amount of the
20.5T 1 0.5R 2 0.5N #      0 Max 50% radio investment.
0.9T 2 0.1R 2 0.1N $      0 Min 10% TV
T, R, N $ 0 12.
Week Buy Sell Store
Budget $
1 80,000 0 100,000
Solution: T 5 4 $  8000
2 0 0 100,000
R 5 14    4200
3 0 100,000 0
N 5 10    6000 4 25,000 0 25,000
$18,200
Audience 
5 1,052,000

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-9

14. b. Solution: x11 5 193; x21 5 95; x12 5 162; x22 5 175

Ending Total cost  5 $67,156
Quarter Production Inventory Inventory levels: s11 5 63; s12 5 25; s21 5 0; s22 5 25
1 4000 2100 Labor levels: Previous    1000 hours
2 3000 1100 Month 1   922.25 hours
3 2000  100 Month 2 1022.25 hours
4 1900  500 b. To accommodate the new policy, the right-hand sides of
the four labor-smoothing constraints must be changed
15. Let x11 5 gallons of crude 1 used to produce regular
to 950, 1050, 50, and 50, respectively; the new total cost
x12 5 gallons of crude 1 used to produce high octane
is $67,175.
x21 5 gallons of crude 2 used to produce regular
x22 5 gallons of crude 2 used to produce high octane 20. Produce 10,250 units in March, 10,250 units in April, and
Min  0.10x11 1 0.10x12 1 0.15x21 1 0.15x22
12,000 units in May.
s.t. 22. b. 5, 516, 000 sq. in. of waste
Each gallon of regular must have at least 40% A. Machine 3: 492 minutes
x11 1 x21 5 amount of regular produced 24. Investment strategy: 45.8% of A and 100% of B
0.4(x11 1 x21) 5 amount of A required for regular Objective function 5 $4340.40
0.2x11 1 0.50x21 5 amount of A in (x11 1 x21) gallons of regular gas Savings/Loan schedule
∴ 0.2x11 1 0.50x21 $ 0.4x11 1 0.40x21
∴ 20.2x11 1 0.10x21 $ 0
Each gallon of high octane can have at most 50% B. Period
x12 1 x22 5 amount of high octane
0.5(x12 1 x22) 5 amount of B required for high octane 1 2 3 4
0.60x12 1 0.30x22 5 amount of B in (x12 1 x22) gallons of high octane Savings 242.11 — — 341.04
∴ 0.60x12 1 0.30x22 # 0.5x12 1 0.5x22 Funds from loan — 200.00 127.58 —
∴ 0.1x12 2 0.2x22 # 0
x11 1 x21 $ 800,000
x12 1 x22 $ 500,000
x11, x12, x21, x22 $ 0
Chapter 5
Optimal solution: x11 5 266,667, x12 5 333,333, x21 5 533,333,
x22 5 166,667  2. b. E 5 0.924
Cost 5 $165,000 wa 5 0.074
16. xi 5 number of 10-inch rolls processed by cutting ­alternative i wc 5 0.436
a. x1 5 0, x2 5 125, x3 5 500, x4 5 1500, x5 5 0, x6 5 0, we 5 0.489
x7 5 0; 2125 rolls with waste of 750 inches c. D is relatively inefficient.
b. 2500 rolls with no waste; however, 11/2-inch size is Composite requires 92.4 of D’s resources.
overproduced by 3000 units d. 34.37 patient days (65 or older)
41.99 patient days (under 65)
18. a. 5 Super, 2 Regular, and 3 Econo-Tankers
e. Hospitals A, C, and E
Total cost $583,000; monthly operating cost $4650
19. a. Let x11 5 amount of men’s model in month 1  4. b. E 5 0.960
x21 5 amount of women’s model in month 1 wb 5 0.074
x12 5 amount of men’s model in month 2 wc 5 0.000
x22 5 amount of women’s model in month 2 wj 5 0.436
s11 5 inventory of men’s model at end of month 1 wn 5 0.489
s21 5 inventory of women’s model at end of month 1 ws 5 0.000
s12 5 inventory of men’s model at end of month 2 c. Yes; E 5 0.960
s22 5 inventory of women’s model at end of month 2 d. More: $220 profit per week
Min  120x11 1 90x21 1 120x12 1 90x22 1 2.4s11 1 1.8s21 1 2.4s12 1 1.8s22 Less: Hours of Operation 4.4 hours

J
s.t. FTE Staff 2.6
x11 2    s11 5 130 Supply Expense $185.61
x 21 2    s21 5   95
Satisfy demand d. Bardstown, Jeffersonville, and New Albany
s11 1    x12 2   s12 5 200
s21 1    x22 2   s22 5 150  6. a. 19, 18, 12, 18
       s12 $ 25
       s22 $ 25
J
Ending inventory requirement
b. PCQ 5 8
PCY 5 4
PMQ 5 0
PMY 5 1
POQ 5 27
POY 5 2
Labor-hours: M  en’s 2.0 1 1.5 5 3.5 NCQ 5 6 NMQ 5 23 NOQ 5 2

J
Women’s 1.6 1 1.0 5 2.6
NCY 5 4 NMY 5 2 NOY 5 1
3.5x11 1 2.6x21 $   900
3.5x11 1 2.6x21 # 1100 CMQ 5 37 CMY 5 2
Labor smoothing COQ 5 11 COY 5 3
3.5x11 1 2.6x21 2 3.5x12 2 2.6x22 #   100
23.5x11 2 2.6x21 1 3.5x12 1 2.6x22 #   100
   x11, x12, x21, x22, s11, s12, s21, s22 $ 0

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 A-10 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

c. PCQ 5 8 PMQ 5 1 POQ 5 3 Chapter 6

PCY 5 4 PMY 5 1 POY 5 2
NCQ 5 6 NMQ 5 3 NOQ 5 2   1. The network model is shown:
NCY 5 4 NMY 5 2 NOY 5 1
CMQ 5 3 CMY 5 2
Atlanta 1400
COQ 5 7 COY 5 3
8. b. 65.7% small-cap growth fund 2
34.3% of the portfolio in a small-cap value 5000 Phila. 6
6
Expected return 5 18.5% Dallas 3200
c. 10% foreign stock

2
50.8% small-cap growth fund
39.2% of the portfolio in a small-cap value
Expected return 5 17.178% 2

1
Columbus 2000
5
10. 3000 New
Orleans 7
Player B
b1 b2 b3 Minimum
Boston 1400
a1 8 5 7 5
Player A
a2 2 4 10 4
Maximum 8 5 7 Maximum  2. a. Let  x11 5 amount shipped from Jefferson City to
Des Moines
Minimum x12 5 amount shipped from Jefferson City to
The game has a pure strategy: Player A strategy a1; Player B Kansas City
strategy b2; and value of game 5 5. ?
?
12. a. The payoff table is ?
Min  14x11 1 9x12 1 7x13 1 8x21 1 10x22 1 5x23
Blue Army s.t.
Attack Defend Minimum x11 1   x12 1   x13 # 30
x21 1 x22 1 x23 # 20
Attack 30 50 30 x11 1 x21 5 25
Red Army
Defend 40 0 0 x12 1    x22 5 15
Maximum 40 50        x13 1   x23 5 10
x11, x12, x13, x21, x22, x23 $ 0
The maximum of the row minimums is 30 and the
minimum of the column maximums is 40. Because b. Optimal Solution:
these values are not equal, a mixed strategy is optimal.
Therefore, we must determine the best probability, p, Amount Cost
for which the Red Army should choose the Attack
strategy. Assume the Red Army chooses Attack with Jefferson City–Des Moines 5 70
probability p and Defend with probability 1 2 p. If Jefferson City–Kansas City 15 135
Jefferson City–St. Louis 10 70
the Blue Army chooses Attack, the expected payoff is
Omaha–Des Moines 20 160
30p 1 40 (1 2 p). If the Blue Army chooses Defend,
the expected payoff is 50p 1 0*(1 2 p). Setting these               Total     435
equations equal to each other and solving for p, we
get p = 2/3. Red Army should choose to Attack with  4. The optimization model can be written as
probability 2/3 and Defend with probability 1/3. xij 5 Red GloFish shipped from i to j, i 5 M for Michigan, T
b. Assume the Blue Army chooses Attack with probability for Texas; j 5 1, 2, 3.
q and Defend with probability 1 2 q. If the Red Army yij 5  Blue GloFish shipped from i to j, i 5 M for
chooses Attack, the expected payoff for the Blue Army is Michigan, T for Texas; j 5 1, 2, 3.
30q 1 50*(1 2 q). If the Red Army chooses Defend, the Min xM1 1 2.50xM2 1 0.50xM3 1 yM1 1 2.50yM2 1 0.50yM3 1 2.00yT1 1 1.50yT2 1 2.80yT3
expected payoff for the Blue Army is 40q 1 0*(1 2 q).
s.t.
Setting these equations equal to each other and solving
     xM1 1     xM2 1 xM3                     # 1,000,000
for q, we get q = 0.833. Therefore, the Blue Army should
                                                  yM1 1 yM2 1 yM3 # 1,000,000
choose to Attack with probability 0.833 and Defend with
                                                                                                yT1 1      yT2 1    yT3 #  600,000
probability 1 2 0.833 5 0.167.         xM1                               $  320,000
14. Pure strategies a4 and b3               xM2                          $  300,000
                      xM3                       $  160,000
Value 5 10
                          yM1 1                        yT1        $  380,000
16. Company A: 0.0, 0.0, 0.8, 0.2                                    yM2 1                     yT2   $  450,000
Company B: 0.4, 0.6, 0.0, 0.0                                             yM3 1                        yT3 $  290,000
Expected gain for A 5 2.8      xij $ 0

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-11

Solving this linear program, we find that we should pro- Max 32x11 1 34x12 1 32x13 1 40x14 1 34x21 1 30x22 1 28x23 1 38x24
duce 780,000 red GloFish in Michigan, 670,000 blue s.t.
  x11 1 x12 1 x13 1 x14 # 5000
GloFish in Michigan, and 450,000 blue GloFish in Texas.             x21 1 x22 1 x23 1 x24 # 3000
 Using the notation in the model, the number of GloFish                        x31 1 x32 1 x33 1 x34 # 4000 Dummy
shipped from each farm to each retailer can be expressed x11                1 x21                 1 x31 5 2000
as follows:         x12       1 x22        1 x32 5 5000
              x13     1 x23      1 x33 5 3000
xM1 5 320,000
                 x14       1 x24      1 x34 5 2000
xM2 5 300,000 xij $ 0   for all i, j
xM3 5 160,000
yM1 5 380,000
yM2 5 0 Optimal Solution Units Cost
yM3 5 290,000
yT1 5 0 Clifton Springs–D2 4000 $136,000
yT2 5 450,000 Clifton Springs–D4 1000 40,000
Danville–D1 2000 68,000
yT3 5 0
Danville–D4 1000 38,000
a. The minimum transportation cost is $2.35 million.
b. We have to add variables xT1, xT2, and xT3 for Red Total Cost  $282,000
GloFish shipped between Texas and Retailers 1, 2, and 3.
The revised objective function is
Customer 2 demand has a shortfall of 1000.
Minimize xM1 1 2.50xM2 1 0.50xM3 1 yM1 1 2.50yM2 1
0.50yM3 1 2.00yT1 1 1.50yT2 1 2.80yT3 1 xT1 1 Customer 3 demand of 3000 is not satisfied.
2.50xT2 1 0.50xT3  8. a.
We replace the third constraint above with
xT1 1xT2 1 xT3 1 yT1 1yT2 1 yT3 # 600,000
1
And we change the constraints 50
Boston
xM1 $ 320,000 7
xM2 $ 300,000
xM3 $ 160,000 1 11
100
to Denver
xM1 1 xT1 $ 320,000 8
xM2 1 xT2 $ 300,000
13
xM3 1 xT3 $ 160,000 2
Dallas 70
Using this new objective function and constraint the opti- 20
mal solution is $2.2 million, so the savings are $150,000. 17
 6. The network model, the linear programming formulation, and 2
the optimal solution are shown. Note that the third constraint 100 Atlanta 12
corresponds to the dummy origin. The variables x31, x32, x33,
and x34 are the amounts shipped out of the dummy origin; they 10
3
do not appear in the objective function because they are given Los 60
a coefficient of zero. 8 Angeles
Demand
18
D1 2000
13
Supply 3
32
150
Chicago
5000 C.S. 34
16
32 40

4
St. Paul 80
D2 5000

34
30 b.
There are alternative optimal solutions.
3000 D. 28
38

Solution 1 Solution 2
Denver to St. Paul: 10 Denver to St. Paul: 10
D3 3000
Atlanta to Boston: 50 Atlanta to Boston: 50
Atlanta to Dallas: 50 Atlanta to Los Angeles: 50
0
0

Chicago to Dallas: 20 Chicago to Dallas: 70

0
Chicago to Los Angeles: 60 Chicago to Los Angeles: 10
4000 Dum 0
Chicago to St. Paul: 70 Chicago to St. Paul: 70
Total Profit:    $4240
Note: Dummy origin has supply of 4000. D4 2000

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 A-12 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

If solution 1 is used, Forbelt should produce 10 motors b. & c. The linear programming formulation and solution
at Denver, 100 motors at Atlanta, and 150 motors at is shown below:
Chicago. There will be idle capacity for 90 motors at
Denver. LINEAR PROGRAMMING PROBLEM
 If solution 2 is used, Forbelt should adopt the
same production schedule but a modified shipping MIN 4X14 1 7X15 1 8X24 1 5X25 1 5X34 1 6X35
schedule. 1 6X46 1 4X47 1 8X48 1 4X49 1 3X56 1 6X57
1 7X58 1 7X59
10. a. The total cost is the sum of the purchase cost and
the transportation cost. We show the calculation for S.T.
­Division 1–Supplier 1 and present the result for the
(1) X14 1 X15 , 450
other Division-Supplier combinations. (2) X24 1 X25 , 600
(3) X34 1 X35 , 380
Division 1–Supplier 1 (4) X46 1 X47 1 X48 1 X49 2 X14 2 X24
2 X34 5 0
(5) X56 1 X57 1 X58 1 X59 2 X15 2 X25
Purchase Cost (40,000 3 $12.60) $504,000 2 X35 5 0
Transportation Cost (40,000 3 $2.75)   110,000 (6) X46 1 X56 5 300
(7) X47 1 X57 5 300
Total Cost:    $614,000 (8) X48 1 X58 5 300
(9) X49 1 X59 5 400

Cost Matrix ($1000s)

OPTIMAL SOLUTION
Supplier
Division
1 2 3 4 5 6 Objective Function Value 5 11850.000
1 614 660 534 680 590 630 Variable Value Reduced Costs
2 603 639 702 693 693 630 ------------ ------------ -------------
3 865 830 775 850 900 930 X14 450.000 0.000
4 532 553 511 581 595 553 X15 0.000 3.000
5 720 648 684 693 657 747 X24 0.000 3.000
X25 600.000 0.000
X34 250.000 0.000
X35 0.000 1.000
b. Optimal Solution: X46 0.000 3.000
X47 300.000 0.000
X48 0.000 1.000
Supplier 1–Division 2 $ 603 X49 400.000 0.000
Supplier 2–Division 5 648 X56 300.000 0.000
X57 0.000 2.000
Supplier 3–Division 3 775 X58 300.000 0.000
Supplier 5–Division 1 590 X59 0.000 3.000
Supplier 6–Division 4 553
Total  $3169
There is an excess capacity of 130 units at plant 3.

12. a. Three arcs must be added to the network model in Prob-

11. a. Network Model
lem 11a. The new network is shown:
Demand
Demand
6 300 6
C1 300
Supply C1
Supply
1 4 1
450 P1 6 450 4 6
4 P1
7 4 7 7 4 4
W1 300 W1 7
8 C2 8 300
C2
8 8 2
2
4

2
4

600 600
P2 5 P2 5
3

2
3

6 6
5 7 8 7 8
W25 300 5 5 300
7 C3 C3
3 6 W2 6 W2 7
380 3
380 7
P3 P3

9 9
400 400
C4 C4

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-13

b. & c. The linear programming formulation and optimal A linear programming model is
solution is shown below: Min 8x1416x1513x2418x2519x3413x35144x46134x47134x48132x49157x56135x57128x58124x59
s.t.
LINEAR PROGRAMMING PROBLEM x141  x15 #3
MIN 4X14 1 7X15 1 8X24 1 5X25 1 5X34 1 x241  x25 #6
6X35 1 6X46 1 4X47 1 8X48 1 4X49 1 3X56 1 x341  x35 #5
6X57 1 7X58 1 7X59 1 7X39 1 2X45 1 2X54 2x14 2  x24 2  x34 1  x461  x471  x481  x49 5 0
2  x15 2  x25 2  x35 1  x561  x571  x581  x59 5 0
S.T. x46 1  x56 52
(1) X14 1 X15 , 450 x47 1  x57 54
(2) X24 1 X25 , 600 x48 1  x58 5 3
(3) X34 1 X35 1 X39 , 380 x49 1  x59 5 3
(4) X45 1 X46 1 X47 1 X48 1 X49 2 X14 2 X24 xij $ 0   for all i, j
2 X34 2 X54 5 0
(5) X54 1 X56 1 X57 1 X58 1 X59 2 X15 2 X25
2 X35 2 X45 5 0 Units
(6) X46 1 X56 5 300 Optimal Solution Shipped Cost
(7) X47 1 X57 5 300
(8) X48 1 X58 5 300 Muncie–Cincinnati 1 6
(9) X39 1 X49 1 X59 5 400
Cincinnati–Concord 3 84
Brazil–Louisville 6 18
Louisville–Macon 2 88
OPTIMAL SOLUTION Louisville–Greenwood 4 136
Objective Function Value 5 11220.000 Xenia–Cincinnati 5 15
Variable Value Reduced Costs
Cincinnati–Chatham 3 72
------------ ------------ --------------- 419
X14 320.000 0.000
X15 0.000 2.000
X24 0.000 4.000 Two rail cars must be held at Muncie until a buyer is found.
X25 600.000 0.000
X34 0.000 2.000
16. a.
X35 0.000 2.000 Min 20x12 1 25x15 1 30x25 1 45x27 1 20x31 1 35x36 
X46 0.000 2.000 1 30x42 1 25x53 1 15x54 1 28x56 1 12x67 1 27x74
X47 300.000 0.000 s.t.
X48 0.000 0.000 x31 2     x12 2    x15 5 8
X49 20.000 0.000
                x25  1     x27 2     x12 2     x42 5 5
X56 300.000 0.000
X57 0.000 3.000          x31 1    x36   2  x53 5 3
X58 300.000 0.000                        x54   1 x74 2   x42 5 3
X59 0.000 4.000 x53 1     x54   1    x56  2   x15 2     x25 5 2
X39 380.000 0.000                              x36  1   x56  2  x67 5 5
X45 0.000 1.000        x74  2      x27 2      x67 5 6
X54 0.000 3.000
xij $ 0 for all i, j

b. x12 5 0 x53 5 5
The value of the solution here is $630 less than the value of x15 5 0 x54 5 0
the solution for Problem 23. The new shipping route from x25 5 8 x56 5 5
plant 3 to customer 4 has helped (X39 5 380). There is now x27 5 0 x67 5 0
excess capacity of 130 units at plant 1. x31 5 8 x74 5 6
x36 5 0 x56 5 5
14.
x42 5 3
6
2
Macon Total cost of redistributing cars 5 $917
1
3
Muncie 8
6 44
4
Louisville 34 7
4
34 Greenwood
2 3
32

6
Brazil 8
57

35
8
9 5 28 3
3 Concord
Cincinnati 24
3
5
Xenia

9
3
Chatham

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 A-14 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

17. a. b.
Min 30x11 1 44x12 1 38x13 1 47x14 1 31x15 1 25x21 1 . . . 1 28x55
s.t.
1 x11 1 x12 1 x13 1 x14 1 x15 # 1
10 1
1 Jackson 1 x21 1 x22 1 x23 1 x24 1 x25 # 1
Client 1
16 x31 1 x32 1 x33 1 x34 1 x35 # 1
32 x41 1 x42 1 x43 1 x44 1 x45 # 1
x51 1 x52 1 x53 1 x54 1 x55 # 1
x11 1 x21 1 x31 1 x41 1 x51 5 1
x12 1 x22 1 x32 1 x42 1 x52 5 1
x13 1 x23 1 x33 1 x43 1 x53 5 1
14 x14 1 x24 1 x34 1 x44 1 x54 5 1
2 22 2 x15 1 x25 1 x35 1 x45 1 x55 5 1
1 Ellis Client 2 1      xij $ 0, i 5 1, 2, . . . , 5; j 5 1, 2, . . . , 5
40
Optimal Solution:

Green to Job 1 $ 26
22

24 Brown to Job 2 34
3 3
Red to Job 3 38
34
1 Smith Client 3 1 Blue to Job 4 39
White to Job 5 25
$162
b.
Min 10x11 1 16x12 1 32x13 1 14x21 1 22x22 1 40x23 1 22x31 1 24x32 1 34x33 Because the data are in hundreds of dollars, the total
s.t. installation cost for the five contracts is $16,200.
x11 1   x12 1    x13  # 1
x21 1    x22 1   x23 # 1 20. a. This is the variation of the assignment problem in which
x31 1   x32 1   x33  # 1 multiple assignments are possible. Each distri­bution
x11 1    x21 1     x31 5 1
x12 1    x22 1    x32 5 1 center may be assigned up to three customer zones.
x13 1     x23 1     x33 5 1  The linear programming model of this problem has
xij $ 0   for all i, j 40 variables (one for each combination of distribution
Solution: x12 5 1, x21 5 1, x33 5 1 ­center and customer zone). It has 13 constraints. There
Total completion time 5 64 are five supply (#3) constraints and eight demand
(51) constraints.
18. a. Crews Jobs The optimal solution is as follows:

1 30 Cost
1 1 1
Red 25
44 Assignments ($1000s)
38 Plano Kansas City, Dallas 34
Flagstaff Los Angeles 15
47 1

1 2 2 1 Springfield Chicago, Columbus, Atlanta 70

3

White Boulder Newark, Denver 97

Total Cost  $216

3
1
Blue
3 1 b. The Nashville distribution center is not used.
c. All the distribution centers are used. Columbus is
switched from Springfield to Nashville. Total cost in-
creases by $11,000 to $227,000.
34 6

4 22. A linear programming formulation of this problem can

2

1 4 1
Green
44 be developed as follows. Let the first letter of each vari-
able name represent the professor and the second two the
43
course. Note that a DPH variable is not created because the
1 5 28 assignment is unacceptable.
5 1
Brown Max 2.8AUG 1 2.2AMB 1 3.3AMS 1 3.0APH 1 3.2BUG 1 · · · 1 2.5DMS
s.t.
AUG 1 AMB 1 AMS 1 APH #1
BUG 1 BMB 1 BMS 1 BPH #1
CUG 1 CMB 1 CMS 1 CPH # 1
DUG 1 DMB 1 DMS # 1

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-15

AUG 1 BUG 1 CUG 1 DUG 51 Min 35x12 1 30x13 1 20x14 1 8x23 1 12x25 1 8x32 1 9x34 1 10x35
AMB 1 BMB 1 CMB 1 DMB 51 1 20x36 1 9x43 1 15x47 1 12x52 1 10x53 1 5x56 1 20x57 1 15x74
AMS 1 BMS 1 CMS 1 DMS 51 1 20x75 1 5x76
APH 1 BPH 1 CPH 51 s.t.
     All Variables $ 0 Flow Out Flow In
Node 1 x12 1 x13 1 x14 51
Node 2 x23 1 x25  2x12 2 x32 2 x52 50
Optimal Solution Rating Node 3 x32 1 x34  1 x35  1 x36  2x13 2 x23 2 x43 2 x53 5 0
Node 4 x43 1 x47  2x14 2 x34 2 x74 50
A to MS course 3.3
Node 5 x52 1 x53 1 x56 1 x57 2x252 x35 2 x75 50
B to Ph.D. course 3.6 Node 6 1x36 1 x56 1 x76 51
C to MBA course 3.2 Node 7 x74 1 x75 1 x76 2x47 2 x57  50
D to Undergraduate course 3.2 xij $ 0   for all i and j
               Max Total Rating 13.3 Optimal Solution: x14 5 1, x47 5 1, and x76 5 1
Shortest Route: 1–4–7–6
Total Distance 5 40 miles
23. Origin—Node 1
Transshipment—Nodes 2–5 28. Origin—Node 0
Destination—Node 7 Transshipment—Nodes 1 to 3
The linear program will have 14 variables for the arcs Destination—Node 4
and 7 constraints for the nodes. The linear program will have 10 variables for the arcs
Let and 5 constraints for the nodes.
Let
1 if the arc from node i to node j is on the shortest route
xij 5 50 otherwise xij 5
1 if the arc from node i to node j is on the shortest route
50 otherwise
Min 7x12 1 9x13 1 18x14 1 3x23 1 5x25 1 3x32 1 4x35  Min 600x01 1 1000x02 1 2000x03 1 2800x04 1 500x12 1 
1 3x46 1 5x52 1 4x53 1 2x56 1 6x57 1 2x65 1 3x67 1400x13 1 2100x14 1 800x23 1 1600x24 1 700x34
s.t.
s.t.
Flow Out Flow In
Flow Out Flow In
Node 0 x01 1 x02 1 x03 1 x04 51
Node 1 x12 1 x13 1 x14 51 Node 1 x12 1 x13  1 x14  2x01 50
Node 2 x23 1 x25  2x12 2 x32 2 x52 5 0 Node 2 x23 1 x24  2x02 2 x12 50
Node 3 x32 1 x35  2x13 2 x23 2 x53 5 0 Node 3 x34 2x03 2 x13 2 x23 50
Node 4 x46  2x14 50 Node 4 2x04 2 x14 2 x24 2 x34 51
Node 5 x52 1 x53 1 x56 1 x57 2x252 x35 2 x65 5 0 xij $ 0   for all i and j
Node 6 x65 1 x67 2x46 2 x56  50 Optimal Solution: x02 5 1, x23 5 1, and x34 5 1
Node 7 1x57 1 x67  51 Shortest Route: 0–2–3–4
xij $ 0 for all i and j Total Cost 5 $2500
Optimal Solution: x12 5 1, x25 5 1, x56 5 1, and x67 5 1
Shortest Route: 1–2–5–6–7 29. The capacitated transshipment problem to solve is given:
Length 5 17 Max  x61
s.t.
24. The linear program has 13 variables for the arcs and 6 con- x12 1 x13 1 x14 2 x61                   5 0
straints for the nodes. Use the same 6 constraints for the x24 1 x25 2 x12 2 x42                   5 0
Gorman shortest route problem, as shown in the text. The x34 1 x36 2 x13 2 x43                   5 0
objective function changes to travel time as follows: x42 1 x43 1 x45 1 x46 2 x14 2 x24 2 x34 2 x54 5 0
Min 40x12 1 36x13 1 6x23 1 6x32 1 12x24 1 12x42 1 25x26 1 x54 1 x56 2 x25 2 x45 50
x61 2 x36 1 x46 2 x56 50
15x35 1 15x53 1 8x45 1 8x54 1 11x461 23x56
x12 # 2 x13 # 6 x14 # 3
Optimal Solution: x12 5 1, x24 5 1, and x46 5 1 x24 # 1 x25 # 4
Shortest Route: 1–2–4–6 x34 # 3 x36 # 2
Total Time 5 63 minutes x42 # 1 x43 # 3 x45 # 1 x46 # 3
26. Origin—Node 1 x54 # 1 x56 # 6
  xij $ 0 for all i, j
Transshipment—Nodes 2–5 and node 7
Destination—Node 6 3
2 5
The linear program will have 18 variables for the arcs
1 4
and 7 constraints for the nodes. 2 1
Let 3 3 Maximum Flow
1 4 6 9000 Vehicles
per Hour
1 if the arc from node i to node j is on the shortest route
xij 5 50 otherwise 4 2 2

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 A-16 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

The system cannot accommodate a flow of 10,000 vehicles second two characters designate the “to node” of the arc.
per hour. For instance, R1D1 is the amount of regular time produc-
tion available to satisfy demand in month 1; O1D1 is the
30.
amount of overtime production in month 1 available to
4 satisfy demand in month 1; D1D2 is the amount of inven-
2 5
tory carried over from month 1 to month 2; and so on.
2 6
3 1

3 3 Min 50R1D1 1 80O1D1 1 20D1D2 1 50R2D2 1 80O2D2

1 4 6 11,000 1 20D2D3 1 60R3D3 1 100O3D3
5 3 2 S.T.
3 (1) R1D1 # 275
(2) O1D1 # 100
(3) R2D2 # 200
32. a. 10,000 gallons per hour or 10 hours (4) O2D2 # 50
b. Flow reduced to 9000 gallons per hour; 11.1 hours. (5) R3D3 # 100
(6) O3D3 # 50
34. Maximal Flow 5 23 gallons/minute. Five gallons will flow (7) R1D1 1 O1D1 2 D1D2 5 150
(8) R2D2 1 O2D2 1 D1D2 2 D2D3 5 250
from node 3 to node 5. (9) R3D3 1 O3D3 1 D2D3 5 300

36. a. Let R1, R2, R3 represent regular time production in

months 1, 2, 3 c. Optimal Solution:
O1, O2, O3  represent overtime production in
months 1, 2, 3 Variable Value
D1, D2, D3 represent demand in months 1, 2, 3 ------------------- -----------------
R1D1 275.000
Using these nine nodes, a network model is shown: O1D1 25.000
D1D2 150.000
R2D2 200.000
275 R1 O2D2 50.000
D2D3 150.000
R3D3 100.000
O3D3 50.000
D1 150

Value 5 $46,750
100 O1
Note: Slack variable for constraint 2 5 75
d.
The values of the slack variables for constraints 1 through
6 represent unused capacity. The only nonzero slack vari-
able is for constraint 2; its value is 75. Thus, there are 75
units of unused overtime capacity in month 1.
200 R2

Chapter 7
D2 250
2. a. x2
6 Optimal solution to
50 O2 LP Relaxation (1.43, 4.29)
5

4 5x
1 +8
x2
=4
3 1.4
100 R3 7

D3 300 1

0 x1
0 1 2 3 4 5 6 7
50 O3

b. The optimal solution to the LP Relaxation is given by

x1 5 1.43, x2 5 4.29, with an objective function value
b. Use the following notation to define the variables: The of 41.47. Rounding down gives the feasible integer
first two characters designate the “from node” and the ­solution x1 5 1, x2 5 4; its value is 37.

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-17

c.  x2 c. x1 1 x4 5 1
d. x4 # x1
x4 # x3
7
e. x4 # x1
6 Optimal integer x4 # x3
solution (0, 5)
5 x4 $ x1 1 x3 2 1
4 8. a. x3 5 1, x4 5 1, x6 5 1; Value 5 17,500
3 b. Add x1 1 x2 # 1
5x
1 +8 c. Add x3 2 x4 5 0
2 x2
=4
0 10. b. Choose locations B and E.
1
12. a. 
Let  y[ j] 5 1 if carrier j is selected, 0 if not
0 x1
0 1 2 3 4 5 6 7 8 9 10 j 5 1, 2, …, 7
x[i, j] 5 1 if city i is assigned to carrier j,
The optimal solution is given by x1 5 0, x2 5 5; its value is 0 if not i 5 1, 2, …, 20  j 5 1, 2, …, 7
40. It is not the same solution as found by rounding down; it Minimize the cost of city-carrier assignments (note: for
provides a 3-unit increase in the value of the ­objective function. brevity, zeros are not shown).
4. a. x1 5 3.67, x2 5 0; Value 5 36.7
Rounded: x1 5 3, x2 5 0; Value 5 30 Minimize
Lower bound 5 30; Upper bound 5 36.7 65640x[1,5] 1 49980x[1,6] 1 53700x[1,7] 1 14530x[2,2] 1
b. x1 5 3, x2 5 2; Value 5 36 26020x[2,5] 1 17670x[2,6] 1 30680x[3,2] 1 45660x[3,5] 1
c. Alternative optimal solutions: x1 5 0, x2 5 5 37140x[3,6] 1 37400x[3,7] 1 67480x[4,2] 1 104680x[4,5] 1
x1 5 2, x2 5 4 69520x[4,6] 1 15230x[5,2] 1 22390x[5,5] 1 17710x[5,6] 1
5. a. The feasible mixed-integer solutions are indicated by 18550x[5,7] 1 15210x[6,2] 1 15710x[6,5] 1 15450x[6,7] 1
the boldface vertical lines in the graph. 25200x[7,2] 1 23064x[7,4] 1 23256x[7,5] 1 24600x[7,7] 1
45000x[8,2] 1 35800x[8,4] 1 35400x[8,5] 1 43475x[8,7] 1
x2
5 28350x[9,2] 1 30825x[9,4] 1 29525x[9,5] 1 28750x[9,7] 1
22176x[10,2] 1 20130x[10,4] 1 22077x[10,5] 1 22374x[10,7] 1
4 7964x[11,1] 1 7953x[11,3] 1 6897x[11,4] 1 7227x[11,5] 1
Optimal solution to
LP Relaxation (3.14, 2.60) 7766x[11,7] 1 22214x[12,1] 1 22214x[12,3] 1 20909x[12,4] 1
3
19778x[12,5] 1 21257x[12,7] 1 8892x[13,1] 1 8940x[13,3] 1
2 2x1 + 3x2 = 14.08 8184x[13,5] 1 8796x[13,7] 1 19560x[14,1] 1 19200x[14,2] 1
19872x[14,3] 1 17880x[14,5] 1 19968x[14,7] 1 9040x[15,1] 1
1
8800x[15,3] 1 8910x[15,5] 1 9140x[15,7] 1 9580x[16,1] 1
0 x1 9330x[16,3] 1 8910x[16,5] 1 9140x[16,7] 1 21275x[17,1] 1
0 1 2 3 4 5 6 7 8
21367x[17,3] 1 21551x[17,5] 1 22632x[17,7] 1 22300x[18,1] 1
b. The optimal solution to the LP Relaxation is given by 21725x[18,3] 1 20550x[18,4] 1 20725x[18,5] 1 21600x[18,7] 1
x1 5 3.14, x2 5 2.60; its value is 14.08. 11124x[19,1] 1 11628x[19,3] 1 11604x[19,5] 1 12096x[19,7] 1
Rounding down the value of x1 to find a feasible mixed- 9630x[20,1] 1 9380x[20,3] 1 9550x[20,5] 1 9950x[20,7]
integer solution yields x1 5 3, x2 5 2.60 with a value
subject to
of 13.8; this solution is clearly not optimal; with x1 5 3,
x2 can be made larger without violating the constraints. x[1,1] 1 x[1,2] 1 x[1,3] 1 x[1,4] 1 x[1,5] 1 x[1,6] 1 x[1,7] 5 1
c. The optimal solution to the MILP is given by x1 5 3, x2 x[2,1] 1 x[2,2] 1 x[2,3] 1 x[2,4] 1 x[2,5] 1 x[2,6] 1 x[2,7] 5 1
5 2.67; its value is 14, as shown in the following fi
­ gure: x[3,1] 1 x[3,2] 1 x[3,3] 1 x[3,4] 1 x[3,5] 1 x[3,6] 1 x[3,7] 5 1
x[4,1] 1 x[4,2] 1 x[4,3] 1 x[4,4] 1 x[4,5] 1 x[4,6] 1 x[4,7] 5 1
x2
5 x[5,1] 1 x[5,2] 1 x[5,3] 1 x[5,4] 1 x[5,5] 1 x[5,6] 1 x[5,7] 5 1
x[6,1] 1 x[6,2] 1 x[6,3] 1 x[6,4] 1 x[6,5] 1 x[6,6] 1 x[6,7] 5 1
4 x[7,1] 1 x[7,2] 1 x[7,3] 1 x[7,4] 1 x[7,5] 1 x[7,6] 1 x[7,7] 5 1
Optimal mixed-integer
solution (3, 2.67)
x[8,1] 1 x[8,2] 1 x[8,3] 1 x[8,4] 1 x[8,5] 1 x[8,6] 1 x[8,7] 5 1
3
x[9,1] 1 x[9,2] 1 x[9,3] 1 x[9,4] 1 x[9,5] 1 x[9,6] 1 x[9,7] 5 1
2x1 + 3x2 = 14
2 x[10,1] 1 x[10,2] 1 x[10,3] 1 x[10,4] 1 x[10,5] 1 x[10,6] 1 x[10,7] 5 1
x[11,1] 1 x[11,2] 1 x[11,3] 1 x[11,4] 1 x[11,5] 1 x[11,6] 1 x[11,7] 5 1
1 x[12,1] 1 x[12,2] 1 x[12,3] 1 x[12,4] 1 x[12,5] 1 x[12,6] 1 x[12,7] 5 1
0 x1
x[13,1] 1 x[13,2] 1 x[13,3] 1 x[13,4] 1 x[13,5] 1 x[13,6] 1 x[13,7] 5 1
0 1 2 3 4 5 6 7 8 x[14,1] 1 x[14,2] 1 x[14,3] 1 x[14,4] 1 x[14,5] 1 x[14,6] 1 x[14,7] 5 1
x[15,1] 1 x[15,2] 1 x[15,3] 1 x[15,4] 1 x[15,5] 1 x[15,6] 1 x[15,7] 5 1
6. b. x1 5 1.96, x2 5 5.48; Value 5 7.44
x[16,1] 1 x[16,2] 1 x[16,3] 1 x[16,4] 1 x[16,5] 1 x[16,6] 1 x[16,7] 5 1
Rounded: x1 5 1.96, x2 5 5; Value 5 6.96
x[17,1] 1 x[17,2] 1 x[17,3] 1 x[17,4] 1 x[17,5] 1 x[17,6] 1 x[17,7] 5 1
Lower bound 5 6.96; Upper bound 5 7.44
x[18,1] 1 x[18,2] 1 x[18,3] 1 x[18,4] 1 x[18,5] 1 x[18,6] 1 x[18,7] 5 1
c. x1 5 1.29, x2 5 6; Value 5 7.29
x[19,1] 1 x[19,2] 1 x[19,3] 1 x[19,4] 1 x[19,5] 1 x[19,6] 1 x[19,7] 5 1
7. a. x1 1 x3 1 x5 1 x6 5 2 x[20,1] 1 x[20,2] 1 x[20,3] 1 x[20,4] 1 x[20,5] 1 x[20,6] 1 x[20,7] 5 1
b. x3 2 x5 5 0

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 A-18 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

x[1,1] 1 x[2,1] 1 x[3,1] 1 x[4,1] 1 x[5,1] 1 x[6,1] 1 x[7,1]1 x[8,1] 1 Given the incremental drop in cost, three seems like the
x[9,1] 1 x[10,1] 1 x[11,1] 1 x[12,1] 1 x[13,1] 1 x[14,1] 1 x[15,1] 1 correct number of carriers (the curve flattens considerably
x[16,1] 1 x[17,1] 1 x[18,1] 1 x[19,1] 1 x[20,1] <5 10y[1] after three carriers).
x[1,2] 1 x[2,2] 1 x[3,2] 1 x[4,2] 1 x[5,2] 1 x[6,2] 1 x[7,2] 1 x[8,2] 1 13. a. Add the following multiple-choice constraint to the
x[9,2] 1 x[10,2] 1 x[11,2] 1 x[12,2] 1 x[13,2] 1 x[14,2] 1 x[15,2] 1 problem:
x[16,2] 1 x[17,2] 1 x[18,2] 1 x[19,2] 1 x[20,2] <5 10y[2] y1 1 y2 5 1
x[1,3] 1 x[2,3] 1 x[3,3] 1 x[4,3] 1 x[5,3] 1 x[6,3] 1 x[7,3] 1 x[8,3] 1 New optimal solution: y1 5 1, y3 5 1, x12 5 10, x31 5 30,
x[9,3] 1 x[10,3] 1 x[11,3] 1 x[12,3] 1 x[13,3] 1 x[14,3] 1 x[15,3] 1 x52 5 10, x53 5 20
x[16,3] 1 x[17,3] 1 x[18,3] 1 x[19,3] 1 x[20,3] <5 10y[3] Value 5 940
b. Because one plant is already located in St. Louis, it is only
x[1,4] 1 x[2,4] 1 x[3,4] 1 x[4,4] 1 x[5,4] 1 x[6,4] 1 x[7,4]1 x[8,4] 1 necessary to add the following constraint to the model:
x[9,4] 1 x[10,4] 1 x[11,4] 1 x[12,4] 1 x[13,4] 1 x[14,4] 1 x[15,4] 1 y3 5 y4 # 1
x[16,4] 1 x[17,4] 1 x[18,4] 1 x[19,4] 1 x[20,4] <5 7y[4] New optimal solution: y4 5 1, x42 5 20, x43 5 20,
x[1,5] 1 x[2,5] 1 x[3,5] 1 x[4,5] 1 x[5,5] 1 x[6,5] 1 x[7,5] 1 x[8,5] 1
x51 5 30
x[9,5] 1 x[10,5] 1 x[11,5] 1 x[12,5] 1 x[13,5] 1 x[14,5] 1 x[15,5] 1
Value 5 860
x[16,5] 1 x[17,5] 1 x[18,5] 1 x[19,5] 1 x[20,5] <5 20y[5] 14. b. Modernize plants 1 and 3 or plants 4 and 5.
x[1,6] 1 x[2,6] 1 x[3,6] 1 x[4,6] 1 x[5,6] 1 x[6,6] 1 x[7,6]1 x[8,6] d. Modernize plants 1 and 3.
1 x[9,6] 1 x[10,6] 1 x[11,6] 1 x[12,6] 1 x[13,6] 1 x[14,6] 1 x[15,6]
16. b. Use all part-time employees.
1 x[16,6] 1 x[17,6] 1 x[18,6] 1 x[19,6] 1 x[20,6] <5 5y[6]
 Bring on as follows: 9:00 a.m.–6, 11:00 a.m.–2,
x[1,7] 1 x[2,7] 1 x[3,7] 1 x[4,7] 1 x[5,7] 1 x[6,7] 1 x[7,7] 1 x[8,7] 1 12:00 noon–6, 1:00 p.m.–1, 3:00 p.m.–6
x[9,7] 1 x[10,7] 1 x[11,7] 1 x[12,7] 1 x[13,7] 1 x[14,7] 1 x[15,7] 1 Cost 5 $672
x[16,7] 1 x[17,7] 1 x[18,7] 1 x[19,7] 1 x[20,7] <5 18y[7] c. Same as in part (b)
d. New solution is to bring on 1 full-time employee at
x[1,1] 1 x[2,1] 1 x[3,1] 1 x[4,1] 1 x[5,1] 1 x[6,1] 1 x[7,1] 1 x[8,1] 1
9:00 a.m., 4 more at 11:00 a.m., and part-time employ-
x[9,1] 1 x[10,1] 5 0
ees as follows:
x[1,2] 1 x[11,2] 1 x[12,2] 1 x[13,2] 1 x[15,2] 1 x[16,2] 1 x[17,2] 1 9:00 a.m.–5, 12:00 noon–5, and 3:00 p.m.–2
x[18,2] 1 x[19,2] 1 x[20,2] 5 0
18. a. 52, 49, 36, 83, 39, 70, 79, 59
x[1,3] 1 x[2,3] 1 x[3,3] 1 x[4,3] 1 x[5,3] 1 x[6,3] 1 x[7,3] 1 x[8,3] 1 b. 
Thick crust, cheese blend, chunky sauce, medium
x[9,3] 1 x[10,3] 5 0 sausage: Six of eight consumers will prefer this pizza
(75%).
x[1,4] 1 x[2,4] 1 x[3,4] 1 x[4,4] 1 x[5,4] 1 x[6,4] 1 x[13,4] 1
x[14,4] 1 x[15,4] 1 x[16,4] 1 x[17,4] 1 x[19,4] 1 x[20,4] 5 0 20. a. New objective function: Min 25x1 1 40x2 1 40x3 1
40x4 1 25x5
x[6,6] 1 x[7,6] 1 x[8,6] 1 x[9,6] 1 x[10,6] 1 x[11,6] 1 x[12,6] 1
b. x4 5 x5 5 1; modernize the Ohio and California
x[13,6] 1 x[14,6] 1 x[15,6] 1 x[16,6] 1 x[17,6] 1 x[18,6] 1 x[19,6] 1
plants.
x[20,6] 5 0
c. Add the constraint x2 1 x3 5 1.
x[2,7] 1 x[4,7] 5 0 d. x1 5 x3 5 1
y[1] 1 y[2] 1 y[3] 1 y[4] 1 y[5] 1 y[6] 1 y[7] <5 3 22. x1 1 x2 1 x3 5 3y1 1 5y2 1 7y3
Solution: Total Cost = $436,512 y1 1 y2 1 y3 5 1

Carrier 2: assigned cities 2, 3, 4, 5, 6, and 9

Carrier 5: assigned cities 7, 8, and 10–20
Carrier 6: assigned city 1
b.

# Carriers Cost Carriers Chosen

1 $524,677 5 Shipping Cost
2 $452,172 2,5 $550,000
$530,000
3 $436,512 2,5,6
$510,000
4 $433,868 2,4,5,6 $490,000
5 $433,112 1,2,4,5,6 $470,000
6 $432,832 1,2,3,4,5,6 $450,000
7 $432,832 1,2,3,4,5,6,7 $430,000
$410,000
$390,000
$370,000
$350,000
0 1 2 3 4 5 6 7 8
# Carriers

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-19

24. Let xi 5 the amount (dollars) to invest in alternative i, S 5 22R2 2 10M2 2 8RM 1 18R 1 34M
i 5 1, 2, …, 10   5 22(22) 2 10(12) 2 8(2)(1) 1 18(2) 1 34(1)
yi 5 1 if Dave invests in alternative i, 0 if not, i 5 1, 2…, 10 5 18
Max .067x1 1 .0765x2 1 .0755x3 1 .0745x4 1 .075x5 1 Sales 5 $18,000
.0645x6 1 .0705x7 1 .069x8 1 .052x9 1 .059x10 b. Max  –2R2 2 10M2 2 8RM 1 18R 1 34M
subject to s.t.
x1 1 x2 1 x3 1 x4 1 x5 1 x6 1 x7 1 x8 1 x9 1 x10 5 R1 M#3
100,000  c. The optimal solution is Radio 5 $2500 and Direct mail 5
 Invest $100,000 $500
xi # 25,000yi  i 5 1, 2,…, 10 Total sales 5 $37,000
Invest no more than $25,000 in any one fund
xi $ 10,000yi  i 5 1, 2, …, 10   6. Substituting the given data into the model formulation
If invest in a fund, invest at least $10,000 in a fund gives us

3
y1 1 y2 1 y3 1 y4 # 2 150 3 2000 Q1
Min 100 3 2000 1 1 0.20 3 100 3 1
No more than 2 pure growth funds Q1 2
y9 1 y10 $ 1 135 3 2000 Q2
50 3 2000 1 1 0.20 3 50 3 1 80 3
At least 1 must be a pure bond fund Q2 2
x9 1 x10 $ x1 1 x2 1 x3 1 x4
4
125 3 1000 Q3
Amount in pure bonds must be at least that invested in pure 1000 1 1 0.20 3 80 3
Q3 2
growth funds s.t.
xi $ 0 i 5 1, 2, …, 10 [50 3 Q1 1 25 3 Q2 1 40 3 Q3] # 5000
The optimal solution follows: x2 5 x10 5 $12,500, x5 5 x7  Q1,Q2,Q3 $ 0
5 x8 5 $25,000; Total return 5 $7,056.25
Assumptions: (1) the expected annual returns are valid Q1 5 44.481, Q2 5 59.677, Q3 5 32.101 with a total

for the future. (2) All $100,000 will be invested. (3) These cost of $26,163.
are the only alternatives for this $100,000.   8. b. L 5 2244.281 and C 5 2618.328; Optimal solution 5
Since these are annual returns, we would expect to run $374,046.9 (If Excel Solver is used for this problem,
this no more often than once per year. we recommend starting with an initial solution that has
L . 0 and C . 0.)
Chapter 8 10. a. Min X2 2 X 1 5 1 Y2 1 2Y 1 3
s.t.
2. a. 
X 5 4.32 and Y 5 0.92, for an optimal solution value of
X 1 Y 5 8
4.84.
X, Y $ 0
b. 
The dual value on the constraint X 1 4Y # 8 is 20.88
b. X 5 4.75 and Y 5 3.25; Optimal objective value 5
so we expect the optimal objective function value to de-
42.875
crease by 0.88 if we increase the right-hand-side from 8 to 9.
c. 
If we resolve the problem with a new right-hand-side 11. The LINGO formulation:
of 9, the new optimal objective function value is 4.0 so Min 5 (1/5)*((R1 2 RBAR)^2 1 (R2 2 RBAR)^2 1
the actual decrease is only .84 rather than 0.88. (R3 2 RBAR)^2 1 (R4 2 RBAR)^2 1 (R5 2 RBAR)^2;
.1006*FS 1 .1764*IB 1 .3241*LG 1 .3236*LV 1 .3344*SG 1 .2456*SV 5 R1;
4. a. q1 5 2150 .1312*FS 1 .0325*IB 1 .1871*LG 1 .2061*LV 1 .1940*SG 1 .2532*SV 5 R2;
q2 5 100 .1347*FS 1 .0751*IB 1 .3328*LG 1 .1293*LV 1 .0385*SG 1 .0670*SV 5 R3;
Gross profit 5 $1,235,000 .4542*FS 1 .0133*IB 1 .4146*LG 1 .0706*LV 1 .5868*SG 1 .0543*SV 5 R4;
b. G 5 21.5p21 2 0.5p22 1 p1p2 1 2000p1 1 3450p2 2 2.2193*FS 1 .0736*IB 1 .2326*LG 1 .0537*LV 1 .0902*SG 1 .1731*SV 5 R5;
11,465,000        FS 1      IB 1      LG 1        LV 1      SG 1       SV 5 50000;
c. p1 5 $2725 and p2 5 $6175; q1 5 1185 and q2 5 230;
(1/5)*(R1 1 R2 1 R3 1 R4 1 R5) 5 RBAR;
G 5 $1,911,875
RBAR . RMIN;
d. Max p1q1 1 p2q2 2 c1 2 c2 RMIN 5 5000;
s.t. @FREE(R1);
c1 5 10,000 1 1500q1 @FREE(R2);
c2 5 30,000 1 4000q2 @FREE(R3);
q1 5 950 2 1.5p1 1 0.7p2 @FREE(R4);
@FREE(R5);
q2 5 2500 1 0.3p1 2 0.5p2
  5. a. 
If $1000 is spent on radio and $1000 is spent on direct mail,
simply substitute those values into the sales ­function:

06529_appE_web.indd 19 10/6/17 9:35 AM

 A-20 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

Optimal solution: ! MUST BE FULLY INVESTED IN THE MUTUAL FUNDS;

AAPL 1 AMD 1 ORCL 5 1;
Local optimal solution found. ! DEFINE THE MEAN RETURN;
  Objective value: 6784038 (1/9) * (R1 1 R2 1 R3 1 R4 1 R5 1 R6 1 R7 1 R8 1 R9) 5 RBAR;
  Total solver iterations: 19 ! THE MEAN RETURN MUST BE AT LEAST 10 PERCENT;
  Model Title: MARKOWITZ RBAR > 0.12;
Variable Value Reduced Cost ! SCENARIO RETURNS MAY BE NEGATIVE;
R1 9478.492 0.000000 @FREE(R1);
RBAR 5000.000 0.000000 @FREE(R2);
R2 5756.023 0.000000 @FREE(R3);
R3 2821.951 0.000000 @FREE(R4);
R4 4864.037 0.000000 @FREE(R5);
@FREE(R6);
R5 2079.496 0.000000
@FREE(R7);
FS 7920.372 0.000000 @FREE(R8);
IB 26273.98 0.000000 @FREE(R9);
LG 2103.251 0.000000
LV 0.000000 208.2068 Optimal solution:
SG 0.000000 78.04764
SV 13702.40 0.000000 Local optimal solution found.
RMIN 5000.000 0.000000   Objective value: 0.4120213
  Total solver iterations: 8
(Excel Solver will produce the same optimal solution.)   
Model Title: MATCHING S&P INFO TECH
12. Optimal value of a 5 0.1743882 ­RETURNS
Sum of squared errors 5 98.56 Variable Value Reduced Cost
R1 20.5266475E-01 0.000000
14. Optimal solution: R2 0.8458175 0.000000
R3 0.9716207 0.000000
Local optimal solution found.
R4 20.1370104 0.000000
  Objective value: 0.1990478
R5 20.3362695 0.000000
  Total solver iterations: 12
R6 20.4175977 0.000000
  Model Title: MARKOWITZ
R7 0.2353628 0.000000
Variable Value Reduced Cost R8 0.3431437 0.000000
R1 20.1457056 0.000000 R9 0.1328016 0.000000
RBAR 0.1518649 0.000000 AAPL 0.2832558 0.000000
R2 0.7316081 0.000000 AMD 0.6577707E-02 0.000000
R3 0.8905417 0.000000 ORCL 0.7101665 0.000000
R4 20.6823468E-02 0.000000
R5 20.3873745 0.000000 (Excel Solver produces the same return.)
R6 20.5221017 0.000000
R7 0.3499810 0.000000 16. Optimal solution:
R8 0.2290317 0.000000
R9 0.2276271 0.000000   Local optimal solution found.
AAPL 0.1817734 0.000000     Objective value: 7.503540
AMD 0.1687534 0.000000     Total solver iterations: 18
ORCL 0.6494732 0.000000   Model Title: MARKOWITZ WITH SEMIVARIANCE
Variable Value Reduced Cost
15. D1N 0.000000 0.000000
MODEL TITLE: MARKOWITZ; D2N 0.8595142 0.000000
! MINIMIZE VARIANCE OF THE PORTFOLIO; D3N 3.412762 0.000000
MIN 5 (1/9) * ((R1 2 RBAR)^2 1 (R2 2 RBAR)^2 1 (R3 2 RBAR)^2 1 D4N 2.343876 0.000000
(R4 2 RBAR)^2 1 (R5 2 RBAR)^2 1 (R6 2 RBAR)^2 1 (R7 2 RBAR)^2 1 D5N 4.431505 0.000000
(R8 2 RBAR)^2 1 (R9 2 RBAR)^2); FS 0.000000 6.491646
! SCENARIO 1 RETURN; IB 0.6908001 0.000000
0.0962*AAPL 2 0.5537*AMD 2 0.1074*ORCL 5 R1; LG 0.6408726E-01 0.000000
! SCENARIO 2 RETURN; LV 0.000000 14.14185
0.8104*AAPL 1 0.1272*AMD 1 0.8666*ORCL 5 R2; SG 0.8613837E-01 0.000000
! SCENARIO 3 RETURN; SV 0.1589743 0.000000
0.9236*AAPL 1 0.4506*AMD 1 0.9956*ORCL 5 R3; R1 21.04766 0.000000
! SCENARIO 4 RETURN; R2 9.140486 0.000000
–0.8753*AAPL 1 0.3124*AMD 1 0.1533*ORCL 5 R4; R3 6.587238 0.000000
! SCENARIO 5 RETURN; R4 7.656124 0.000000
0.1340*AAPL 2 0.4270*AMD 2 0.5230*ORCL 5 R5;
R5 5.568495 0.000000
! SCENARIO 6 RETURN; RBAR 10.00000 0.000000
–0.5432*AAPL 2 1.1194*AMD 2 0.3610*ORCL 5 R6;
RMIN 10.00000 0.000000
! SCENARIO 7 RETURN; D1P 11.04766 0.000000
0.4517*AAPL 1 1.0424*AMD 1 0.1416*ORCL 5 R7;
D2P 0.000000 0.3438057
! SCENARIO 8 RETURN;
D3P 0.000000 1.365105
1.2263*AAPL 1 0.0613*AMD 2 0.0065*ORCL 5 R8;
D4P 0.000000 0.9375505
! SCENARIO 9 RETURN;
D5P 0.000000 1.772602
0.6749*AAPL 1 0.9729*AMD 2 0.0912*ORCL 5 R9;

06529_appE_web.indd 20 10/6/17 9:35 AM

 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-21

The solution calls for investing 69.1% of the portfolio in the c.

intermediate-term bond fund, 6.4% in the large-cap growth
fund, 8.6% in the small-cap growth fund, and 15.9% in the Earliest Latest Earliest Latest Critical
Activity Start Start Finish Finish Slack Activity
small-cap value fund.
A  0  2  6  8 2
(Excel Solver may have trouble with this problem, depend- B  0  0  8  8 0 Yes
ing upon the starting solution that is used; a starting solution C   8   8 20 20 0 Yes
D 20 22 24 26 2
of each fund at 0.167 will produce the optimal value.) E 20 20 26 26 0 Yes
F 26 26 41 41 0 Yes
18. G 26 29 38 41 3
H 41 41 49 49 0 Yes
Max Variance Exp Return
20 Infeasible d. Yes, time 5 49 weeks
25 9.645 10. a.
30 10.449 Most Expected
35 11.172 Activity Optimistic Probable Pessimistic Times Variance
A 4 5.0  6 5.00 0.11
40 11.835 B 8 9.0 10 9.00 0.11
45 12.450 C 7 7.5 11 8.00 0.44
D 7 9.0 10 8.83 0.25
50 13.022 E 6 7.0  9 7.17 0.25
F 5 6.0  7 6.00 0.11
55 13.526
60 13.976 b. Critical activities: B–D–F
Expected project completion time: 23.83
20. Call option price is approximately C 5 $1.524709. Variance of projection completion time: 0.47
22. 
Optimal solution: Produce 10 chairs at Aynor, cost 5 $1350; 12. a. A–D–H–I
30 chairs at Spartanburg, cost 5 $3150; Total cost 5 $4500 b. 25.66 days
c. 0.2578
Chapter 9 13. 
Activity Expected Time Variance
  2. A E G
A  5 0.11
Start B D F J Finish B   3 0.03
C   7 0.11
C H
D   6 0.44
I E   7 0.44
F   3 0.11
G 10 0.44
  3.  D
H   8 1.78
A G
C E
Start Finish From Problem 6, A–D–F–H is the critical path, so
B F E(T ) 5 5 1 6 1 3 1 8 5 22.
  4. a. A–D–G s2 5 0.11 1 0.44 1 0.11 1 1.78 5 2.44
b. No; Time 5 15 months Time 2 E sT d Time 2 22
z5 5
  6. a. Critical path: A–D–F–H s Ï2.44
b. 22 weeks
a. Time 5 21: z 5 20.64
c. No, it is a critical activity.
Cumulative Probability 5 0.2611
d. Yes, 2 weeks
P(21 weeks) 5 0.2611
e. Schedule for activity E:
b. Time 5 22: z50
Cumulative Probability 5 0.5000
Earliest start   3 P(22 weeks) 5 0.5000
Latest start   4 c. Time 5 25: z 5 11.92
Earliest finish 10 Cumulative Probability 5 0.9726
Latest finish 11
P(25 weeks) 5 0.9726

 8. a. 14. a. A–C–E–G–H

b. 52 weeks (1 year)
A D F
c. 0.0174
Start C H Finish d. 0.0934
e. 10 month doubtful
B E G
13 month very likely
b. B–C–E–F–H Estimate 12 months (1 year)

06529_appE_web.indd 21 10/6/17 9:35 AM

 A-22 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

16. a. Min  400YA 1 667YB 1 500YC 1 300YD 1 350YE 1 450YF 1

360YG 1 1000YH
A s.t.
xA 1 yA $ 3 xE 1 yE 2 xD $ 4 xH 1 yH 2 xG $   3
xB 1 yB $ 6 xF 1 yF 2 xE $ 3 xH # 16
Start C Finish
xC 1 yC 2 xA $ 2 xG 1 yG 2 xC $ 9
xD 1 yD 2 xC $ 5 xG 1 yG 2 xB $ 9
B xD 1 yD 2 xB $ 5 xH 1 yH 2 xF $ 3
Maximum Crashing:
b. 0.90 yA # 2
c. 0.828 yB # 3
d. The probability estimate from (c) based on both paths is yC # 1
more accurate. yD # 2
yE # 1
18. a. yF # 2
yG # 5
C D G H yH # 1
All x, y $ 0
Start A B E I Finish
b. Crash B(1 week), D(2 weeks), E(1 week), F(1 week),
F
G(1 week)
Total cost 5 $2427
c. All activities are critical
b.
Activity Expected Time Variance 21. a.
A 1.17 0.03
B 6.00 0.44 Earliest Latest Earliest Latest Critical
C 4.00 0.44 Activity Start Start Finish Finish Slack Activity
D 2.00 0.11 A  0  0  3  3 0 Yes
E 3.00 0.11 B  0  1  2  3 1
F 2.00 0.11 C  3  3  8  8 0 Yes
G 2.00 0.11 D  2  3  7  8 1
H 2.00 0.11 E  8  8 14 14 0 Yes
I 1.00 0.00 F  8 10 10 12 2
G 10 12 12 14 2

Earliest Latest Earliest Latest Critical Critical path: A–C–E

Activity Start Start Finish Finish Slack Activity Project completion time 5 14 days
A  0.00  0.00  1.17  1.17  0.00 Yes b. Total cost 5 $8400
B  1.17  1.17  7.17  7.17  0.00 Yes
C  1.17  3.17  5.17  7.17  2.00 22. a.
D  7.17  7.17  9.17  9.17  0.00 Yes
Crash
E  7.17 10.17 10.17 13.17  3.00
ctivity
A Max Crash Days Cost/Day
F  1.17 11.17  3.17 13.17 10.00
G  9.17  9.17 11.17 11.17  0.00 Yes A 1 600
H 11.17 11.17 13.17 13.17   0.00 Yes B 1 700
I 13.17 13.17 14.17 14.17   0.00 Yes C 2 400
D 2 400
E 2 500
c. A–B–D–G–H–I, 14.17 weeks
F 1 400
d. 0.0951, yes G 1 500
20. a.
Maximum Crash Min 600YA 1 700YB 1 400YC 1 400YD 1 500YE 1 400YF 1 400YG
Activity Crash Cost/Week
s.t.
A 2  400 XA 1 YA $  3
B 3  667 XB 1 YB $  2
C 1  500 2XA 1 XC 1 YC $  5
D 2  300 2XB 1 XD 1 YD $  5
E 1  350 2XC 1 XE 1 YE $  6
F 2  450
2XD 1 XE 1 YE $  6
G 5  360
H 1 1000 2XC 1 XF 1 YF $  2
2XD 1 XF 1 YF $  2

06529_appE_web.indd 22 10/6/17 9:35 AM

 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-23

XF 1 XG 1 YG $  2
2  2. $164.32 for each; Total cost 5 $328.64
2XE 1 XFIN $  0
2XG 1 XFIN $  0
 4. a. 1095.45
XFIN # 12
b. 240
YA #  1
c. 22.82 days
YB #  1
d. $273.86 for each; Total cost 5 $547.72
YC #  2  6. a. Q*pens 5 101 days
YD #  2 Q*pencils 5 120 days
YE #  2 TC*pens 5 $94.87
YF #  1
TC*pencils 5 $80
YG #  1
Total cost 5 $174.87
All X, Y $ 0
b. $22.88
b. Solution of the linear programming model in part (a)
shows  8. Q* 5 11.73; use 12 as the class size
5 classes per year
Activity Crash Crashing Cost Total cost 5 $225,200
C 1 day $400 10. Q* 5 1414.21
E 1 day 500 T 5 28.28 days
Total  $900 Production run length 5 7.07 days
12. a. 1500
c. Total cost 5 $9300 b. 4 production runs; 3 month cycle time
24. a. c. Yes, savings 5 $12,510

Start A
B C

F Finish
Î
13. a. Q* 5 
2DCo
s1 2 DyPdCh

D E 5 Î 2s7200ds150d
s1 2 7200y25,000ds0.18ds14.50d
5 1078.12
b.
D 7200
b. Number of production runs 5  5 5 6.68
Q* 1078.12
Earliest Latest Earliest Latest
Activity Start Start Finish Finish Slack 250Q 250s1078.12d
c. 
T5 5 5 37.43 days
A  0  0 10 10 0 D 7200
B 10 10 18 18 0 Q
C 18 18 28 28 0 d. Production run length 5 
D 10 11 17 18 1 Py250
E 17 18 27 28 1 1078.12
F 28 28 31 31 0 5  5 10.78 days
25,000y250

c. A–B–C–F, 31 weeks
d. Crash A(2 weeks), B(2 weeks), C(1 week), D(1 week), 1 DP2 Q
e. Maximum inventory  5  1 2
E(1 week)
5 11 2
25,000 2
7200
e. All activities are critical. s1078.12d
f. $112,500
5 767.62
Chapter 10 f. 
Holiday cost 5 
1
1a2
D
2
QCh

Î Î
2 P
2DCo 2s3600ds20d
1. a. Q* 5 
Ch
5
0.25s3d
5 438.18 5 
1
2112
7200
25,000 2
s1078.12ds0.18ds14.50d

3600 5 $1001.74
b. r 5 dm 5  s5d 5 72
250 D 7200
Ordering cost  5  Co 5 s150d 5 $1001.74
250Q* 250s438.18d Q 1078.12
c. 
T 5  5 5 30.43 days
D 3600 Total cost 5 $2003.48
1 D
d. TC 5  QCh 1 Co
2
1
Q
3600
g. 
r 5 dm 5  1250
D
2m 5 7200
250
s15d 5 432
5  s438.18ds0.25ds3d 1 s20d 5 $328.63
2 438.18 14. new production lot size 5 (0.9017)(5000) 5 4509

06529_appE_web.indd 23 10/6/17 9:35 AM

 A-24 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

15. a. 
Q* 5  Î Ch Cb1
2DCo Ch 1 Cb
2
b. P(Sell all) 5 P(D $ Q*) 5 1 2 0.60 5 0.40
26. a. $150

Î
b. $240 2 $150 5 $90
1 2
2s12,000ds25d 0.50 1 5
5  5 1148.91 c. 47
0.50 0.50 d. 0.625

b. S* 5 Q* 1C C1 C 2 5 1148.9110.500.501 52 5 104.45

h
h

b
28. a. 440
b. 0.60
c. Max inventory 5 Q* 2 S* 5 1044.46 c. 710
d. g 5 15
250Q* 250s1148.91d
d. T 5 5 5 23.94 days
D 12,000 29. a. r 5 dm 5 (200/250)15 5 12
sQ 2 Sd2 D 200
e. Holding  5  Ch 5 $237.38 b.  5  5 8 orders/year
2Q Q 25
D The limit of 1 stock-out per year means that
Ordering  5  Co 5 $261.12
Q P(Stock-out/cycle) 5 1/8 5 0.125.
S2
Backorder  5  Cb 5 $23.74
2Q  = 2.5
Total cost  5 $522.24
The total cost for the EOQ model in Problem 4 was
P(Stock-out) = 0.125
$547.72; allowing backorders reduces the total cost.
16. r 5 dm 2 S 5135.55; reorder point is smaller when back-
orders allowed
18. dm 5 64, dm 2 S 5 24.44 12 r
20. Q* 5 100; Total cost 5 $3601.50

Î
P(No Stock-out/cycle) 5 1 2 0.125 5 0.875
2s500ds40d For cumulative probability 0.875, z 5 1.15
21. Q1 5 5 141.42
0.20s10d r 2 12

Î Thus, z 5 5 1.15
2s500ds40d 2.5
Q2 5 5 143.59
0.20s9.7d r 5 12 1 1.15(2.5) 5 14.875 Use 15.
c. Safety stock 5 3 units
Because Q1 is over its limit of 99 units, Q1 cannot be opti-
Added cost 5 3($5) 5 $15/year
mal; use Q2 5 143.59 as the optimal order quantity.
1 D 30. a. Q* 5 56 boxes
Total cost  5  QCh 1 Co 1 DC b. r 5 475 cups
2 C
 5 139.28 1 139.28 1 4850.00 5 $5128.56 32. a. 31.62
22. Q* 5 300; Savings 5 $480 b. r 5 19.8; 0.2108
c. safety stock 5 5, safety stock cost 5 $15
24. a. 8352 magazines
b. 8828 magazines 33. a. 1/52 5 0.0192
b. P(No Stock-out) 5 1 2 0.0192 5 0.9808
25. a.  co 5 80 2 50 5 30 For cumulative probability 0.9808, z 5 2.07
 cu 5 125 2 80 5 45
M 2 60
cu 45 Thus, z 5 5 2.07
 P(D # Q*) 5  5 5 0.60 12
cu 1 co 45 1 30
M 5 µ 1 z s 5 60 1 2.07(12) 5 85
c. M 5 35 1 (0.9808)(85 2 35) 5 84
P(D # Q*) = 0.60 =8 34. a. 243
b. safety stock 5 93, annual cost 5 $54.87
c. 613
d. safety stock 5 163, annual cost 5 $96.17
e. Yes, periodic review only costs $41.30 more per year.
f. Yes, periodic review costs $4130 more per year.
20
36. a. 40
Q* b. variance 5 62.25; standard deviation 5 7.9
For the cumulative standard normal probability 0.60, c. 54
z 5 0.25. d. 36
Q* 5 20 1 0.25(8) 5 22

06529_appE_web.indd 24 10/6/17 9:35 AM

 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-25

Chapter 11 12. a. 0.25, 2.25, 3, 0.15 hours, 0.20 hours, 0.75

b. The service needs improvement.
  2. a. 0.4512
14. a. 8
b. 0.6988
b. 0.3750
c. 0.3012
c. 1.0417
  4. n Pn d. 12.5 minutes
0 0.3333 e. 0.6250
1 0.2222 f. Add a second consultant.
2 0.1481
16. a. 0.50
3 0.0988
b. 0.50
4 0.1976
c. 0.10 hours (6 minutes)
l 10 d. 0.20 hours (12 minutes)
  5. a. 
P0 5 1 2 512 5 0.1667 e. Yes, Wq 5 6 minutes is most likely acceptable for a marina.
m 12
l2 10 2 18. a.    k 5 2; l/m 5 5.4/3 5 1.8; P0 5 0.0526
b. Lq 5 5 5 4.1667
msm 2 ld 12s12 2 10d slymd2lm
Lq 5 P0
Lq sk 2 1d!s2m 2 ld2
c. 
Wq 5 5 0.4167 hour s25 minutesd
l s1.8d2s5.4ds3d
5 s0.0526d 5 7.67
1 s2 2 1d!s6 2 5.4d2
d. W 5 Wq 1 5 0.5 hour s30 minutesd
l L 5 Lq 1 lym 5 7.67 1 1.8 5 9.47
l 10
e. Pw 5 5 5 0.8333 Lq 7.67
m 12 Wq 5 5 5 1.42 minutes
l 5.4
  6. a. 0.3750  W  5 Wq 1 1ym 5 1.42 1 0.33 5 1.75 minutes
b. 1.0417
1 2 1km 2 l2P
k km
c. 0.8333 minutes (50 seconds) 1 l
Pw 5 0
d. 0.6250 k! m
e. Yes
  5 s1.8d 1
6 2 5.4 2
1 2 6
0.0526 5 0.8526
  8. P0 5 0.20, Lq 5 3.2, L 5 4, Wq 5 3.2, W 5 4, Pw 5 0.80 2!
Slightly poorer service b. Lq 5 7.67; Yes
10. a. New: 1.3333, 2, 0.6667, 1, 0.6667 c. W 5 1.75 minutes
Experienced: 0.50, 1, 0.25, 0.50, 0.50 20. a. Use k 5 2
b. New $74/hour; experienced $50/hour; hire experienced W 5 3.7037 minutes
60 L 5 4.4444
11. a.   l 5 2.5;  m 5 5 6 customers per hour Pw 5 0.7111
10
l2 s2.5d2 b. For k 5 3
Lq 5 5 5 0.2976 W 5 7.1778 minutes
msm 2 ld 6s6 2 2.5d
L 5 15.0735 customers
l
  L 5 Lq 1 5 0.7143 PN 5 0.8767
m Need at least four clerks.
Lq
Wq 5  5 0.1190 hours s7.14 minutesd 21. From Problem 11, a service time of 8 minutes has
l
m 5 60/8 5 7.5.
1
 W 5 Wq 1 5 0.2857 hours l2 s2.5d2
m Lq 5 5 5 0.1667
msm 2 ld 7.5s7.5 2 2.5d
l 2.5
 Pw 5 5 5 0.4167 l
m 6 L 5 Lq 1 5 0.50
m
b. No; Wq 5 7.14 minutes; firm should increase the ­service
rate (µ) for the consultant or hire a second c­ onsultant. Total cost 5 $25 1 $16
5 25(0.50) 1 16 5 $28.50
60
c. m 5 5 7.5 customers per hour Two channels: l 5 2.5; m 5 60y10 5 6
8
With P0 5 0.6552,
l2 s2.5d2 slymd2lm
Lq 5 5 5 0.1667 Lq 5 P0 5 0.0189
msm 2 ld 7.5s7.5 2 2.5d 1!s2m 2 ld2
Lq
Wq 5 5 0.0667 hours s4 minutesd l
l L 5 Lq 1 5 0.4356
m
The service goal is being met. Total cost 5 25(0.4356) 1 2(16) 5 $42.89
Use one consultant with an 8-minute service time.

06529_appE_web.indd 25 10/6/17 9:35 AM

 A-26 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

22. b. 0.2254
Characteristic A B C c. L 5 l/m(1 2 Pk ) 5 42/20(1 2 0.2254) 5 1.6267
d. Four lines will be necessary; the probability of denied
P0
a. 0.2000 0.5000 0.4286
access is 0.1499
Lq
b. 3.2000 0.5000 0.1524
c.
L 4.0000 1.0000 0.9524 32. a. 31.04%
Wq
d. 0.1333 0.0208 0.0063 b. 27.58%
e.
W 0.1667 0.0417 0.0397 c. 0.2758, 0.1092, 0.0351
Pw
f. 0.8000 0.5000 0.2286 d. k 5 3, 10.92%
34. N 5 5; l5 0.025; m5 0.20; l/m5 0.125
The two-channel System C provides the best service.
a.

12
24. l 5 4, W 5 10 minutes N! l n

a. m 5 0.5
sN 2 nd! m
b. Wq 5 8 minutes
0 1.0000
c. L 5 40
1 0.6250
26. a. 0.2668, 10 minutes, 0.6667 2 0.3125
b. 0.0667, 7 minutes, 0.4669 3 0.1172
c. $25.33; $33.34; one-server system more economical 4 0.0293
5 0.0037
27. a. 2⁄8 hours 5 0.25 per hour
b. 1y3.2 hours 5 0.3125 per hour Total  2.0877
2 2 2
l s 1 slymd
c. Lq 5 P0 5 1/2.0877 5 0.4790
2s1 2 lymd

1 2
l1m
s0.25d2s2d2 1 s2.5y0.3125d2 b. Lq 5 N 2 s1 2 P0d
5 5 2.225 l
2s1 2 0.25y0.3125d
1 2
0.225
Lq 552 s1 2 0.4790d 5 0.3110
2.225 0.025
d. Wq 5 5 5 8.9 hours
l 0.25
c.  L 5 Lq 1 (1 2 P0) 5 0.3110 1 (1 2 0.4790)
1 1 5 0.8321
e. W 5 Wq 1 5 8.9 1 5 12.1 hours Lq 0.3110
m 0.3125 d. Wq 5 5
sN 2 Ldl s5 2 0.8321ds0.025d
l 0.25
f. Same as Pw 5  5 5 0.80 5 2.9854 minutes
m 0.3125 1 1
e. W 5 Wq 1 5 2.9854 1 5 7.9854 minutes
The welder is busy 80% of the time. m 0.20
28. a. A: 10, B: 9.6 f. Trips/day 5 (8 hours)(60 minutes/hour)(l)
b. Design A with µ 5 10  5 (8)(60)(0.025) 5 12 trips
c. A: 0.05, B: 0.01 Time at copier: 12 3 7.9854 5 95.8 minutes/day
d. A: 0.5, 0.3125, 0.8125, 0.0625, 0.1625, 0.5 Wait time at copier: 12 3 2.9854 5 35.8 minutes/day
B: 0.4792, 0.2857, 0.8065, 0.0571, 0.1613, 0.5208 g. Yes, five assistants 3 35.8 5 179 minutes (3 hours/day),
e. Design B has slightly less waiting time. so 3 hours per day are lost to waiting.
(35.8/480)(100) 5 7.5% of each assistant’s day is spent
30. a. 
l 5 42; l 5 20
waiting for the copier.
i (l/m)i/i!
Chapter 12
0 1.0000
1 2.1000 Simulation results will vary. These results provide general
2 2.2050 guidance on the approximate output values.
3 1.5435
 2. a. Base case: Profit 5 (300 2 200) 3 4000 2 300,000 5
Total  6.8485 100,000
Worst case: Profit 5 (300 2 240) 3 0 2 300,000 5
2300,000
Best case: Profit 5 (300 2 160) 3 20,000 2 300,000 5
j Pj 2,500,000
0 1/6.8485 5 0.1460 b. See Figure E12.2b. Average profit is approximately
1 2.1/6.8485 5 0.3066 $282,837 with a probability of 0.24 of a loss.
2 5 0.3220
2.2050/6.8485 c. While the average profit is attractive ($282,837), this
3 5 0.2254
1.5435/6.8485 project appears quite risky as there’s a 0.24 probability
of a loss.
1.0000

06529_appE_web.indd 26 10/6/17 9:35 AM

 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-27

Sum of 1
250
Figure E12.2b  
200
A B C D E F G
1 Madeira Manufacturing Company
2 150
3 Parameters
4 Unit Selling Price 300
5 Fixed Cost 300000 100
6 Variable Cost =RANDBETWEEN(B10,B11)
7 Demand =LN(RAND())*(–l*E10)
8 50
9 Variable Cost (Uniform Distribution) Demand (Exponential Distribution)
10 Smallest Value 160 Mean 4000
11 Largest Value 240
12
0
13 Model
1 2 3 4 5 6
14 Profit =((B4–B6)*B7) – B5
15
16 Sum of 1 Sum of
Sum of 12
17 Simulation Trial Unit Variable Cost Demand 200 Profit Summary Statistics
250 18 1 =B6 =B7 =B14 250 Mean Profit =AVERAGE(Dl8:Dl017)
19 2 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2) 180 Probability of Loss =COUNTIF(D18:Dl017,“<0”)/COUNT(D18:Dl017)
20 3 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2)
200 21 4 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2) 160
200
22 5 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2) 140
23 6 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2)
150 24 7 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2) 120
150
25 8 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2)
26 9 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2) 100
100 27 10 =TABLE(,D2) =TABLE(,D2) =TABLE(,D2) 100
80
60
50 40
50
 4. As the number of dice in the sum increases, the distribution 20
0 becomes more bell-shaped. This demonstrates the central 0
1 2 3 4 5 6 2 1 3 42 5 63 7 48 9 510 11 6 12
limit theorem.
Sum of 12 Sum of 23
200
250 160
200
180 180
140
160
200 160
120
140 140
120
150 100
120
100 80
100
100
80 80
60
60 60
40
50
40 40
20 20
20
0 0
2 1 3 42 5 63 7 48 9 510 11 6 12 32 4 35 46 75 8 69 107 11 812 139 14 1015 16
11 17 1218

Sum of 32 Sum of 43
200
160 120
160
180
140 140
100
160
120 120
140
80
100
120 100
100
80 60
80
80
60 60
40
60
40 40
40
20
20
20 20
0 0
32 4 35 46 75 8 69 107 11 812 139 14 1015 16
11 17 1218 43 5 4 6 57 86 9 710 11
8 129 131014 11
15 16
12 171318 14
19 20
15 21162217
23 18
24

  6. a.
Sum of 43 Sum of 4
160
120 A B C D 120 E F
1 Statewide
140
2
100
3 Parameters 100
120
4 Claims Payment =VLOOKUP(RAND(),A8:C14,3,TRUE)
80
5
100 80
6 Claims Payment
7
80
60 Lower End of Interval Upper End of Interval Payment Probability 60 Squared Deviation From Mean
8 0 =D8+A8 0 0.83 =(C8-$F$17)^2
60
9 =B8 =D9+A9 500 0.06 =(C9-$F$17)^2
40
10 =B9 =D10+A10 1000 0.05 40 =(C10-$F$17)^2
40
11 =B10 =D11+A11 2000 0.02 =(C11-$F$17)^2
20
12
20 =B11 =D12+A12 5000 0.02 20 =(C12-$F$17)^2
13 =B12 =D13+A13 8000 0.01 =(C13-$F$17)^2
140 =B13 =D14+A14 10000 0.01 0 =(C14-$F$17)^2
15 43 5 4 6 57 86 9 710 11
8 129 131014 11 12 171318 14
15 16 15 21162217
19 20 23 18
24 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
16 Simulation Trial Claims Payment Summary Statistic Simulation Estimate Formulaic Computation
17 1 =B4 Mean Payment =AVERAGE(B17:B1016) =SUMPRODUCT(C8:C14,D8:D14)
18 2 Sum
=TABLE(,H10) of 4 Payment Standard Deviation =STDEV.S(B17:B1016) =SQRT(SUMPRODUCT(D8:D14,F8:F14))
19
120 3 =TABLE(,H10)
20 4 =TABLE(,H10)
21 5 =TABLE(,H10)
100
22 6 =TABLE(,H10)
23 7 =TABLE(,H10)
80
24 8 =TABLE(,H10)
25 9 =TABLE(,H10)
26
60 10 =TABLE(,H10)

40

20

0
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

06529_appE_web.indd 27 10/6/17 9:35 AM

 A-28 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

b. The simulation-based estimates of the payment mean formulas, we obtain $400 and $1458, respectively. To
and standard deviation are $513 and $1736, respec- reduce the discrepancy between the simulation-based
tively. Computing the mean and standard deviation estimates and the analytical computation, we can in-
directly from the distribution using the respective crease the number of simulation trials.

 8. a.
A B C D E F G H
1 New York Stock Exchange
2
3 Parameters
4 3-Month Stock Price Change =VLOOKUP(RAND(),$A$11:$C$17,3,TRUE)
5 3-Month Stock Price Change =VLOOKUP(RAND(),$A$11:$C$17,3,TRUE)
6 3-Month Stock Price Change =VLOOKUP(RAND(),$A$11:$C$17,3,TRUE)
7 3-Month Stock Price Change =VLOOKUP(RAND(),$A$11:$C$17,3,TRUE)
8
9 3-Month Stock Price Change
10 Lower End of Interval Upper End of Interval Change Probability
11 0 =D11+A11 –2 0.05
12 =B11 =D12+A12 –1 0.1
13 =B12 =D13+A13 0 0.25
14 =B13 =D14+A14 1 0.2
15 =B14 =D15+A15 2 0.2
16 =B15 =D16+A16 3 0.1
17 =B16 =D17+A17 4 0.1
18 Model
19 Current Stock Price 39
20 Stock Price in 3 Months =B19+B4
21 Stock Price in 6 Months =B20+B5
22 Stock Price in 9 Months =B21+B6
23 Stock Price in 12 Months =B22+B7
24
25 Simulation Trial Stock Price in 3 Months Stock Price in 6 Months Stock Price in 9 Months Stock Price in 12 Months Summary Statistics
26 1 =B20 =B21 =B22 =B23 Mean Stock Price in 12 Months =AVERAGE(E26:E1025)
27 2 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) St. Dev. Stock Price in 12 Months =STDEV.S(E26:E1025)
28 3 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35)
29 4 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35)
30 5 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35)
31 6 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35)
32 7 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35)
33 8 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35)
34 9 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35)
35 10 =TABLE(,G35) =TABLE(,G35) =TABLE(,G35) =TABLE(,G35)

b. The mean stock price after 12 months is $43.51, and for the three-month change could be used. The normal
the standard deviation is $3.27. distribution or skewed normal distribution may be two
c. The lowest stock price that is possible after 12 months choices.
is $31, resulting from four consecutive three-month 10. See Figure E12.10.
changes of 2$2. The highest stock price that is pos- a. Expected project length is 33.91 weeks with a standard
sible after 12 months is $55, resulting from four con- deviation of 2.81 weeks.
secutive three-month changes of 1$4. To model a b. Probability of completing project in 35 weeks or less
wider range of outcomes, an unbounded distribution is 0.729.

Figure E12.10  

A B C D E F G H I
1 Project
2
3 Parameters
4 Activity A Duration =VLOOKUP(RAND(),A11:C14,3,TRUE)
5 Activity B Duration =VLOOKUP(RAND(),F11:H13,3,TRUE)
6 Activity C Duration =VLOOKUP(RAND(),A18:C22,3,TRUE)
7 Activity D Duration =VLOOKUP(RAND(),F18:H19,3,TRUE)
8
9 Activity A Activity B
10 Lower End of Interval Upper End of Interval Duration Probability Lower End of Interval Upper End of Interval Duration Probability
11 0 -D11+A11 5 0.25 0 =I11+F11 3 0.2
12 =B11 =D12+A12 6 0.35 =G11 =I12+F12 5 0.55
13 =B12 =D13+A13 7 0.25 =G12 =I13+F13 7 0.25
14 =B13 =D14+A14 8 0.15
15
16 Activity C Activity D
17 Lower End of Interval Upper End of Interval Duration Probability Lower End of Interval Upper End of Interval Duration Probability
18 0 =D18+A18 10 0.1 0 =I18+F18 8 0.6
19 =B18 =D19+A19 12 0.25 =G18 =I19+F19 10 0.4
20 =B19 =D20+A20 14 0.4
21 =B20 =D21+A21 16 0.2
22 =B21 =D22+A22 18 0.05
23
24 Model
25 Project Length =SUM(B4:B7)
26
27 Simulation Trial Activity A Activity B Activity C Activity D Project Length Summary Statistics
28 1 =B4 =B5 =B6 =B7 =B25 Mean Project Length =AVERAGE(F28:F1027)
29 2 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) St. Dev. Project Length =STDEV.S(F28:F1027)
30 3 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) P(Project Length <36) =COUNTIF(F28:F1027,“<36”)/COUNT(F28:F1027)
31 4 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33)
32 5 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33)
33 6 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33)
34 7 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33)
35 8 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33)
36 9 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33)
37 10 =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33) =TABLE(,H33)

06529_appE_web.indd 28 10/6/17 9:35 AM

 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-29

12. a. Average net profit is $5,165.

b. There is a .039 probability that the overbooking strategy
will result in less than $5000 net profit (the net profit
resulting from no overbooking).

A B C D E F
1 South Central Airlines
2
3 Parameters
4 Capacity 50
5 Number of Reservations 52
6 Passengers Showing Up =VLOOKUP(RAND(),A10:C14,3,TRUE)
7
8 Passengers Showing Up
9 Lower End of Interval Upper End of Interval Cost Probability
10 0 =D10+A10 48 0.05
11 =B10 =D11+A11 49 0.25
12 =B11 =D12+A12 50 0.5
13 =B12 =D13+A13 51 0.15
14 =B13 =D14+A14 52 0.05
15
16 Marginal Profit 100
17 Marginal Overbooking Cost 150
18
19 Model
20 Profit from Reservations =B5*B16
21 Overbooked Passengers =IF(B6>B4,B6–B4,0)
22 Total Overbooking Cost =B17*B21
23 Net Profit =B20–B22
24
25 Simulation Trial Passengers Showing Up Net Profit Summary Statistics
26 1 =B6 =B23 Mean Profit per Unit =AVERAGE(C26:C1025)
27 2 =TABLE(,J26) =TABLE(,J26) P(Profit < $5000) =COUNTIF(C26:C1025,“<5000”)/COUNT(C26:C1025)
28 3 =TABLE(,J26) =TABLE(,J26)
29 4 =TABLE(,J26) =TABLE(,J26)
30 5 =TABLE(,J26) =TABLE(,J26)
31 6 =TABLE(,J26) =TABLE(,J26)
32 7 =TABLE(,J26) =TABLE(,J26)
33 8 =TABLE(,J26) =TABLE(,J26)
34 9 =TABLE(,J26) =TABLE(,J26)
35 10 =TABLE(,J26) =TABLE(,J26)

c. 
The same spreadsheet design can be used to simulate 14. See Figure E12.14.
other overbooking strategies, including accepting 51, a. We win the bid about 64% of the time with a bid of
53, and 54 passenger reservations. In each case, South $750,000.
Central would need to estimate the distribution of the b.  Bidding $765,000 results in winning approximately
number of passengers showing up and rerun the simula- 75% of the time. Bidding $775,000 results in win-
tion model. This would enable South Central to evaluate ning approximately 82% of the time. Thus, to ensure
the other overbooking alternatives and determine the at least an 80% chance of winning the bid, we must bid
most beneficial overbooking policy. $775,000.

Figure E12.14  

A B C D E F G H
1 Contractor Bidding
2
3 Parameters
4 Contractor A Bid =B8+(B9–B8)*RAND()
5 Contractor B Bid =NORM.INV(RAND(),E8,E9)
6
7 Contractor A (Uniform Distribution) Contractor A (Normal Distribution)
8 Minimum Value 600000 Mean 700000
9 Maximum Value 800000 Standard Deviation 50000
10
11 Model
12 Our Bid 750000
13 Winning Bid =MAX(B4,B5,B12)
14 Winning Contractor =IF(B12>MAX(B4:B5),“US”,IF(B4>B5,“A”,“B”))
15
16 Simulation Trial Contractor A’s Bid Contractor B’s Bid Winning Bid Winning Contractor Summary Statistics
17 1 =B4 =B5 =B13 =B14 P(We Win Bid) =COUNTIF(E17:E1016,“=US”)/COUNTA(E17:E1016)
18 2 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)
19 3 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)
20 4 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)
21 5 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)
22 6 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)
23 7 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)
24 8 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)
25 9 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)
26 10 =TABLE(,I8) =TABLE(,I8) =TABLE(,I8) =TABLE(,I8)

06529_appE_web.indd 29 10/6/17 9:35 AM

 A-30 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

16. See Figure E12.16. Estimates possess non-neglible (0.16 minutes), decreased maximum wait time (5.1 min-
variability. utes), and decreased probability of waiting more than
a. Average wait time is approximately 2.29 minutes. 2 minutes (0.0180). Burger Dome needs to evaluate
b. The longest wait time varies, but 15.0 is a representative whether these improvements are worth the cost of the
value. second employee.
c. There is an estimated probability of 0.4037 of a cus- 20. a. See Figure E12.20.
tomer waiting more than 2 minutes. b. See Figure E12.20.
d. See Figure E12.16. c. When the dealer has a 6 and you have a 16 and you decide
e. It is not appropriate to increase the number of trials to hit, you have about a 24.8% chance of winning, 3.9%
because Burger Dome is trying to model the waiting chance of tying, and 71.3% chance of losing to the dealer.
line behavior during its 14-hour work day (and each d. When the dealer has a 6 and you have a 16 and you stay
day begins with no customers in the system from the on 16, you have about a 43.5% chance of winning, 0%
previous day). chance of tying, and 56.5% chance of losing to the dealer.
18. Estimates possess considerable variability, but adding a The player has a greater chance of winning if the player
second employee results in a reduced average wait time stays on 16.

Figure E12.16  

A B C D E F G H I J
1 Burger Dome
2
3 Parameters
4 Hours to Simulate 14
5 Minutes to Simulate =B4*60
6
7 Interarrival Time (exponential) Service Time (exponential)
8 mean 1.35 minutes mean 1 minutes
9
10 Model
11 Customer Interarrival Time Arrival Time Begin Service Time Waiting Time Service Time Completion Time Time in System Customer
810 799 =LN(RAND())*(-$B$8) =C809+B810 =IF(C810>G809,C810,G809) =D810-C810 =LN(RAND())*(-$F$8) =D810+F810 =G810-C810 799
811 800 =LN(RAND())*(-$B$8) =C810+B811 =IF(C811>G810,C811,G810) =D811-C811 =LN(RAND())*(-$F$8) =D811+F811 =G811-C811 800
812
813 Summary Statistics
Wait Time Distribution
814 Customer Arrivals =VLOOKUP(B5,C12:I811,7,TRUE) 350
815 Number Waiting =COUNTIFS(C12:C811,“<=”&B5,E12:E811,“>0”)
816 Probability of Waiting =B815/B814
300
817 Average Waiting Time =AVERAGEIF(C12:C811,“<=”&B5,E12:E811)
818 Maximum Waiting Time =MAX(E12:OFFSET(E12,B814-1,0))
819 Number Waiting > 2 Min =COUNTIFS(C12:C811,“<=”&B5,E12:E811,“>2”) 250
820 Probability of Waiting > 2 Min =B819/B814
Frequency

821
822 200
823
824 150
825
826
827 100
828
829
830
50
831
832 0
833
1
2
3
4
5
6
7
8
9

10 0
11 1
12 2
13 3
14 4
15 5
16 6
17 7
18 8
19 9
0
0
0–
1–
2–
3–
4–
5–
6–
7–
8–

1
–1
–1
–1
–1
–1
–1
–1
–1
–1
–2
>2
834
9–

835
836
Wait Time

Figure E12.20  

A B C D E
1 Blackjack
2
3 Parameters
4 End Value of Dealer’s Hand =VLOOKUP(RAND(),A9:C14,3,TRUE)
5 End Value of Your Hand =VLOOKUP(RAND(),A18:C23,3,TRUE)
6
7 End Value of Dealer’s Hand
8 Lower End of Interval Upper End of Interval Value Probability
9 0 =D9+A9 17 0.1654
10 =B9 =D10+A10 18 0.1063
11 =B10 =D11+A11 19 0.1063
12 =B11 =D12+A12 20 0.1017
13 =B12 =D13+A13 21 0.0972
14 =B13 =D14+A14 0 0.4231
15
16 End Value of Your Hand
17 Lower End of Interval Upper End of Interval Value Probability
18 0 =D18+A18 17 0.0769
19 =B18 =D19+A19 18 0.0769
20 =B19 =D20+A20 19 0.0769
21 =B20 =D21+A21 20 0.0769
22 =B21 =D22+A22 21 0.0769
23 =B22 =D23+A23 0 0.6155
24
25 Model
26 Winner =IF(B5=0,“Dealer”,IF(B4>B5,“Dealer”,IF(B4=B5,“Push”,“You”)))
27
28 Simulation Trial Winner Summary Statistics
29 1 =B26 P(Dealer Win) =COUNTIF(B29:B1028,“=Dealer”)/COUNTA(B29:B1028)
30 2 =TABLE(,G20) P(Push) =COUNTIF(B29:B1028,“=Push”)/COUNTA(B29:B1028)
31 3 =TABLE(,G20) P(You Win) =COUNTIF(B29:B1028,“=You”)/COUNTA(B29:B1028)
32 4 =TABLE(,G20)
33 5 =TABLE(,G20)
34 6 =TABLE(,G20)
35 7 =TABLE(,G20)
36 8 =TABLE(,G20)
37 9 =TABLE(,G20)

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-31

Chapter 13 c. Low
150

 1. a.  s1
250 Small Medium
200
d1 s2
2 100 High
200
s3
25
1 Low
s1 50
100

d2 s2 Large Medium
3 100 200

s3 High
75 500
b.
Maximum Minimum d.
Decision Profit Profit
d1 250 25 Maximum Minimum Maximum
d2 100 75 Decision Profit Profit Regret
Small 200 150 300
Optimistic approach: Select d1 Large 500  50 100
Conservative approach: Select d2
Regret or opportunity loss table: Optimistic Approach: Large plant
Conservative Approach: Small plant
Decision s1 s2 s3 Minimax Regret: Large plant
d1   0 0 50   4. a. The decision faced by Amy is to select the best lease
d2 150 0  0 option from three alternatives (Hepburn Honda,
Midtown Motors, and Hopkins Automotive). The
Maximum regret: 50 for d1 and 150 for d2; select d1 chance event is the number of miles Amy will drive.
 2. a. Optimistic: d1 b.
Conservative: d3
Minimax regret: d3 Actual Miles Driven Annually
c. Optimistic: d1
Dealer 12,000 15,000 18,000
Conservative: d2 or d3
Minimax regret: d2 Hepburn Honda $10,764 $12,114 $13,464
Midtown Motors $11,160 $11,160 $12,960
 3. a. 
Decision: Choose the best plant size from the two
Hopkins Automotive $11,700 $11,700 $11,700
­alternatives—a small plant and a large plant.
Chance event: Market demand for the new product line c. The minimum and maximum payoffs for each of Amy’s
with three possible outcomes (states of nature): low, three alternatives are:
medium, and high
b. Influence Diagram: Minimum Maximum
Dealer Cost Cost
Hepburn Honda $10,764 $13,464
Plant Market
Demand Midtown Motors $11,160 $12,960
Size
Hopkins Automotive $11,700 $11,700

Thus:
 The optimistic approach results in selection of the
­Hepburn Automotive lease option (which has the small-
est minimum cost of the three alternatives—$10,764).
Profit
 The conservative approach results in selection of the
Hopkins Automotive lease option (which has the small-
est maximum cost of the three alternatives—$11,700).

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 A-32 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

 The minimax regret approach results in selection of  8. a. EV(d1) 5 p(10) 1 (1 2 p)(1) 5 9p 1 1
the Hopkins Automotive lease option (which has the EV(d2) 5 p(4) 1 (1 2 p)(3) 5 1p 1 3
smallest regret of the three alternatives: $936).
d. The expected value approach results in selection of the 10
Midtown Motors lease option (which has the minimum
expected value of the three alternatives—$11,340).
e. The risk profile for the decision to lease from Midtown
Motors is as follows:

1.0
0.8
Probability

0.6
0.4 p
0 0.25 1
0.2
Value of p for
10 11 12 13 which EVs are equal
Cost ($1000s)
9p 1 1 5 1p 1 3 and hence p 5 0.25
Note that although we have three chance outcomes d2 is optimal for p $ 0.25, d1 is optimal for p $ 0.25
(drive 12,000 miles annually, drive 15,000 miles an- b. d2
nually, and drive 18,000 miles annually), we only have c. As long as the payoff for s1 $ 2, then d2 is optimal.
two unique costs on this graph. This is because for this
decision alternative (lease from Midtown Motors) there 10. b. Space Pirates
are only two unique payoffs associated with the three EV 5 $724,000
chance outcomes—the payoff (cost) associated with $84,000 better than Battle Pacific
the Midtown Motors lease is the same for two of the c. $200 0.18
chance outcomes (whether Amy drives 12,000 miles or $400 0.32
15,000 miles annually, her payoff is $11,160). $800 0.30
f. The expected value approach results in selection of e­ ither $1600 0.20
the Midtown Motors lease option or the Hopkins Auto- d. P(Competition) . 0.7273
motive lease option (both of which have the m ­ inimum 12. a. Decision: Whether to lengthen the runway
expected value of the three alternatives—$11,700). Chance event: The location decisions of Air Express
 5. EV(d1) 5 0.65(250) 1 0.15(100) 1 0.20(25) 1 182.5 and DRI
EV(d2) 5 0.65(100) 1 0.15(100) 1 0.20(75) 1 95 Consequence: Annual revenue
The optimal decision is d1. b.
$255,000
 6. a. Pharmaceuticals; 3.4% c.
$270,000
b. Financial; 4.6%
d.
No
 7. a. EV(own staff) 5 0.2(650) 1 0.5(650) 1 0.3(600) 5 635
EV(outside vendor) 5 0.2(900) 1 0.5(600) e.
Lengthen the runway.
1 0.3(300) 5 570
14. a. If s1, then d1; if s2, then d1 or d2; if s3, then d2
EV(combination) 5 0.2(800) 1 0.5(650) 1 0.3(500)
5 635 b.
EvwPI 5 0.65(250) 1 0.15(100) 1 0.20(75) 5 192.5
 Optimal decision: Hire an outside vendor with an c. 
From the solution to Problem 5, we know that EV(d1) 5
­expected cost of $570,000 182.5 and EV(d2) 5 95; thus, recommended decision is
b. d1; hence, EvwoPI 5 182.5.
Cost Probability d.
EVPI 5 EvwPI 2 EvwoPI 5 192.5 2 182.5 5 10
Own staff 300 0.3
Outside vendor 600 0.5
Combination 900 0.2
1.0

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-33

16. a. Profit 20. b. If Do Not Review, Accept

Payoff
s1
100 If Review and F, Accept
d1 If Review and U, Accept
6
s2 300 Always Accept
F c. Do not review; EVSI 5 $0
3
d. $87,500; better method of predicting success
s1
400
d2
7
22. a. Order 2 lots; $60,000
s2
200 b. If E, order 2 lots
Market If V, order 1 lot
Research 2
s1
100
EV 5 $60,500
d1 c. EVPI 5 $14,000
8 s2
300 EVSI 5 $500
U Efficiency 5 3.6%
4
1 Yes, use consultant.
s1
400
d2
9
23.
s2
200
State
of Nature P(sj) P(I| sj) P(I ù sj) P(sj |I)
s1
100 s1 0.2 0.10 0.020 0.1905
d1
10 s2 s2 0.5 0.05 0.025 0.2381
300
s3 0.3 0.20 0.060 0.5714
No Market
Research
5 1.0 P(I) 5 0.105 1.0000
s1
400
d2
11 s2
24. a. 0.695, 0.215, 0.090
200 0.98, 0.02
b. EV (node 6) 5 0.57(100) 1 0.43(300) 5 186 0.79, 0.21
EV (node 7) 5 0.57(400) 1 0.43(200) 5 314 0.00, 1.00
EV (node 8) 5 0.18(100) 1 0.82(300) 5 264 c. If C, Expressway
EV (node 9) 5 0.18(400) 1 0.82(200) 5 236 If O, Expressway
EV (node 10) 5 0.40(100) 1 0.60(300) 5 220 If R, Queen City
EV (node 11) 5 0.40(400) 1 0.60(200) 5 280 26.6 minutes
EV (node 3) 5 Max(186,314) 5 314 d2
26. a. EV(d1) 5 10,000
EV (node 4) 5 Max(264,236) 5 264 d1
EV(d2) 5 0.96(0) 1 0.03(100,000) 1 0.01(200,000) 5
EV (node 5) 5 Max(220,280) 5 280 d2
5000
EV (node 2) 5 0.56(314) 1 0.44(264) 5 292
Using EV approach, we should choose No Insurance
EV (node 1) 5 Max(292,280) 5 292
(d2).
[ Market Research
b. Lottery:
  If favorable, decision d2
p 5 probability of a $0 Cost
  If unfavorable, decision d1
1 2 p 5 probability of a $200,000 Cost
18. a. Outcome 1 5000 2 200 2 2000 2 150 5 2650 c.
Outcome 1 3000 2 200 2 2000 2 150 5 650 s1 s2 s3
None Minor Major
b. Expected values at nodes:
Insurance d1 9.9 9.9 9.9
8: 2350   5: 2350 9: 1100
No Insurance d1 10.0 6.0 0.0
6: 1150 10: 2000 7: 2000
4: 1870   3: 2000 2: 1560 EU(d1) 5 9.9
1: 1560 EU(d2) 5 0.96(10.0) 1 0.03(6.0) 1 0.01(0.0) 5 9.78
c. Cost would have to decrease by at least $130,000. ∴ Using EU approach → Insurance (d1)
d. d. Use expected utility approach. The EV approach results
Payoff (in millions) Probability in a decision that can be very risky since it means that
2$200 0.20 the decision maker could lose up to $200,000. Most
800 0.32 decision makers (particularly those considering insur-
2800 0.48 ance) are risk averse.
1.00

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 A-34 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

28. a. Therefore, we can write the goal programming model as

follows:
1.0
Min  P1(d12) 1 P2(d21)
.9
s.t.
.8 C       50x1 1 100x2  # 50,000  Funds available
.7        3x1 1   10x2 2 d11 1 d12 5   4,500  P1 goal
A
Probability

.6 B            x2 2 d21 1 d22 5     300  P2 goal

.5        x1, x2, d1 , d1 , d21, d22 $ 0
1 2

.4 b. 
In the following graphical solution, x1 5 250 and
.3 x2 5 375.
.2 x2
.1
100
-100 -50 0 50 100
Payoff

b. A - Risk avoider (250, 375)

50
B - Risk taker
P2 Goal
C - Risk neutral
F
c. Risk avoider A, at $20 payoff p 5 0.70 Ava unds P1 G
oal
ilab
Thus, EV(Lottery) 5 0.70(100) 1 0.30(2100) 5 $40 le
x1
Therefore, will pay 40 2 20 5 $20 50 100 150
Risk taker B, at $20 payoff p 5 0.45
Thus, EV(Lottery) 5 0.45(100) 1 0.55(2100) 5 2$10 4. a. Min  P1(d2 1 2 2 2
1 ) 1 P2(d2 ) 1 P2(d3 ) 1 P2(d4 ) 1 P3(d5 )
Therefore, will pay 20 2 (210) 5 $30 s.t.
30. 20x1 1 30x2 2 d1 2
1    1 d1  5 4800
Monetary Payoff, x Utility, U(x) 20x1 1 30x2 2 d21    1 d2
2  5 6000
2200 21.226   x1  2 d1 2
3    1 d3   5  100
2100 20.492 x2 2 d1 2
4    1 d4  5  120
  0 0.000
100 0.330   x1 1    x2 2 d51     1 d2
5   5   300
200 0.551   x1, x2, all deviation variables $ 0
300 0.699 b. x1 5 120, x2 5 120
400 0.798
6. a. Min  P1(d2 2 1
1 ) 1 P2(d2 ) 1 P2(d3 )
500 0.865
s.t.
x1  2 d1 2
1  1 d1   5 40,000
1
x2 2 d1 2
2  1 d2  5 50,000
Utility, U(x)

0.5 x1 1 x2 2 d31   1 d2

3   5 70,000

x1, x2, all deviation variables $ 0

0 b. x1 5 40,000, x2 5 50,000
230,000 220,000 210,000 0 10,000 20,000 30,000 40,000 c. Optimal solution does not change.
x
20.5
8. a. Min d2 1 2 1 2 1 2
1  1 d1  1 e1   1 e1  1 d2  1 d2  1 e2  1
21 e1 2 1 2 1
2  1 d3  1 d3  1 e3  1 e3
s.t.
21.5 x1  1 d2 1
1 2 d1 5 1

x2 1 e2 1
1 2 e1 5 7
Chapter 14 x1  1 d2 1
2 2 d2 5 5

2. a. Let x1 5 number of shares of AGA Products purchased x2 1 e2 1

2 2 e2 5 9

x2 5 number of shares of Key Oil purchased x1  1 d2 1

3 2 d3 5 6
To obtain an annual return of exactly 9%: x2 1 e2 1
3 2 e3 5 2
0.06(50)x1 1 0.10(100)x2 5 0.09(50,000)   all variables $ 0
3x1 1 10x2 5 4500 b. x1 5 5, x2 5 7
To have exactly 60% of the total investment in Key Oil:
100x2 5 0.60(50,000)
x2 5 300

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-35

9. Scoring calculations 18. a. 0.724, 0.193, 0.083

b. CR 5 0.057, yes
Analyst Accountant Auditor 20. a.
Criterion Chicago Denver Houston
Flavor A B C
Career advancement 35 20 20
Location 10 12 8 A 1 3 2
Management 30 25 35 B 1
⁄3 1 5
Salary 28 32 16 C 1
⁄2 1
⁄5 1
Prestige 32 20 24
Job security 8 10 16
Enjoyment of the work 28 20 20 b. Step 1: Column totals are 11⁄6, 21⁄ 5, and 8.
Total 171 139 139
Step 2:

The analyst position in Chicago is recommended. Flavor A B C

A 6
⁄11 15
⁄21 2
⁄8
10. Scores: 178, 184, 151 B 2
⁄11 5
⁄21 5
⁄8
Marysville is leading candidate C 3
⁄11 1
⁄21 1
⁄8

12. Scores: 170, 168, 190, 183
Step 3:
Handover College is recommended
Row
14. a. 220 Bowrider (194) Flavor A B C Average
b. 240 Sundancer (144)
A 0.545 0.714 0.250 0.503
B 0.182 0.238 0.625 0.348
16. Step 1: Column totals are ⁄4, ⁄21, and 12.
17 31
C 0.273 0.048 0.125 0.148
Step 2:
c. Step 1:

3 4 34 34
Style Accord Taurus Cruze 1 3 2
0.503 1/ 1 0.348 1 1 0.148 5
Accord 4
⁄17 7
⁄31 4
⁄12 3
1/ 1/ 1
Taurus 12
⁄17 21
⁄31 7
⁄12 2 5
Cruze 1
⁄17 3
⁄31 1
⁄12

3 4 3 4 3 4 3 4
0.503 1.044 0.296 1.845
0.168 1 0.348 1 0.740 5 1.258
Step 3:
0.252 0.070 0.148 0.470

Row Step 2:    1.845/0.503 5 3.668

Style Accord Taurus Cruze Average 1.258/0.348 5 3.615
0.470/0.148 5 3.123
Accord 0.235 0.226 0.333 0.265
Taurus 0.706 0.677 0.583 0.656 Step 3: lmax 5 (3.668 1 3.615 1 3.123)/3 5 3.469
Cruze 0.059 0.097 0.083 0.080 Step 4: CI 5 (3.469 2 3)/2 5 0.235
Step 5: CR 5 0.235/0.58 5 0.415
Because CR 5 0.415 is greater than 0.10, the individual’s
Consistency Ratio
judgments are not consistent.
Step 1:
22. a. D S N

3 4 3 4 34
1 1y3 4
0.265 3 1 0.656 1 1 0.080 7 D 1 1⁄4 1
⁄7
1y 1y7 1
4
S 4 1 1⁄3

3 4 3 4 3 4 3 4
0.265 0.219 0.320 0.802
      0.795 1 0.656 1 0.560 5 2.007 N 7 3 1
0.066 0.094 0.080 0.239
b. 0.080, 0.265, 0.656
Step 2: 0.802y0.265 5 3.028
c. CR 5 0.028, yes
2.007y0.656 5 3.062
0.239y0.080 5 3.007 24. Criteria: Yield and Risk
Step 3: lmax 5 (3.028 1 3.062 1 3.007)y3 5 3.032 Step 1: Column totals are 1.5 and 3.
Step 4: CI 5 (3.032 2 3)y2 5 0.016 Step 2:
Step 5: CR 5 0.016y0.58 5 0.028
Yield Risk Priority
Because CR 5 0.028 is less than 0.10, the degree of con-
sistency exhibited in the pairwise comparison matrix for Yield 0.667 0.667 0.667
style is acceptable. Risk 0.333 0.333 0.333

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 A-36 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

With only two criteria, CR 5 0; no need to compute CR; Overall Priorities:

preceding calculations for Yield and Risk provide CCC 0.667(0.750) 1 0.333(0.333) 5 0.611
  SRI 0.667(0.250) 1 0.333(0.667) 5 0.389
CCC is preferred.
Stocks Yield Priority Risk Priority
CCC 0.750 0.333 26. a. Criterion: 0.608, 0.272, 0.120
SRI 0.250 0.667 Price: 0.557, 0.123, 0.320
Sound: 0.137, 0.239, 0.623
Reception: 0.579, 0.187, 0.046
b. 0.446, 0.162, 0.392
System A is preferred.
Chapter 15
  1. The following table shows the calculations for parts (a),
(b), and (c).

Absolute Absolute
Time Value of Squared Value of
Series Forecast Forecast Forecast Percentage Percentage
Week Value Forecast Error Error Error Error Error
  1 18
  2 13 18 –5  5  25 –38.46 38.46
  3 16 13  3  3   9 18.75 18.75
  4 11 16 –5  5  25 –45.45 45.45
  5 17 11  6  6  36 35.29 35.29
  6 14 17 –3  3   9 –21.43 21.43
Total 22 104 –51.30 159.38

a. MAE 5 22/5 5 4.4 c. MAPE 5 159.38/5 5 31.88

b. MSE 5 104/5 5 20.8 d. Forecast for week 7 is 14.

  2. The following table shows the calculations for parts (a),

(b), and (c).

Absolute Absolute
Time Value of Squared Value of
Series Forecast Forecast Forecast Percentage Percentage
Week Value Forecast Error Error Error Error Error
1 18
2 13 18.00 –5.00  5.00 25.00 –38.46 38.46
3 16 15.50  0.50  0.50  0.25 3.13 3.13
4 11 15.67 –4.67  4.67 21.81 –42.45 42.45
5 17 14.50  2.50  2.50  6.25 14.71 14.71
6 14 15.00 –1.00  1.00  1.00 –7.14 7.14

Total 13.67 54.31 –70.21 105.86

a. MAE 5 13.67y5 5 2.73   5. a. The data appear to follow a horizontal pattern.

b. MSE 5 54.31y5 5 10.86 b.
c. MAPE 5 105.89y5 5 21.18
d. Forecast for week 7 is (18 1 13 1 16 1 11 1 17 1
14)y6 5 14.83. Time Squared
Series Forecast Forecast
  3. By every measure, the approach used in Problem 2 appears Week Value Forecast Error Error
to be the better method. 1 18
  4. a. MSE 5 363y6 5 60.5 2 13
Forecast for month 8 is 15. 3 16
4 11 15.67 24.67 21.78
b. MSE 5 216.72y6 5 36.12
5 17 13.33 3.67 13.44
Forecast for month 8 is 18.
6 14 14.67 20.67 0.44
c. The average of all the previous values is better because
MSE is smaller.  Total 35.67

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-37

MSE 5 35.67/3 5 11.89. 12. a. The data appear to follow a horizontal pattern.
The forecast for week 7 5 (11 1 17 1 14)y3 5 14. b. MSE(3-month) 5 0.12
c. MSE(4-month) 5 0.14
Use 3-month moving averages.
Time Squared
Series Forecast Forecast c. 9.63
Week Value Forecast Error Error 13. a. The data appear to follow a horizontal pattern.
1 18
2 13 18.00 25.00 25.00 b.
3 16 17.00 21.00 1.00
4 11 16.80 25.80 33.64 3-Month
5 17 15.64 1.36 1.85 Time- Moving
6 14 15.91 21.91 3.66 Series Average a 5 0.2
Total 65.15 Month Value Forecast (Error)2 Forecast (Error)2
MSE 5 65.15y5 5 13.03   1 240
The forecast for week 7 is 0.2(14) 1 (1 2 0.2)15.91 5   2 350 240.00 12100.00
15.53.   3 230 262.00 1024.00
d. The three-week moving average provides a better fore-   4 260 273.33 177.69 255.60 19.36
cast because it has a smaller MSE.   5 280 280.00 0.00 256.48 553.19
e.   6 320 256.67 4010.69 261.18 3459.79
Alpha 0.367694922   7 220 286.67 4444.89 272.95 2803.70
Time Squared   8 310 273.33 1344.69 262.36 2269.57
Series Forecast Forecast   9 240 283.33 1877.49 271.89 1016.97
Week Value Forecast Error Error 10 310 256.67 2844.09 265.51 1979.36
1 18 11 240 286.67 2178.09 274.41 1184.05
2 13 18 25.00 25.00 12 230 263.33 1110.89 267.53 1408.50
3 16 16.16 20.16 0.03
4 11 16.10 25.10 26.03 17,988.52 27,818.49
5 17 14.23 2.77 7.69
6 14 15.25 21.25 1.55 MSE(3-Month) 5 17,988.52y9 5 1998.72
Total 60.30 MSE(a 5 0.2) 5 27,818.49y11 5 2528.95
Based on the above MSE values, the 3-month moving
MSE 5 60.30y5 5 12.061 average appears better. However, exponential smooth-
6. a. The data appear to follow a horizontal pattern. ing was penalized by including month 2, which was dif-
b. MSE 5 110y4 5 27.5 ficult for any method to forecast. Using only the e­ rrors
The forecast for week 8 is 19. for months 4–12, the MSE for exponential smoothing is
c. MSE 5 252.87y6 5 42.15 MSE(a 5 0.2) 5 14,694.49y9 5 1632.72
The forecast for week 7 is 19.12. Thus, exponential smoothing was better considering
d. The three-week moving average provides a better fore- months 4–12.
cast because it has a smaller MSE. c. Using exponential smoothing,
e. a 5 0.351404848 MSE 5 39.61 
F13 5 a Y12 1 (1 2 a)F12 5 0.20(230) 1 0.80(267.53)
 8. a. 5 260
Week 4 5 6 7 8 9 10 11 12 14. a. The data appear to follow a horizontal pattern.
Forecast 19.3 21.3 19.8 17.8 18.3 18.3 20.3 20.3 17.8 b. Values for months 2–12 are as follows:
b. MSE 5 11.49 105.00 114.00 115.80 112.56 105.79 110.05 120.54
 Prefer the unweighted moving average here; it has a 126.38 118.46 106.92 104.85
smaller MSE. MSE 5 510.29
c. You could always find a weighted moving average c. a 5 0.032564518 MSE 5 459.69
ˆ13 5 .3(110) 1 .7(104.85) 5 106.4
Forecast for month 13: Y 
at least as good as the unweighted one. Actually, the
unweighted moving average is a special case of the
weighted ones where the weights are equal.
10. b. The more recent data receives the greater weight or im-
portance in determining the forecast. The moving aver-
ages method weights the last n data values equally in
determining the forecast.

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 A-38 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

16. a.
60,000

50,000
Number of Homes (1000s)

40,000

30,000

20,000

10,000

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47
Year (t)

b. This time series plot indicates a possible linear trend in b. a 5 0.467307293; MSE 5 1.22
the data, so forecasting methods discussed in this chap- c. Forecast for second quarter 2014 5 30.93
ter are appropriate to develop forecasts for this time
20. a. The time series plot shows a linear trend.
series.
c. Equation for linear trend: ⁄yt 5 24170.506 1 596.366t b.
17. a. The time series plot shows a linear trend.
b. b0 4.72
b1 1.46
Squared
b0 4.70 Forecast Forecast
b1 2.10 Period Year
Enrollment Forecast Error Error
Squared 1 2001 6.50 6.17 0.33 0.11
Forecast Forecast 2 2002 8.10 7.63 0.47 0.22
   Year Sales Forecast Error Error 3 2003 8.40 9.09 20.69 0.47
        1 6.00 6.80 20.80 0.64 4 2004 10.20 10.54 20.34 0.12
        2 11.00 8.90 2.10 4.41 5 2005 12.50 12.00 0.50 0.25
        3 9.00 11.00 22.00 4.00 6 2006 13.30 13.46 20.16 0.02
        4 14.00 13.10 0.90 0.81 7 2007 13.70 14.91 21.21 1.47
        5 15.00 15.20 20.20 0.04 8 2008 17.20 16.37 0.83 0.69
        6 17.30 Total 9.9 9 2009 18.10 17.83 0.27 0.07
10 2010 19.28 Total 3.427333
MSE 5 9.9y5 5 1.98
c.
T6 5 4.7 1 2.1(6) 5 17.3 Tt 5 4.72 1 1.46t
18. a.  c.
T10 5 4.72 1 1.46(10) 5 19.28
33.0
22. a. The time series plot shows an upward linear trend.
32.0
b. Tt 5 19.992811.7738t
Percentage in Portfolio

31.0
c.
$1.77
30.0
d. T9 5 19.9928 1 1.7738(9) 5 35.96
29.0
24. a. 
The time series plot shows a horizontal pattern. But,
28.0
there is a seasonal pattern in the data. For instance, in
27.0 each year the lowest value occurs in quarter 2 and the
26.0 highest value occurs in quarter 4.
25.0
1 2 3 4 5 6 7 8 9
Period (t)
The time series plot indicates a horizontal pattern.

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-39

b.

Seasonality Squared
Forecast
Forecast
Year Quarter Period QTR1 QTR2 QTR3 Series Forecast Error Error
1 1 1 1 0 0 71 67.00   4.00 16.00
2 2 0 1 0 49 47.00   2.00  4.00
3 3 0 0 1 58 57.00   1.00  1.00
4 4 0 0 0 78 77.00   1.00  1.00
2 1 5 1 0 0 68 67.00   1.00  1.00
2 6 0 1 0 41 47.00 26.00 36.00
3 7 0 0 1 60 57.00   3.00  9.00
4 8 0 0 0 81 77.00   4.00 16.00
3 1 9 1 0 0 62 67.00 25.00 25.00
2 10 0 1 0 51 47.00   4.00 16.00
3 11 0 0 1 53 57.00 24.00 16.00
4 12 0 0 0 72 77.00 25.00 25.00
Total 166.00

b0 b1 b2 b3
77.00 210.00 230.00 220.00

c. 
The quarterly forecasts for next year are as follows: c. The equation is
Quarter 1 forecast 5 77.0 2 10.0(1) 2 30.0(0) 2 Revenue 5 270.1 1 45.0 Qtr1 1 128 Qtr2
20.0(0) 5 67           1 257 Qtr3 1 11.7 Period
Quarter 2 forecast 5 77.0 2 10.0(0) 2 30.0(1) 2 Quarter 1 forecast 5 221
20.0(0) 5 47 Quarter 1 forecast 5 315
Quarter 3 forecast 5 77.0 2 10.0(0) 2 30.0(0) 2 Quarter 1 forecast 5 456
20.0(1) 5 57 Quarter 1 forecast 5 211
Quarter 4 forecast 5 77.0 2 10.0(0) 2 30.0(0) 2
20.0(0) 5 77 Chapter 16
26. a. 
There appears to be a seasonal pattern in the data and
2. a. 0.82
perhaps a moderate upward linear trend.
b. Salest 5 2492 2 712 Qtr1t 2 1512 Qtr2t 1 327 Qtr3t b. 
p1 5 0.5, p2 5 0.5
c. The quarterly forecasts for next year are as follows: c. 
p1 5 0.6, p2 5 0.4
Quarter 1 forecast 5 1780 3. a. 0.10 as given by the transition probability
Quarter 2 forecast 5 980
Quarter 3 forecast 5 2819 b. p1 5 0.90p1 1 0.30p2 (1)
Quarter 4 forecast 5 2492 p2 5 0.10p1 1 0.70p2
 (2)
d. Salest 5 2307 2 642 Qtr1t 2 1465 Qtr2t 1 350 Qtr3t 1 p1 1 p2 5 1
 (3)
23.1 t
Using (1) and (3),
The quarterly forecasts for next year are as follows:
Quarter 1 forecast 5 2058 0.10p1 1 0.30p2 5 0
Quarter 2 forecast 5 1258 0.10p1 2 0.30(1 2 p1) 5 0
Quarter 3 forecast 5 3096   0.10p1 2 0.30 1 0.30p1 5 0
Quarter 4 forecast 5 2769
0.40p1 5 0.30
28. a. 
The time series plot shows both a linear trend and sea-
p1 5 0.75
sonal effects.
b. Revenuet 5 70.0 1 10.0 Qtr1t 1 105 Qtr2t 1 245 Qtr3t p2 5 (1 2 p1) 5 0.25
Quarter 1 forecast 5 80 4. a. p1 5 0.92, p2 5 0.08
Quarter 1 forecast 5 175 b. $85
Quarter 1 forecast 5 315 6. a. Given the opposing player last chose Rock, the transition
Quarter 1 forecast 5 70 matrix shows that she is most likely to choose Paper next
(with probability 0.42). Therefore, you should choose
Scissors (because Scissors beats Paper).

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 A-40 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

b. Rock 10. p1 5 0.80p1 1 0.05p2 1 0.40p3 (1)

0.27
p2 5 0.10p1 1 0.75p2 1 0.30p3 (2)
p3 5 0.10p1 1 0.20p2 1 0.30p3 (3)
Rock Paper also
0.42

0.31
p1 1 p2 1 p3 5 1 (4)
Scissors Using (1), (2) and (4) we have p1 5 0.442, p2 5 0.385,
0.27 and p3 5 0.173.
The Markov analysis shows that Special B now has the
Rock largest market share. In fact, its market share has increased
0.36 by almost 11%. The MDA brand will be hurt most by the
introduction of the new brand, T-White. People who switch
0.42 Paper Paper
0.15 from MDA to T-White are more likely to make a second
Rock
0.49 switchback to MDA.
Scissors

12. sI 2 Qd 5 310 01 4 2 30.4 0.3

0.1 0.5 4 5 3
0.6
2 0.1 0.5 4
2 0.3

Rock
53
0.37 2.224
0.31 1.85 1.11
0.18
N 5 sI 2 Qd 21

Paper
NR 5 3
0.37 2.224
23
0.2 0.24
5 3
0.52 0.48 4
0.55 1.85 1.11 0.2 0.1 0.59 0.41

Scissors 0.27
Scissors
0.59 probability state 3 units end up in state 1;
0.52 probability state 4 units end up in state 1.
c. The one step probability matrix is
30 14 Q 5 30.05 0.254
1 0 0.25 0.25
13. I 5

3 4
0.27 0.42 0.31
P 5 0.36 0.15 0.49
sI 2 Qd 5 3
2 0.05 0.75 4
0.75 2 0.25
0.18 0.55 0.27

53
0.0909 1.36364
The probability your opponent will choose Paper 1.3636 0.4545
N 5 sI 2 Qd 21
two rounds from now given she chose Rock last
round is given by p2(2). This can be found from
NR 5 3
0.0909 1.36364 30.5 0.5 4
5 3
0.727 0.273 4
1.3636 0.4545 0.5 0.01 0.909 0.091
P(2) by first finding P(1) as follows:

3 4
0.27 0.42 0.31
BNR 5 f400 5000g3
0.727 0.2734
0.909 0.091
P(1) 5 [1 0 0] 0.36 0.15 0.49 5 f7271 1729g
0.18 0.55 0.27
Estimate $1729 in bad debts.
  5 [0.27 0.42 31] 14. 3580 will be sold eventually; 1420 will be lost.

3 4
0.27 0.42 0.31 16. a. The Injured and Retired states are absorbing states.
b. Rearrange the transition probability matrix to the
P(2) 5 [0.27 0.35 37] 0.36 0.15 0.49
0.18 0.55 0.27 following:

  5 [0.28 0.35 37]
Injured Retired Backup Starter
So, p2(2) is 0.35. Injured 1   0   0   0
Retired 0   1   0   0
8. a. p1 5 0.85p1 1 0.20p2 1 0.15p3 (1)
Backup 0.1  0.1  0.4  0.4
p2 5 0.10p1 1 0.75p2 1 0.10p3 (2)
Starter 0.15 0.25 0.1  0.5
p2 5 0.05p1 1 0.05p2 1 0.75p3 (3)
p1 1 p2 1 p3 5 1 (4)
  Using (1), (2), and (4) provides three equations with
three unknowns; solving provides p1 5 0.548, p2 5
sI 2 Qd 5 3 2 0.6
0.1
2 0.4
0.54
0.286, and p3 5 0.166. 38.5% of Starters will eventually be Injured and 61.5%
b. 16.6% as given by p3 will be Retired.
c. Quick Stop should take
667 2 0.548(1000) 5 119 Murphy’s customers
 and 333 2 0.286(1000) 5   47 Ashley’s customers
   Total 166 Quick Stop customers
   It will take customers from Murphy’s and Ashley’s.

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-41

Chapter 17   5x1 1  5x2 1 s2 5 20

   x1, x2, s1, s2 $ 0
1. a. With x1 5 0, we have b. Partial initial simple tableau:
x2  5   6 (1) x1 x2 s1 s2

4x2 1 x3 5 12 (2)
60 90 0 0
From (1), we have x2 5 6; substituting for x2 in (2)

yields 15 45 1 0 90
1 x3 5 12
4(6)   5  5 0 1 20
x3 5 12 2 24 5 212
Basic solution: x1 5 0, x2 5 6, x3 5 212
b. With x2 5 0, we have  5. a. 
Initial tableau:
x1 x2 s1 s2
3x1  5   6 (3)
2x1 1 x3 5 12 (4) Basis cB 5 9 0 0
From (3), we find x1 5 2; substituting for x1 in (4)
 s1 0 10 9 1 0 90
yields s2 0 25 3 0 1 15
1 x3 5 12
2(2) 
zj 0 0 0 0  0
x3 5 12 2 4 5 8
cj 2 zj 5 9 0 0
Basic solution: x1 5 2, x2 5 0, x3 5 8
c. With x3 5 0, we have b. Introduce x2 at the first iteration
3x1 1  x2 5   6 (5) c. Max 5x1 1 9x2
2x1 1   4x2 5 12 (6) s.t.
10x1 1 9x2 # 90
Multiplying (6) by 32 and subtracting from (5)

25x1 1 3x2 # 15
yields
 x1, x2 $ 0
3x1 1  x2 5 6  6. a.
2(3x1 1 6x2) 5 218 zj 0 0 0 0 0 0 0
25x2 5 212 cj 2 zj 5 20 25 0 0 0
x2 5 125 b. Max 5x1 1 20x2 1 25x3 1 0s1 1 0s2 1 0s3
Substituting x2 5 125 into (5) yields s.t.
2x1 1  1x2      1 1s1                5 40
3x1 1 125 5 6 2x2  1 1x3     1 1s2       5 30
3x1 5 185 3x1  2 12 x3        1 1s3 5 15
x1 5 65  x1, x2, x3, s1, s2, s3 $ 0
Basic solution: x1 5 65, x2 5 125, x3 5 0 c. s1, s2, s3; it is the origin
d. The basic solutions found in parts (b) and (c) are basic d. 0
feasible solutions. The one in part (a) is not because e. x3 enters, s2 leaves
x3 5 212. f. 30, 750
g. x1 5 10, s1 5 20
 2. a. Max  x1 1 2x2  x2 5 0, s2 5 0, Value 5 800
s.t.  x3 5 30, s3 5 0
 x1 1 5x2 1 s1  5 10  8. a.  x1 5 540, x2 5 252
2x1  1 6x2  1 s2 5 16 b. $7668
 x1, x2, s1, s2 $ 0 c. 630, 480, 708, 117
b. 2 d. 0, 120, 0, 18
c. x1 5 0, x2 5 0, s1 5 10, s2 5 16; feasible 10. x2 5 250, x3 5 150, s2 5 4000
 x1 5 0, x2 5 2, s1 5 0, s2 5 4; feasible Value  5 4850
 x1 5 0, x2 5 83, s1 5 2103, s2 5 0; not feasible 12. A 5 0, B 5 0, C 5 3313; Profit 5 500
 x1 5 10, x2 5 0, s1 5 0, s2 5 24; not feasible
14. a. x1 5 0, x2 5 50, x3 5 75; Profit 5 $210
 x1 5 8, x2 5 0, s1 5 2, s2 5 0; feasible
c. Grade B grapes and labor
 x1 5 5, x2 5 1, s1 5 0, s2 5 0; feasible
15. Max       4x1 1 2x2 2 3x3 1 5x4 1 0s1 2 Ma1 1 0s2 2 Ma3
d. x1 5 8, x2 5 0; Value 5 8 s.t.
2x1 2 1x2 1 1x3 1 2x4 2 1s1 1  1a1  5 50
 4. a. 
Standard form:
3x1  2 1x3 1 2x4    1 1s2  5 80
Max 60x1 1 90x2 1x1 1 1x2  1 1x4    1 1a3 5 60
s.t. x1, x2, x3, x4, s1, s2, a1, a3 $ 0
 15x1 1 45x2 1 s1 5 90

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 A-42 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

16. 25. Unbounded solution:

Max 24x1 2 5x2 2 3x3 1 0s1 1 0s2 1 0s4 2 Ma1 2 Ma2 2 Ma3
x1 x2 s1 s2 s3
s.t.
4x1  1 2x3 2 1s1  1 1a1  5 20 Basis cB 1 1 0 0 0
2 1x2 1 1x3  2 1s2  1 1a2  5   8
21x1 1 2x2  1 1a3 5   5 s3 0 83 0 213 0 1  4
2x1 1 1x2 1 1x3  1 1s4  5 12 s2 0 4 0 21 1 0 36
x1, x2, x3, s1, s2, s4, a1, a2, a3 $ 0 x2 1 43 1 216 0 0  4
17. Converting to a max problem and solving using the sim- zj 43 1 216 0 0  4
plex method, the final simplex tableau is cj 2 zj 213 0 16 0 0
x1 x 2 x 3 s1 s2
Basis cB 23 24 28 0 0 Incoming
column
x1 23 1 0 21 2¼ ⅛ 1
x2 24 0 1 2 0 2¼ 4 26. Alternative optimal solution: x1 5 4, x2 5 0, x3 5 0
x1 5 0, x2 5 0, x3 5 8
zj 23 24 25 34 58 219
28. Infeasible
cj 2 zj 0 0 23 234 258
30. a. Infeasible solution; not enough sewing time
b. Alternative optimal solutions: x1 5 1000, x2 5 0,
18. x2 5 60, x3 5 60, s3 5 20; Value 5 2040 x3 5 250 or x1 5 1000, x2 5 200, x3 5 0
20. 2400 boxes of 33 gallon bags Profit  5 $4000
Profit  5 $480
22. x1 5 480, x4 5 480, x6 5 800; Value 5 46,400 Chapter 18
23. Final simplex tableau:  1. a. Recomputing the cj 2 zj values for the nonbasic vari-
ables with c1 as the coefficient of x1 leads to the follow-
x1 x2 s1 s2 a2
ing inequalities that must be satisfied:
Basis cB 4 8 0 0 2M  For x2, we get no inequality because of the zero in the
x2 column for the row in which x1 is a basic variable
x2 8 1 1 12 0 0 5  For s1, we get
a2 2M 22 0 212 21 1 3
1 4 2 c1 # 0
0 
zj 8  1 2M 8 4  1 M/2 1M 2M 40 2 3M c1 $ 4
cj 2 zj 24 2 2M 0 24 2 M/2 2M 0
For s2, we get

0 2 12 1 2c1 #  0
Infeasible; optimal solution condition is reached with the 2c1 # 12
artificial variable a2 still in the solution c1 #  6
24. Alternative optimal solutions: Range: 4 # c1 #  6
b. Because x2 is nonbasic, we have
x1 x 2 s1 s2 s3
c2 # 8
Basis cB 23 23 0 0 0 c. Because s1 is nonbasic, we have
s2 0 0 0 243 1 16 4 cs1 # 1
x1 23 1 0 223 0 112 4   2. a. 31.25 # c2 # 83.33
x2 23 0 1 23 0 213 4 b. 243.33 # cs2 # 8.75
c. cs3 # 26/5
zj 23 23 0 0 34 224 d. Variables do not change; Value 5 $1920
cj 2 zj 0 0 0 0 234
 3. a. It is the zj value for s1; dual price 5 1
b. It is the zj value for s2; dual price 5 2
Indicates alternative optimal solutions exist: c. It is the zj value for s3; dual price 5 0
x1 5 4, x2 5 4, z 5 24 d.  s3 5   80 1 5(22) 5   70
x1 5 8, x2 5 0, z 5 24  x3 5   30 1 5(21) 5  25
 x1 5   20 1 5(1) 5   25
 Value 5 220 1 5(1) 5 225
e.  s3 5   80 2 10(22) 5 100
 x3 5   30 2 10(21) 5   40
x1 5   20 2 10(1) 5   10
 Value 5 220 2 10(1) 5 210

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-43

  4. a. 80 1 Db1(22) $ 0 Db1 #  40 19. The canonical form is

30  1 Db1(21) $ 0 Db1 #  30 Max 3x1 1   x2 1 5x3 1 3x4
 20  1 Db1(1) $ 0 Db1 $ 220 s.t.
 220 # Db1 # 30 3x1 1 1x2 1 2x3  #  30
100  #  b1 # 150  23x1 2 1x2 2 2x3  #  230
b.  80  1 Db2(7) $ 0 Db2 $ 280/7  22x1 2 1x2 2 3x3 2   x4 #  215
 30  1 Db2(3) $ 0 Db2 $ 210 2x2  1 3x4 #  25
 20  1 Db2(22) $ 0 Db2 #  10  x1, x2, x3, x4 $ 0
 210 # Db2 # 10 The dual is
40  #  b2 # 60 Min 30u9 2 30u
1 10 2 15u2 1 25u3
c.  80  2 Db3(1) $   0 → Db3 # 80 s.t.
 30  2 Db3(0) $   0    3u9 2  1 3u10 2   2u2 $ 3
 20  2 Db3(0) $   0     u9 2 1     u10 2     u2 1    2u3 $ 1
 Db3 #   80    2u9 2   1 2u10 2   3u2 $ 5
 b3 # 110  2     u2 1    3u3 $ 3
 1 u10, u2, u3 $ 0
u9,
 6. a. 6.3  # c1 # 13.5
b. 62/3 # c2 # 142/7 20. a. Max 30u1 1 20u2 1 80u3
c. Variables do not change; Value 5 $7164 s.t.
  u1  1   u3 # 1
d. Below 62/3 or above 142/7
u2 1  2u3 # 1
e. x1 5 300, x2 5 420; Value 5 $9300
  u1, u2, u3 $ 0
 8. a. x1 5 5220/11, x2 5 3852/11; Value 5 86,868/11
b. No, s1 would enter the basis b. x1 5 30, x2 5 25
c. Reduce cost by $0.50
10. a. Increase in profit
b. No 22. a. Max 10x1 1 5x2
s.t.
12. a. 14  # b1 # 211/2   x1  $ 20
b. 4  # b2 x2 $ 20
c. 183/4 # b3 # 30   x1  # 100
d. Dual price  5 400/9; Range: 183/4 # b3 # 30 x2 # 100
14. a. 400/3 # b1 # 800  3x1 1 x2 # 175
b. 275  # b2   x1, x2 $ 0
c. 275/2 # b3 # 625 b. Min 220u1 2 20u2 1 100u3 1 100u4 1175u5
16. a. x1 5 4000, x2 5 10,000; Total risk 5 62,000 s.t.
b. Increase it by 2.167 per unit 2u1  1      u3  1    3u5 $ 10
c. 48,000  # b2 # 102,000 2   u2  1     u4 1       u5 $   5
d. x1 5 5667, x2 5 9167; Total risk 5 72,833 u1, u2, u3, u4, u5 $ 0
e. Variables do not change; Total risk 5 66,000 Solution: u4 5 5/3, u5 5 10/3
c. x1 5 25, x2 5 100; commission 5 $750
17. a. The dual is given by:
24. Check both constraints with x1 5 10, x2 5 30, x3 5 15
Min 550u1 1 700u2 1 200u3 Both constraints are satisfied; solution remains optimal
s.t.
1.5u1 1   4u2 1   2u3 $ 4 Chapter 19
2u1 1   1u2 1   3u3 $ 6 2. a. An initial solution is
4u1 1   2u2 1   1u3 $ 3
Los San San
3u1 1   1u2 1   2u3 $ 1
Angeles Francisco Diego
u1, u2, u3 $ 0
b. Optimal solution: u1 5 3/10; u2 5 0, u3 5 54/30 4 10 6
The zj values for the four surplus variables of the dual
show x1 5 0, x2 5 25, x3 5 125, and x4 5 0 San Jose 100
c. Because u1 5 3/10, u2 5 0, and u3 5 54/30, machines A
and C (uj . 0) are operating at capacity; m
­ achine C is
the priority machine since each hour is worth 54/30.
8 16 6

18. The dual is given by Las Vegas 100 200

Max 5u1 1 5u2 1 24u3
s.t.
14 18 10
15u1 1 4u2 1 12u3 # 2800
15u1 1 8u2 # 6000 Tucson 300
u1  1   8u3 # 1200
u1, u2, u3 $ 0
Total cost  5 $7800

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 A-44 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

S b. Note that the initial solution is degenerate because only 4. b. x12 5 300, x21 5 100, x22 5 100, x23 5 300, x31 5
4 cells are occupied; a zero is assigned to the cell in row 100 Cost 5 10,400
3 and column 1 so that the row and column indexes can Note that an alternative optimal solution can be found
be computed by shipping 100 units over the P3 2 W3 route.

ui vj 6. 
The optimal solution is to transport 12 truckloads from
Depot 4 to Centerville, 11 truckloads from Depot 2 to Iris
4 8 2 City, 7 truckloads from Depot 1 to Hillsboro, 3 truckloads
from Depot 1 and 19 truckloads from Depot 4 to Kenley,
4 10 6
14 truckloads from Depot 4 to Elm Heights, and 22
2 4 truckloads from Depot 2 and 3 truckloads from Depot 3
0
to Aurora. The optimal solution results in total deliver-
100 ies of 12 truckloads to Centerville, 11 truckloads to Iris
8 16 6 City, 7 truckloads to Hillsboro, 22 truckloads to Kenley,
14 truckloads to Elm Heights, and 25 truckloads to Au-
4 4 rora and requires the drivers to travel 745 total miles.
100 200   Note that although several neighborhoods will not re-
ceive as many truckloads of salt as they need, Iris City
14 18 10 needs 11 truckloads and will receive none under the op-
timal solution. Perhaps some truckloads should be set
10 22 aside for Iris City and the problem resolved for the other
0 300 six neighborhoods and the remaining truckloads of salt.

Cell in row 3 and column 3 is identified as an incoming 8. Subtract 10 from row 1, 14 from row 2, and 22 from row
cell; however, 0 units can be added to this cell. Initial 3 to obtain:
solution remains optimal.
1 2 3
c. 
Jackson 0 6 22
San Jose–San Francisco: 100
Las Vegas–Los Angeles: 200 Ellis 0 8 26
Las Vegas–San Diego: 100
Tucson–San Francisco: 200 Smith 0 2 12
Tucson–San Diego 100
  Total Cost 5 $7800 Subtract 0 from column 1, 2 from column 2, and 12 from
column 3 to obtain:
Note that this total cost is the same as for part (a); thus, 1 2 3
we have alternative optimal solutions.
d. 
The final transportation tableau is shown; the total Jackson 0 4 10
transportation cost is $8000, an increase of $200 over
Ellis 0 6 14
the solution to part (a):
Smith 0 0 0
ui vj
2 10 2 Two lines cover the zeros; the minimum unlined ele-
ment is 4; step 3 yields:
4 10 6
1 2 3
0 2 4 100
100 Jackson 0 0 6
Ellis 0 2 10
8 16 M
Smith 0 0 0
6
M{8
300
200 100
Optimal solution: Jackson–2
14 18 10 Ellis–1
Smith–3
8 4 300 Time requirement is 64 days.
100 200
10. Terry 2; Carle 3; MacClymonds 1; Higley unassigned
200 300 200 700
Time 5 26 days

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-45

11. We start with the opportunity loss matrix: Chapter 21

7 12 1 8 0 5 12 1 6 0  2. a. The numbers in the squares above each node represent
the shortest route from that node to node 10:
2 0 8 5 0 0 0 8 3 0
18 8
0 8 0 0 0 0 10 2 0 2
2 7
7 11 7
3 6 0 6 0 1 6 0 4 0 10 8
26 19 5 10
8 9
3 2 7 4 0 1 2 7 2 0
8 10
1 3 8 10
6 10
17
1 2 3 4 D* 5
5
6
21 6 6
4 11
Shoe 4 11 0 5 0
4 9
Toy 0 0 8 3 1
Auto 0 10 2 0 3 The shortest route is given by the sequence of nodes
Houseware 1 6 0 4 1 (1–4–6–9–10).
b. The shortest route from node 4 to node 10 is given by
Video 0 1 6 1 0
(4–6–9–10).
*D 5 Dummy c. 

Optimal Solution Profit Route Value Route Value

Toy 2 18 (1–2–5–7–10) 32 (1–3–6–8–10) 34
Auto 4 16 (1–2–5–8–10) 36 (1–3–6–9–10) 31
Housewares 3 13 (1–2–5–9–10) 28 (1–4–6–8–10) 29
Video 1 14 (1–3–5–7–10) 31 (1–4–6–9–10) 26
(1–3–5–8–10) 35
Total  61 (1–3–5–9–10) 27

12. Toy: 2; Auto: 4; Housewares: 3; Video: 1

 3. Use four stages (one for each type of cargo); let the state
Chapter 20 variable represent the amount of cargo space remaining
a. In hundreds of pounds, we have up to 20 units of capac-
2. Connect Distance ity available:
1–6 2
6–7 3 Stage 1 (Cargo Type 1):

7–8 1
7–10 2 x1 0 1 2 d *1 f1(x1) x0
10–9 3 0–7 0 — — 0  0 0–7
9–4 2  8–15 0 22 — 1 22 0–7
16–20 0 22 44 2 44 0–4
9–3 3
3–2 1
4–5 3 Stage 2 (Cargo Type 2):

7–11 4
8–13 4 x2 0 1 2 d 2* f2(x2 ) x1
14–15 2 0–4  0 — — 0  0 0–4
15–12 3 5–7   0 12 — 1 12 0–2
8–9 22 12 — 0 22 8–9
14–13 4 10–12 22 12 24 2 24 0–2
Total  37 13–15 22 34 24 1 34   8–10
16–17 44 34 24 0 44 16–17
4. 1–4, 2–3, 3–4, 4–5, 4–6, 6–7, 7–8, 8–9, 9–11, 11–10
18–20 44 34 46 2 46   8–10
Minimum length 5 28 miles

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 A-46 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems

Stage 3 (Cargo Type 3):

 b. Internet 5 1, Print 5 2, Radio 5 1, TV 5 2; Max
exposure 5 139
c. For part (a): Internet 5 2, Print 5 3, Radio 5 3; Max
x3 0 1 2 3 4 d 3* f3(x3 ) x2
exposure 5 152
0–2  0 — — — — 0  0 0–2 For part (b): Internet 5 2, Print 5 3, Radio 5 1; Max
3–4  0  7 — — — 1  7 0–1 exposure 5 127
5 12  7 — — — 0 12 5
6–7 12  7 14 — — 2 14 0–1 10. The optimal production schedule is as follows:
8 22 19 14 — — 0 22 8
9 22 19 14 21 — 0 22 9 Beginning Ending
10 24 19 14 21 — 0 24 10 Month Inventory Production Inventory
11 24 29 26 21 — 1 29 8
12 24 29 26 21 28 1 29 9 1 10 20 10
13 34 31 26 21 28 0 34 13 2 10 20  0
14–15 34 31 36 33 28 2 36 8–9 3  0 30  0
16 44 41 38 33 28 0 44 16
17 44 41 38 43 40 0 44 17
18 46 41 38 43 40 0 46 18
19 46 51 48 45 40 1 51 16
Appendix A
20 46 51 48 45 50 1 51 17  2. 5F6*$F$3
 4. 
Stage 4 (Cargo Type 4):


x4 0 1 2 3 d 4* f4(x4 ) x3
20 51 49 50 45 0 51 20

Tracing back through the tables, we find

State State
Variable Optimal Variable
Stage Entering Decision Leaving
4 20 0 20
3 20 1 17
2 17 0 17
1 17 2  1

Load 1 unit of cargo type 3 and 2 units of cargo type 1

for a total return of $5100.
b. Only the calculations for stage 4 need to be repeated; the
entering value for the state variable is 18:

x4 0 1 2 3 d 4* f4(x4 ) x3
18 46 47 42 38 1 47 16

Optimal solution: d 4 5 1, d3 5 0, d2 5 0, d1 5 2

Value 5 47
 4. a. Alternative optimal solutions: value 5 186 6. 
Solution 1: A1–3, A2–2, A3–0, A4 –3 Cell Formula
Solution 2: A1–2, A2–3, A3–0, A4 –3 D14 5C14*$B$3
b. Value 5 172; A1–1, A2–2, A3– 0, A4 –3 E14 5C14*$B$7
 6. a. The optimal sequence of assignments is A–G–J–M. F14 5C14*$B$9
The total training period for this solution is 30 months. G14 5$B$5
b. Choose H. The training program can then be completed H14 5SUM(E14:G14)
in 17 months. I14 5D14 -H14
 8. a. Internet 5 1, Print 5 3, Radio 5 1, TV 5 3; Max ex-
posure 5 169

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 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-47

A B C D E F G H I
1 Cox Electric Breakeven Analysis
2
3 Revenue per Unit $0.63
4
5 Fixed Costs $10,000.00
6
7 Material Cost per Unit $0.15
8
9 Labor Cost per Unit $0.10
10
11
12 Model
13 Volume Total Revenue Material Cost Labor Cost Fixed Cost Total Cost Profit
14 10000 $6,300.00 $1,500.00 $1,000.00 $10,000.00 $12,500.00 –$6,200.00
15 20000 $12,600.00 $3,000.00 $2,000.00 $10,000.00 $15,000.00 –$2,400.00
16 30000 $18,900.00 $4,500.00 $3,000.00 $10,000.00 $17,500.00 $1,400.00
17

8. Grade Count
F 1
D 2
C- 1
C- 1
C+ 0
B- 2
B 1
B+ 0
A- 1
A 3

A B C D E F G H I J K L M
1 OM 455
2 Section 001
3 Course Grading Scale Based on Course Average:
4 Lower Upper Course
5 Limit Limit Garde
6 0 59 F New Scale
7 60 69 D
8 70 79 C Lower Upper Grade
9 80 89 B 0 59 F
10 90 100 A 60 69 D
11 Grade 70 72 C-
12 Midterm Final Course Course Based on 73 76 C-
13 Lastname Score Score Average Grade New Scale 77 79 C-
14 Benson 70 56 63.0 D D 80 82 B-
15 Chin 95 91 93.0 A A 83 86 B
16 Choi 82 80 81.0 B B- 87 89 B-
17 Cruz 45 78 61.5 D D 90 92 A-
18 Doe 68 45 56.5 F F 93 100 A
19 Honda 91 98 94.5 A A
20 Hume 87 74 80.5 B B-
21 Jones 60 80 70.0 C C-
22 Miranda 80 93 86.5 B B
23 Murigami 97 98 97.5 A A
24 Ruebush 90 91 90.5 A A-
25
26
27 Grade Count
28 F 1
29 D 2
30 C- 1
31 C- 1
32 C- 0
33 B- 2
34 B 1
35 B- 0
36 A- 1
37 A 3
38

D E F
12 Course Course Based on
13 Average Grade New Scale
14 =AVERAGE(B14:C14) =VLOOKUP(D14,B6:D10,3,TRUE) =VLOOKUP(D14,$J$9:$L$18,3,TRUE)
15 =AVERAGE(B15:C15) =VLOOKUP(D15,B6:D10,3,TRUE) =VLOOKUP(D15,$J$9:$L$18,3,TRUE)
16 =AVERAGE(B16:C16) =VLOOKUP(D16,B6:D10,3,TRUE) =VLOOKUP(D16,$J$9:$L$18,3,TRUE)
17 =AVERAGE(B17:C17) =VLOOKUP(D17,B6:D10,3,TRUE) =VLOOKUP(D17,$J$9:$L$18,3,TRUE)
18 =AVERAGE(B18:C18) =VLOOKUP(D18,B6:D10,3,TRUE) =VLOOKUP(D18,$J$9:$L$18,3,TRUE)
19 =AVERAGE(B19:C19) =VLOOKUP(D19,B6:D10,3,TRUE) =VLOOKUP(D19,$J$9:$L$18,3,TRUE)
06529_appE_web.indd 47
20 =AVERAGE(B20:C20) =VLOOKUP(D20,B6:D10,3,TRUE) =VLOOKUP(D20,$J$9:$L$18,3,TRUE)
10/6/17 9:36 AM
 D 2
30 C- 1
31 C- 1
32 C- 0
33 B- 2
34 B 1
35 B- 0
36 A- 1
A 3
A-48 37 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems
38

D E F
12 Course Course Based on
13 Average Grade New Scale
14 =AVERAGE(B14:C14) =VLOOKUP(D14,B6:D10,3,TRUE) =VLOOKUP(D14,$J$9:$L$18,3,TRUE)
15 =AVERAGE(B15:C15) =VLOOKUP(D15,B6:D10,3,TRUE) =VLOOKUP(D15,$J$9:$L$18,3,TRUE)
16 =AVERAGE(B16:C16) =VLOOKUP(D16,B6:D10,3,TRUE) =VLOOKUP(D16,$J$9:$L$18,3,TRUE)
17 =AVERAGE(B17:C17) =VLOOKUP(D17,B6:D10,3,TRUE) =VLOOKUP(D17,$J$9:$L$18,3,TRUE)
18 =AVERAGE(B18:C18) =VLOOKUP(D18,B6:D10,3,TRUE) =VLOOKUP(D18,$J$9:$L$18,3,TRUE)
19 =AVERAGE(B19:C19) =VLOOKUP(D19,B6:D10,3,TRUE) =VLOOKUP(D19,$J$9:$L$18,3,TRUE)
20 =AVERAGE(B20:C20) =VLOOKUP(D20,B6:D10,3,TRUE) =VLOOKUP(D20,$J$9:$L$18,3,TRUE)
21 =AVERAGE(B21:C21) =VLOOKUP(D21,B6:D10,3,TRUE) =VLOOKUP(D21,$J$9:$L$18,3,TRUE)
22 =AVERAGE(B22:C22) =VLOOKUP(D22,B6:D10,3,TRUE) =VLOOKUP(D22,$J$9:$L$18,3,TRUE)
23 =AVERAGE(B23:C23) =VLOOKUP(D23,B6:D10,3,TRUE) =VLOOKUP(D23,$J$9:$L$18,3,TRUE)
24 =AVERAGE(B24:C24) =VLOOKUP(D24,B6:D10,3,TRUE) =VLOOKUP(D24,$J$9:$L$18,3,TRUE)
25
26
27 Grade Count
28 F =COUNTIF($FS14:$F$24,E28)
29 D =COUNTIF($FS14:$F$24,E29)
30 C- =COUNTIF($FS14:$F$24,E30)

31 C- =COUNTIF($FS14:$F$24,E31)
32 C+ =COUNTIF($FS14:$F$24,E32)
33 B- =COUNTIF($FS14:$F$24,E33)
34 B =COUNTIF($FS14:$F$24,E34)
35 B+ =COUNTIF($FS14:$F$24,E35)
36 A- =COUNTIF($FS14:$F$24,E36)
37 A =COUNTIF($FS14:$F$24,E37)

10. A B C D E F G H
1 Newton Scientific Calculators Total Volume
2 Customer Zone Model Volume (000 units) (000) Units
3 Malaysia N350 399.0 Malaysia 1928.6
4 China N350 3158.3 China 5328.5
5 France N350 1406.0 France 3486.6
6 Brazil N350 163.5 Brazil 1144.7
7 US Northeast N350 68.7 US Northeast 430.2
8 US Southeast N350 999.7 US Southeast 3203.3
9 US Midwest N350 544.9 US Midwest 4482.7
10 US West N350 1804.0 US West 5969.9
11 Malaysia N450 228.0
12 China N450 540.9 Total 25974.5
13 France N450 289.8
14 Brazil N450 240.5
15 US Northeast N450 313.2 Total Volume
16 US Southeast N450 681.3 (000) Units
17 US Midwest N450 1720.3 N350 8544.1
18 US West N450 2922.3 N450 6936.3
19 Malaysia N900 1301.6 N900 10494.1
20 China N900 1629.3
21 France N900 1790.8 Total 25974.5
22 Brazil N900 740.7
23 US Northeast N900 48.3
24 US Southeast N900 1522.3
25 US Midwest N900 2217.5
26 US West N900 1243.6
27
28 Total 25974.5
29

G H
1 Total Volume
2 (000) Units
3 Malaysia =SUMIF($A$3:$A$26,G3,$C$3:$C$26)
4 China =SUMIF($A$3:$A$26,G4,$C$3:$C$26)
5 France =SUMIF($A$3:$A$26,G5,$C$3:$C$26)
6 Brazil =SUMIF($A$3:$A$26,G6,$C$3:$C$26)
7 US Northeast =SUMIF($A$3:$A$26,G7,$C$3:$C$26)
8 US Southeast =SUMIF($A$3:$A$26,G8,$C$3:$C$26)
06529_appE_web.indd 48 10/6/17 9:36 AM
 21 France N900 1790.8 Total 25974.5
22 Brazil N900 740.7
23 US Northeast N900 48.3
24 US Southeast N900 1522.3
25 US Midwest N900 2217.5
26 US West N900 1243.6
27
28 Total 25974.5
29 Appendix E  Self-Test Solutions and Answers to Even-Numbered Problems A-49

G H
1 Total Volume
2 (000) Units
3 Malaysia =SUMIF($A$3:$A$26,G3,$C$3:$C$26)
4 China =SUMIF($A$3:$A$26,G4,$C$3:$C$26)
5 France =SUMIF($A$3:$A$26,G5,$C$3:$C$26)
6 Brazil =SUMIF($A$3:$A$26,G6,$C$3:$C$26)
7 US Northeast =SUMIF($A$3:$A$26,G7,$C$3:$C$26)
8 US Southeast =SUMIF($A$3:$A$26,G8,$C$3:$C$26)
9 US Mideast =SUMIF($A$3:$A$26,G9,$C$3:$C$26)
10 US West =SUMIF($A$3:$A$26,G10,$C$3:$C$26)
11
12 Total =SUM(H3:H10)
13
14
15 Total Volume
16 (000) Units
17 N350 =SUMIF($B$3:$B$26,G17,$C$3:$C$26)
18 N450 =SUMIF($B$3:$B$26,G18,$C$3:$C$26)
19 N900 =SUMIF($B$3:$B$26,G19,$C$3:$C$26)
20
21 Total =SUM(H17:H19)
22

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