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Case Problem 1 PDF Free

Angela Fox and Zooey Caulfield should prepare 40 meals of fish dinners and 20 meals of beef dinners each night at their new French restaurant, "The Possibility", to maximize their profit of $800. Annabelle Sizemore should invest $203,050 in an index fund and $406,090 in an internet fund to maximize her return of $29,684.69 for the coming year given her $120,000 available to invest.

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67 views6 pages

Case Problem 1 PDF Free

Angela Fox and Zooey Caulfield should prepare 40 meals of fish dinners and 20 meals of beef dinners each night at their new French restaurant, "The Possibility", to maximize their profit of $800. Annabelle Sizemore should invest $203,050 in an index fund and $406,090 in an internet fund to maximize her return of $29,684.69 for the coming year given her $120,000 available to invest.

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dunoanna39
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Rogationist College

Km. 52 Aguinaldo Highway, Lalaan 2nd Silang, Cavite

Problem Set Quantitative Techniques

Submitted by:
Frank Loyd B. Entereso

Submitted to:
Ms. Annaliza Sinfuego

July 2019
Case Problem 1: “The Possibility” Restaurant

Angela Fox and Zooey Caulfield were food and nutrition majors at State
University, as well as close friends and roommates. Upon graduation Angela and Zooey
decided to open a French restaurant in Draperton, the small town where the university
was located. There were no other French restaurants in Draperton, and the possibility of
doing something new and somewhat risky intrigued the two friends. They purchased an
old Victorian home just off Main Street for their new restaurant, which they named “The
Possibility.” Angela and Zooey knew in advance that at least initially they could not offer
a full, varied menu of dishes. They had no idea what their local customers’ tastes in
French cuisine would be, so they decided to serve only two full-course meals each
night, one with beef and the other with fish. Their chef, Pierre, was confident he could
make each dish so exciting and unique that two meals would be sufficient, at least until
they could assess which menu items were most popular. Pierre indicated that with each
meal he could experiment with different appetizers, soups, salads, vegetable dishes,
and desserts until they were able to identify a full selection of menu items. The next
problem for Angela and Zooey was to determine how many meals to prepare for each
night so they could shop for ingredients and set up the work schedule. They could not
afford too much waste. They estimated that they would sell a maximum of 60 meals
each night. Each fish dinner, including all accompaniments, requires 15 minutes to
prepare, and each beef dinner takes twice as long. There is a total of 20 hours of
kitchen staff labor available each day. Angela and Zooey believe that because of the
health consciousness of their potential clientele, they will sell at least three fish dinners
for every two beef dinners. However, they also believe that at least 10% of their
customers will order beef dinners. The profit from each fish dinner will be approximately
$12, and the profit from a beef dinner will be about $16. Formulate a linear
programming model for Angela and Zooey that will help them estimate the number of
meals they should prepare each night and solve this model using graphical or simplex
method.
SOLUTION Case Problem 1:
Let x = fish meal
Y = beef meal
V (9, 6)
1

Maximize Profit = 12x + 16y Max P = 12(9) + 16(6)


Subject to: = ₱ 204
x + y ≤ 60 V (9, 36)
2

15x + 30y ≤ 1200 Max P = 12(9) + 16(36)


x≥9 = ₱ 684
y≥6 V3 (40, 20)
x, y ≥ 0 Max P = 12(40) + 16(20)
= ₱800
V4 (54, 6)
Max P = 12(54) + 16(6)
= ₱ 744

Decision: Angela Fox and Zooey Caulfield should prepare 40 meals of fish
dinners and 20 meals of beef dinners to have a maximum profit of P800.
Case Problem 2: Annabelle Invests in the Market

Annabelle Sizemore has cashed in some treasury bonds and a life insurance
policy that her parents had accumulated over the years for her. She has also saved
some money in certificates of deposit and savings bonds during the 10 years since she
graduated from college. As a result, she has $120,000 available to invest. Given the
recent rise in the stock market, she feels that she should invest this entire amount there.
She has researched the market and has decided that she wants to invest in an index
fund tied to S&P stocks and in an Internet stock fund. However, she is very concerned
about the volatility of Internet stocks. Therefore, she wants to balance her risk to some
degree. She has decided to select an index fund from Shield Securities and an Internet
stock fund from Madison Funds, Inc. She has also decided that the proportion of the
dollar amount she invests in the index fund relative to the Internet fund should be at
least one-third but that she should not invest more than twice the amount in the Internet
fund that she invests in the index fund. The price per share of the index fund is $175,
whereas the price per share of the Internet fund is $208. The average annual return
during the last 3 years for the index fund has been 17%, and for the Internet stock fund
it has been 28%. She anticipates that both mutual funds will realize the same average
returns for the coming year that they have in the recent past; however, at the end of the
year she is likely to re-evaluate her investment strategy anyway. Thus, she wants to
develop an investment strategy that will maximize her return for the coming year.
Formulate a linear programming model for Annabelle that will indicate how much money
she should invest in each fund and solve this model by using the graphical method or
simplex method.

SOLUTION Case Problem 2:


Let x = number of shares to be invested in the index fund
Y = number of shares to be invested in the internet fund

Maximize Profit = 29.75x + 58.24y


Subject to:
175x + 208y ≤ 120,000 (686, 577)
x/y ≥ 0.33
y/x ≤ 2 (203, 406)
x, y ≥ 0
Solution Cont.
y/x = 2
y = 2x
Substitute:
175x + 208(2x) = 120,000 175(203.05) + 208y = 120,000
591x = 120,000 35,533.75 + 208y = 120,000
x = 203.05 208y = 120,000 – 35,533.75
208y = 84,466.25
208 208
y = 406.09

175x + 208y = 120,000 175x + 208(0) =120,000 175(0) + 208y = 120,000


175x = 120,000 208y =120,000
x ≥ 203.05 175 175 208 208
x = 685.71 y = 576.92
y ≤ 406.09

x,y ≥ 0

V1: y = 0 x = 203.05 V3: y = 0


(203.05, 0) 175x + 208(0) = 120,000
V2: x = 203.05 y = 406.09 175x = 120,000
(203.05,406.09) 175 175
x = 685.71
(685.71, 0)

V1: 29.75(203) + 58.24(0) = $6,039.25


V2: 29.75(203) + 58.24(406) = $29,684.69
V3: 29.75(686) + 58.24(0) = $20,408.5

Decision: Therefore, Annabelle should invest in 203 stocks of index fund


and 406 stocks of internet fund to have a profit of $29,684.69.

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