Note: This problem requires the use of a linear programming application such as Solver or Analytic Solver.A firm has prepared the following binary integer program to evaluate a number of potential new capital projects. The firm's goal is tomaximize the net present value of their decision while not spending more than their currently available capital.Max 100x1 + 120x2 + 90x3 + 135x4s.t 150x1 + 200x2 + 225x3 + 175x4 < 500 (Constraint 1)X1 + x2 + x3 + X4 2 2{Constraint 2)x2 + x4 < 1 {Constraint 3}x2 + x3 2 1 {Constraint 4)x1 = x4{Constraint 5}1, if project j is selected0, otherwiseIj =Set up the problem in Excel and find the optimal solution. What is the expected net present value of the optimal solution?

Maximize 1000x1 + 120x2 + 90x3 + 135x4 Subject to: 150x1+200x2+225x3+175x4 ≤ 15 Constraint 1…

Answered: Note: This problem requires the use of…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Hudson Corporation is considering three options for managing its data processing operation: continuing with its own staff, hiring an outside vendor to do the managing (referred to as outsourcing), or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: Demand Staffing Options High Medium Low Own staff 600 550 350 Outside vendor 900 650 450 Combination 700 600 400 a. If the demand probabilities are 0.4, 0.25, and 0.35, which decision alternative will minimize the expected cost of the data processing operation? Own Staff What is the expected annual cost associated with that recommendation? If required, round your answer to the nearest thousand of dollars. Expected annual cost = $ ___________
Problem 2: Applications of Linear Programming: Visa Inc. Stock sells for $92 a share and has 3-year average annual return of $20 a share. The beta value is 1.06. JP Morgan Chase and Co. sells for $87 a share and has a 3-year average annual return of $17 a share. The beta value is 1.21. Derek wants to spend no more than $15,000 investing in these two stocks, but he wants to earn at least $2500 in annual revenue. Derek also wants to minimize the risk. Determine the number of shares of each stock that Derek should buy.
California MegaTech is a manufacturing company that, due to low interest rates, thinks now may be the time to finance expansion into the Los Angeles and/or San Francisco areas by building factories there. However, the company only has a $10 million capital budget. So management must decide what to build and where in order to maximize the expansion's net present value (NPV). This investment is subject to the following considerations: Net Present Value ($mil) LA SF Capital Required ($mil) LA SF Warehouse 4 Warehouse 2 Factory 8 Factory 3 The company is willing to build a factory at either or both locations. The company is willing to build no more than one factory in each location. The company is willing to build only ONE warehouse. The company is willing to build a warehouse ONLY if a factory is built at the same location. Each potential factory/warehouse has capital requirements. Each potential factory/warehouse has a positive net present value. The company is only willing to commit $10…
A 36,000 square foot office building in Emeryville, California that was 88% leased had a 2023 annual net operating income estimated to be $1,880,000 with gross leases for all its tenants and a three level subterranean parking garage with 180 parking spaces. The 2024 NOI could be increased by all the following, EXCEPT: Increasing the operating expenses by adding additional maintenance staff Increasing the parking income by charging tenants for their employee parking Increasing the occupancy rate of the building by signing leases with new tenants Increasing the rental rates in new leases that are signed for the building
Steve Johnson believes that this winter is going to be extremely rainy, and he is trying to decide whether he should repair or replace his roof. Steve can install a new roof for $7000 or have it repaired for $1000. While the repair work will probably mean that the house will not have any leaks during the upcoming year, Steve believes that he will definitely need a new roof next year and would have to pay $7000 at that time if he does not get the roof replaced this year. There is a 60% chance that Steve will be transferred during the upcoming year and will have to put his house on the market. Steve feels that a new roof will enable him to get $4000 more if he sells his house. If he does not repair or replace the roof, Steve believes there is a 70% change that there will be rain damage to his home. He estimates the likelihood that the damage will be $500 is 10%, $1000 is 20%, $1500 is 30%, and $2000 is 40%. Using a decision tree analysis, determine Steve’s optimal strategy for dealing…
Unidyde is considering expansion of its Fort Myers plant to produce a new chemical compound. The company is evaluating three different expansion plans: Minor, moderate, or major. They can, of course, also do nothing. Long-term profitability will be a function of future demand growth for the chemical compound. The following payoff table gives the present worth future profitability (in $1,000's) estimated by Unidyde management: Demand Growth for Chemical Compound High Medium Low Do Nothing Minor 140 120 120 Expansion Moderate Major 150 220 -260 250 100 -450 1. What is Unidyde's optimal decision if it wishes to minimize its maximum regret? 2. What is Unidyde's optimal decision if it uses the equal likely criteria? 3. Suppose Unidyde estimates the following probabilities hold for demand growth of the chemical compound: P(High Growth) =.20 P(Medium Growth) = .40 P(Low Growth) What is the most that Unidyde should pay for sample information regarding the compound's future growth? (Hint:…
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Friendly Waste Co. runs three different factories and is required by law to safely dispose of chemicals. Waste from three different factories can be processed to reduce the amount of two different types of pollutants. State law requires that the total reduction in the amount of pollutant A is at least 30 tons and pollutant B is at least 40 tons. Using the information in the following table: Factory Proc Cost Per Ton Reduction Plant A Reduction Plant B 1 15 0.1 0.45 2 10 0.2 0.25 3 20 0.4 0.3 •Algebraically formulate a linear programming model to represent this problem.
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Consider a buying firm and a supplier negotiating terms for a contract. Suppose the Marginal Benefit to the buying firm of additional contract provisions in a contract (x) to the firm is: MB = 20,000 – 400x. Suppose the Marginal Cost to the buying firm of additional contract provision to the firm is: MC = 100x. What is the optimal number of contract provisions? Reconsider the previous question. If the maximum value (or price) of the contract that the buying firm is willing to pay for is $3,000, what would you expect the firm to do? a) Use the spot market b) Vertically integrate c) Continue to contract d) engage in holdup

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