Answered: Questions 1. What is the optimal…

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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Related questions

Question

Denver Transportation Company is considering investing in several projects that have varying capital requirements over the next four years. Faced with limited capital each year, management would like to select the most profitable projects that it can afford. The estimated net present value for each project, the capital requirements, and the available capital over the four-year period are shown in the following binary integer linear programming model.

Questions

1. What is the optimal solution?

2. What is the total estimated net present value at the optimal solution?

3. Based upon the optimal solution and slack variables, what recommendations could you make to management?

Where
S = 1 if the store expansion project is accepted; 0 if rejected
F = 1 if the fleet expansion project is accepted; 0 if rejected
M = 1 if the equipment upgrade project is accepted; 0 if rejected
R = 1 if the market research project is accepted; 0 if rejected
and currency is in $1,000s.

Maximize	75S + 50F + 16E + 12R
s.t.
	30S + 30F + 10E + 20R ≤ 85
	30S + 35F + 20E + 10R ≤ 60
	40S + 50F + 20E + 10R ≤ 100
	65S + 55F + 20E + 10R ≤ 125
	S, F, E, R = 0, 1 (binary)