Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 4, Problem 88P
a)
Summary Introduction
To determine: The minimum cost rental plan for the next 12 months.
Linear programming:
It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.
b)
Summary Introduction
To use: The solver table to identify if the total rental cost increases by the same amount of percentage mentioned.
Linear programming:
It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Jerry takes out a mortgage at 5.2%. After a
few years, his payment increases and he sees
that the interest rate of his mortgage is now
6.1%. Which of these mortgage types does
Jerry most likely have?
ARM loan
home equity loan
fixed-rate loan
package mortgage
money borrowed for personal reasons; to be repaid within
a specific time frame and with added interest
money borrowed for the purchase of real estate; to be
repaid within a specific time frame and with added interest
money borrowed for business reasons; to be repaid within
a specific time frame and with added interest
money borrowed for the purchase of a vehicle; to be
repaid within a specific time frame and with added interest
: Business Loan
:: Auto Loan
:: Mortgage Loan
:: Personal Loan
1
4
6.
8.
9.
Finish
Si
A tire factory wants to set a minimum mileage
guarantee on its tyre. Tyre tests reveals that the
mean mileage has a normal distribution with
mean 128 and standard deviation 1.76.
the manufacturer wants to set the minimum
guaranteed mileage so that no more than 2.5
percent of tyres will have to be replaced.
The Lower limit of guaranteed mileage is :?
(Write your answer in 2 decimals
places)
Chapter 4 Solutions
Practical Management Science
Ch. 4.2 - Prob. 1PCh. 4.2 - Prob. 2PCh. 4.2 - Prob. 3PCh. 4.2 - Prob. 4PCh. 4.2 - Prob. 5PCh. 4.2 - Prob. 6PCh. 4.3 - Prob. 7PCh. 4.3 - Prob. 8PCh. 4.3 - Prob. 9PCh. 4.3 - Prob. 10P
Ch. 4.3 - Prob. 11PCh. 4.3 - Prob. 12PCh. 4.4 - Prob. 13PCh. 4.4 - Prob. 14PCh. 4.4 - Prob. 15PCh. 4.4 - Prob. 16PCh. 4.4 - Prob. 17PCh. 4.4 - Prob. 18PCh. 4.4 - Prob. 19PCh. 4.5 - Prob. 20PCh. 4.5 - Prob. 21PCh. 4.5 - Prob. 22PCh. 4.5 - Prob. 23PCh. 4.5 - Prob. 24PCh. 4.5 - Prob. 25PCh. 4.6 - Prob. 26PCh. 4.6 - Prob. 27PCh. 4.6 - Prob. 28PCh. 4.6 - Prob. 29PCh. 4.7 - Prob. 30PCh. 4.7 - Prob. 31PCh. 4.7 - Prob. 32PCh. 4.7 - Prob. 33PCh. 4.7 - Prob. 34PCh. 4.7 - Prob. 35PCh. 4.7 - Prob. 36PCh. 4.7 - Prob. 37PCh. 4.7 - Prob. 38PCh. 4.7 - Prob. 39PCh. 4.7 - Prob. 40PCh. 4.8 - Prob. 41PCh. 4.8 - Prob. 42PCh. 4.8 - Prob. 43PCh. 4.8 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - Prob. 49PCh. 4 - Prob. 50PCh. 4 - Prob. 51PCh. 4 - Prob. 52PCh. 4 - Prob. 53PCh. 4 - Prob. 54PCh. 4 - Prob. 55PCh. 4 - Prob. 56PCh. 4 - Prob. 57PCh. 4 - Prob. 58PCh. 4 - Prob. 59PCh. 4 - Prob. 60PCh. 4 - Prob. 61PCh. 4 - Prob. 62PCh. 4 - Prob. 63PCh. 4 - Prob. 64PCh. 4 - Prob. 65PCh. 4 - Prob. 66PCh. 4 - Prob. 67PCh. 4 - Prob. 68PCh. 4 - Prob. 69PCh. 4 - Prob. 70PCh. 4 - Prob. 71PCh. 4 - Prob. 72PCh. 4 - Prob. 73PCh. 4 - Prob. 74PCh. 4 - Prob. 75PCh. 4 - Prob. 76PCh. 4 - Prob. 77PCh. 4 - Prob. 78PCh. 4 - Prob. 79PCh. 4 - Prob. 80PCh. 4 - You want to take out a 450,000 loan on a 20-year...Ch. 4 - Prob. 82PCh. 4 - Prob. 83PCh. 4 - Prob. 84PCh. 4 - Prob. 85PCh. 4 - Prob. 86PCh. 4 - Prob. 87PCh. 4 - Prob. 88PCh. 4 - Prob. 89PCh. 4 - Prob. 90PCh. 4 - Prob. 91PCh. 4 - Prob. 92PCh. 4 - Prob. 93PCh. 4 - Prob. 94PCh. 4 - Prob. 95PCh. 4 - Prob. 96PCh. 4 - Prob. 97PCh. 4 - Prob. 98PCh. 4 - Prob. 99PCh. 4 - Prob. 100PCh. 4 - Prob. 101PCh. 4 - Prob. 102PCh. 4 - Prob. 103PCh. 4 - Prob. 104PCh. 4 - Prob. 105PCh. 4 - Prob. 106PCh. 4 - Prob. 107PCh. 4 - Prob. 108PCh. 4 - Prob. 109PCh. 4 - Prob. 110PCh. 4 - Prob. 111PCh. 4 - Prob. 112PCh. 4 - Prob. 113PCh. 4 - Prob. 114PCh. 4 - Prob. 115PCh. 4 - Prob. 116PCh. 4 - Prob. 117PCh. 4 - Prob. 118PCh. 4 - Prob. 119PCh. 4 - Prob. 120PCh. 4 - Prob. 121PCh. 4 - Prob. 122PCh. 4 - Prob. 123PCh. 4 - Prob. 124PCh. 4 - Prob. 125PCh. 4 - Prob. 126PCh. 4 - Prob. 127PCh. 4 - Prob. 128PCh. 4 - Prob. 129PCh. 4 - Prob. 130PCh. 4 - Prob. 131PCh. 4 - Prob. 132PCh. 4 - Prob. 133PCh. 4 - Prob. 134PCh. 4 - Prob. 135P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- In the financial world, there are many types of complex instruments called derivatives that derive their value from the value of an underlying asset. Consider the following simple derivative. A stocks current price is 80 per share. You purchase a derivative whose value to you becomes known a month from now. Specifically, let P be the price of the stock in a month. If P is between 75 and 85, the derivative is worth nothing to you. If P is less than 75, the derivative results in a loss of 100(75-P) dollars to you. (The factor of 100 is because many derivatives involve 100 shares.) If P is greater than 85, the derivative results in a gain of 100(P-85) dollars to you. Assume that the distribution of the change in the stock price from now to a month from now is normally distributed with mean 1 and standard deviation 8. Let EMV be the expected gain/loss from this derivative. It is a weighted average of all the possible losses and gains, weighted by their likelihoods. (Of course, any loss should be expressed as a negative number. For example, a loss of 1500 should be expressed as -1500.) Unfortunately, this is a difficult probability calculation, but EMV can be estimated by an @RISK simulation. Perform this simulation with at least 1000 iterations. What is your best estimate of EMV?arrow_forwardAlthough the normal distribution is a reasonable input distribution in many situations, it does have two potential drawbacks: (1) it allows negative values, even though they may be extremely improbable, and (2) it is a symmetric distribution. Many situations are modelled better with a distribution that allows only positive values and is skewed to the right. Two of these that have been used in many real applications are the gamma and lognormal distributions. @RISK enables you to generate observations from each of these distributions. The @RISK function for the gamma distribution is RISKGAMMA, and it takes two arguments, as in =RISKGAMMA(3,10). The first argument, which must be positive, determines the shape. The smaller it is, the more skewed the distribution is to the right; the larger it is, the more symmetric the distribution is. The second argument determines the scale, in the sense that the product of it and the first argument equals the mean of the distribution. (The mean in this example is 30.) Also, the product of the second argument and the square root of the first argument is the standard deviation of the distribution. (In this example, it is 3(10=17.32.) The @RISK function for the lognormal distribution is RISKLOGNORM. It has two arguments, as in =RISKLOGNORM(40,10). These arguments are the mean and standard deviation of the distribution. Rework Example 10.2 for the following demand distributions. Do the simulated outputs have any different qualitative properties with these skewed distributions than with the triangular distribution used in the example? a. Gamma distribution with parameters 2 and 85 b. Gamma distribution with parameters 5 and 35 c. Lognormal distribution with mean 170 and standard deviation 60arrow_forwardYou are considering a 10-year investment project. At present, the expected cash flow each year is 10,000. Suppose, however, that each years cash flow is normally distributed with mean equal to last years actual cash flow and standard deviation 1000. For example, suppose that the actual cash flow in year 1 is 12,000. Then year 2 cash flow is normal with mean 12,000 and standard deviation 1000. Also, at the end of year 1, your best guess is that each later years expected cash flow will be 12,000. a. Estimate the mean and standard deviation of the NPV of this project. Assume that cash flows are discounted at a rate of 10% per year. b. Now assume that the project has an abandonment option. At the end of each year you can abandon the project for the value given in the file P11_60.xlsx. For example, suppose that year 1 cash flow is 4000. Then at the end of year 1, you expect cash flow for each remaining year to be 4000. This has an NPV of less than 62,000, so you should abandon the project and collect 62,000 at the end of year 1. Estimate the mean and standard deviation of the project with the abandonment option. How much would you pay for the abandonment option? (Hint: You can abandon a project at most once. So in year 5, for example, you abandon only if the sum of future expected NPVs is less than the year 5 abandonment value and the project has not yet been abandoned. Also, once you abandon the project, the actual cash flows for future years are zero. So in this case the future cash flows after abandonment should be zero in your model.)arrow_forward
- As part of a campaign to promote its annual clearance sale, Excelsior Company decided to buy television advertising time on Station KAOS. Excelsior's television advertising budget is $111,000. Morning time costs $3000/min, afternoon time costs $1000/min, and evening (prime) time costs $12,000/min. Because of previous commitments, KAOS cannot offer Excelsior more than 6 min of prime time or more than a total of 25 min of advertising time over the 2 weeks in which the commercials are to be run. KAOS estimates that morning commercials are seen by 200,000 people, afternoon commercials are seen by 100,000 people, and evening commercials are seen by 600,000 people. How much morning, afternoon, and evening advertising time should Excelsior buy to maximize exposure of its commercials? morning min afternoon min evening minarrow_forwardFRUIT COMPUTER COMPANY Fruit Computer Company manufactures memory chips in batches of ten chips. From past experience, Fruit knows that 80% of all batches contain 10% (1 out of 10) defective chips, and 20% of all batches contain 50% (5 out of 10) defective chips. If a good (that is, 10% defective) batch of chips is sent to the next stage of production, processing costs of $4000 are incurred, and if a bad batch (50% defective) is sent on to the next stage of production, processing costs of $16000 are incurred. Fruit also has the alternative of reworking a batch at a cost of $4000. A reworked batch is sure to be a good batch. Alternatively, for a cost of $400, Fruit can test one chip from each batch in an attempt to determine whether the batch is defective. QUESTIONS 1.Determine a strategy so Fruit can minimize the expected total cost per batch. 2.Compute the EVSI and EVPI.arrow_forwardA bhaliyaarrow_forward
- Barbara Flynn sells papers at a newspaper stand for $0.40. The papers cost her $0.30, giving her a $0.10 profit on each one she sells. From past experience Barbara knows that: a) 20% of the time she sells 150 papers. b) 20% of the time she sells 200 papers. c) 30% of the time she sells 250 papers. d) 30% of the time she sells 300 papers. Assuming that Barbara believes the cost of a lost sale to be $0.05 and any unsold papers cost her $0.30 and she orders 250 papers. Use the following random numbers: 14, 4, 13, 9, and 25 for simulating Barbara's profit. (Note: Assume the random number interval begins at 01 and ends at 00.) Based on the given probability distribution and the order size, for the given random number Barbara's sales and profit are (enter your responses for sales as integers and round all profit responses to two decimal places): Random Number Sales Profit 14 4 13 9 25arrow_forwarda. Which of the following best describes the meaning of the equation P(25) = 200? 1. When 200 calculators are sold, the profit is $25. II. When 200 calculators are sold, the profit is increasing at a rate of $25 per additional calculator III. When 25 calculators are sold, the profit is $200. IV. When 25 calculators are sold, the profit is increasing at a rate of $200 per additional calculatoarrow_forwardA trust officer at the Blacksburg National Bank needs to determine how to invest $100,000 in the following collection of bonds to maximize the total annual return (before tax). Bond Annual Return Maturity Risk Tax-Free A 9.5% Long High Yes B 8.0% Short Low Yes C 9.0% Long Low No D 9.0% Long High Yes E 9.0% Short High No The officer wants to invest as least 50% of the money in short-term issues and no more than 50% in high-risk issues. At least 30% of the funds should go in tax-free investments, and at least 40% of the total annual return should be tax free. Suppose the decision variable represents the amount of money invested in bond for . Formulate a linear programming (LP) model to solve the optimal strategy. 1. Write down the constraint using the defined decision variables requiring “invest as least 50% of the money in short-term issues”. 2. Write down the constraint using the defined decision…arrow_forward
- Company XYZ produces and sells two types of calculators: Basic and Scientific. The Basic has a lower selling price per unit compared to the Scientific. However, the Basic has a higher contribution margin compared to the Scientific. Due to fixed production capacity, the company has a cap on total production ability. If the company's CEO has decided to shift the sales mix towards producing more Basic calculators. What would be the effect on total profits? a. Cannot be determined using the above information b. Total profits would remain the same Total profits would increase O C. d. None of the given answers e. Total profits would decrease OO00arrow_forwardA home improvement store sells hydrangea plants during the spring planting season. The hydrangeas cost the store $15 per unit, and sell to customers for $45, but any leftovers at the end of the season are salvaged to a local landscaper for $7/unit. A competitor has advertised that it guarantees 99% of customers find the product they’re looking for in stock. The competitor’s posted price for hydrangeas is $50, and they salvage to the same local landscaper for $7/ hydrangea plant. If the competitor’s advertised service level is correct for hydrangeas and they follow an optimal stocking policy, what does it imply their cost per hydrangea is?arrow_forwarda) The probability that a transistor will last between 12 and 24 weeks is : P(12 < X <24) = F(24, 4, 6) - F(12, 4, 6) = F(24/6, 4) - F(12/6, 4) = F(4, 4) - F(2, 4) = 0.567 -0.143 = 0.424 Explanation: Using the formula, FOX: α; B) = F(x/B; 0)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,