Concept explainers
a)
To determine: The way to minimize the sum of penalty and shipping cost.
Introduction: In linear programming, unbounded solution would occur when the objective function is infinite. If no solution satisfied the constraints then it is said to be unfeasible solution.
b)
To determine: The way the change in penalty cost affect the optimal cost.
Introduction: In linear programming, unbounded solution would occur when the objective function is infinite. If no solution satisfied the constraints then it is said to be unfeasible solution.
c)
To determine: The way the change in warehouse capacity affect the optimal cost.
Introduction: In linear programming, unbounded solution would occur when the objective function is infinite. If no solution satisfied the constraints then it is said to be unfeasible solution.
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Chapter 5 Solutions
Practical Management Science
- Seas Beginning sells clothing by mail order. An important question is when to strike a customer from the companys mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next catalog she receives. If a customer last placed an order four catalogs ago, there is a 4% chance she will order from the next catalog she receives. If a customer last placed an order five catalogs ago, there is a 2% chance she will order from the next catalog she receives. It costs 2 to send a catalog, and the average profit per order is 30. Assume a customer has just placed an order. To maximize expected profit per customer, would Seas Beginning make more money canceling such a customer after six nonorders or four nonorders?arrow_forwardAssume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.arrow_forwardIn the lawn mower production problem in Example 8.4, experiment with the penalty cost for unsatisfied pickups in week 1. If this cost is sufficiently small, does the company ever produce fewer than seven models in week 1 and allow some week 1 pickups to be unsatisfied?arrow_forward
- Lemingtons is trying to determine how many Jean Hudson dresses to order for the spring season. Demand for the dresses is assumed to follow a normal distribution with mean 400 and standard deviation 100. The contract between Jean Hudson and Lemingtons works as follows. At the beginning of the season, Lemingtons reserves x units of capacity. Lemingtons must take delivery for at least 0.8x dresses and can, if desired, take delivery on up to x dresses. Each dress sells for 160 and Hudson charges 50 per dress. If Lemingtons does not take delivery on all x dresses, it owes Hudson a 5 penalty for each unit of reserved capacity that is unused. For example, if Lemingtons orders 450 dresses and demand is for 400 dresses, Lemingtons will receive 400 dresses and owe Jean 400(50) + 50(5). How many units of capacity should Lemingtons reserve to maximize its expected profit?arrow_forwardCWD Electronics sells Televisions (TV), which it orders from the USA. Because of shipping and handling costs, each order must be for 5TVs. Because of the time it takes to receive an order, the company places an order every time the present stock drops to 5 TVs. It costs $50 to place anorder. It costs the company $500 in lost sales when a customer asks for a TV and the warehouse is out of stock. It costs $100 to keep each TV stored in the warehouse. If a customer cannot purchase a TV when it is requested, the customer will not wait until one comes in but will go to a competitor.The following probability distribution for demand for TV has been and the time required to receive an order once it is placed (lead time) has the following probability distribution: (Attached) The company has 3 TVs in stock. Orders are always received at the beginning of the week.Note that a lead time of 2 weeks imply that an order placed in week one will arrive in week 4. The time required to receive an order…arrow_forwardCogent Technology has computer stores on the West Coast. Their stores are set up like warehouse clubs focusing on high volume. Cogent Technology has a hub set up for their distribution. For instance, to serve the Silicon Valley area, a Cogent Technology warehouse is set up in San Jose to serve nearby stores. Cogent Technology warehouse managers generally purchase their items in bulk to get volume discounts from their vendors. Cogent Technology warehouse has an agreement with the vendors that they can return unsold inventory if it does not sell in six months. Cogent Technology has a policy of fulfilling all customer orders. In some cases when the store managers foresee a stockout situation, they are authorized to buy from other vendors rather than wait for the warehouse to deliver their items. In some cases, the prices bought directly by the store managers are cheaper than what the warehouses buy in bulk. A good example of a sellable item is tablets. Cogent Technology warehouses…arrow_forward
- The interContinental Hotel at Tsim Sha Tsui has 100 total rooms available for Dec 31. There are two types of customers, business customers and leisure customers. InterContinental charges a high rate of $300/night and a low rate of $120/night. High-rate guests do not need pre-booking and has time flexibilities; low-rate guests need pre-booking. Assume business customers always take the high rate option and leisure customers always take the low rate option. Leisure customers always book far earlier before business customers and there are sufficient leisure customers. Which of the following actions would increase the optimal protection level for business customers? Increase both the high and low rates by a factor of two Decrease the high rate from $300 to $200 Decrease both the high and low rates by half O Decrease both the high and low rates by $20 O Increase both the high and low rates by $20arrow_forwardBeeson Co. is experiencing a decrease in sales and operating income for the fiscal year ending December 31st. Julia Faure, controller of Beeson Co., has suggested that all orders received before the end of the fiscal year be shipped by midnight, December 31st even if shipping department must work overtime. Since Beeson Co. ships all merchandise FOB shipping point, it would record all such shipments as sales for the year ending December 31st, thereby offsetting some of the decreases in sales and operating income.Discuss whether Julia Faure is behaving in a professional manner and what are the implications of her actions?arrow_forwardfertilizer manufacturer has to fulfill supply contracts to its two main customers (650 tons to Customer A and 800 tons to Customer B). It can meet this demand by shipping existing inventory from any of its three warehouses. Warehouse 1 (W1) has 400 tons of inventory onhand, Warehouse 2 (W2) has 500 tons, and Warehouse 3 (W3) has 600 tons. The company would like to arrange the shipping for the lowest cost possible, where the per-ton transit costs are as follows: W 1 W 2 W 3 Customer A $7.50 $6.25 $6.50 Customer B $6.75 $7.00 $8.00 Write the objective function and the constraint in equations. Let Vij= tons shipped to customer i from warehouse j, and so on. For example, VA1=tons shipped to customer A from warehouse W1. This exercise contains only parts b, c, d, e, and f. Part 2 b) The objective function for the LP model =arrow_forward
- Shale Oil, located in the middle east, has a capacity of 1,500,000 bbl of crude oil per day. The final products fromthe refinery include three types of unleaded gasoline with different octane numbers (ON): regular with ON = 87,premium with ON = 89, and super with ON = 92. The refining process encompasses three stages: (1) a distillationtower that produces feedstock (ON = 82) at the rate of 0.2 bbl per bbl of crude oil, (2) a cracker unit that producesgasoline stock (ON = 98) by using a portion of the feedstock produced from the distillation tower at the rate of 0.5bbl per bbl of feedstock, and (3) a blender unit that blends the gasoline stock from the cracker unit and the feedstockfrom the distillation tower. The company estimates the net profit per barrel of the three types of gasoline to be $6.70,$7.20, and $8.10, respectively. The input capacity of the cracker unit is 200,000 bbl of feedstock a day. The demandlimits for regular, premium, and super gasoline are 50,000, 30,000, and…arrow_forwardThe Fish House (TFH) in Norfolk, Virginia, sells fresh fish and seafood. TFH receives daily shipments of farm-raised trout from a nearby supplier. Each trout costs $2.45 and is sold for $3.95. To maintain its reputation for freshness, at the end of the day TFH sells any leftover trout to a local pet food manufacturer for $1.25 each. The owner of TFH wants to determine how many trout to order each day. Historically, the daily demand for trout is: Demand 10 11 12 13 14 15 16 17 18 19 20 Probability 0.02 0.06 0.09 0.11 0.13 0.15 0.18 0.11 0.07 0.05 0.03 a. Construct a payoff matrix for this problem. b. How much should the owner of TFH be willing to pay to obtain a demand forecast that is 100% accurate? give a clear explanation for (b)arrow_forwardAs 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_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,