Spreadsheet Modeling & Decision Analysis: A Practical Introduction To Business Analytics, Loose-leaf Version
8th Edition
ISBN: 9781337274852
Author: Ragsdale, Cliff
Publisher: South-Western College Pub
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3. (Note: This is a variation of problem 6 of chapter 16 in your textbook.) Kenya and
Dionne live on adjacent plots of land. Each has two potential uses for their land,
the present values of each of which depend on the use adopted by the other, as
summarized in the table. All the values in the table are known to both parties.
Dionne
Rental housing
Bee keeping
Kenya
Apple
growing
A: $200
B: $700
A: $400
B: $650
Pig
farming
A: $450
B: $400
A: $450
B: $500
a. What is the efficient outcome?
b. If there are negotiation costs of $150, what activities will the two
pursue on their land?
c. If there are no negotiation costs and the two negotiate, what activities
will the two pursue on their land? How might a benevolent planner help
reduce the costs of negotiating to encourage the optimal combination
of land uses?
Please do not give solution in image format thanku
Simplex Method
Write in normal form and solve by the simplex method, assuming x, to be nonnegative.
1. The owner of a shop producing automobile trailers wishes to determine the best mix for his three products:
flat-bed trailers, economy trailers, and luxury trailers. His shop is limited to working 24 days/month on metal-
working and 60 days/month on woodworking for these products. The following table indicates production data
for the trailers.
Usage per unit of trailer
Flat-bed
Economy Luxury
Available resources
1
2
1
24
Metal work days
Wood work days
Contribution (Rx100)
60
4
6
2
14
13
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- If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.arrow_forwardLemingtons 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_forwardInnis Investments manages funds for a number of companies and wealthy clients. The investment strategy is tailored to each client's needs. For a new client, Innis has been authorized to invest up to $1.2 million in two investment funds: a stock fund and a money market fund. Each unit of the stock fund costs $50 and provides an annual rate of return of 10%; each unit of the money market fund costs $100 and provides an annual rate of return of 4%. The client wants to minimize risk subject to the requirement that the annual income from the investment be at least $60,000. According to Innis' risk measurement system, each unit invested in the stock fund has a risk index of 8, and each unit invested in the money market fund has a risk index of 3. The higher risk index associated with the stock fund simply indicates that it is the riskier investment. Innis's client also specified that at least $300,000 be invested in the money market fund. Refer to the computer solution shown below. Optimal…arrow_forward
- b) The Scott Tractor Company ships tractor parts from Omaha to St. Louis by railroad. However, a contract limits the number of railroad cars the company can secure on each branch/arc during a week. Given these limiting conditions, the company wants to know the maximum number of railroad cars containing tractor parts that can be shipped from Omaha to St. Louis during a week. Phoenix Des Moines 3 5 6. 6. 1. Dallas 2 Omaha St. Louis 7. 3 Denver 6. ActivateW O 31°Carrow_forwardDon't use chat gpt solve own solutionsarrow_forwardSuppose we are solving a maximization problem andthe variable xr is about to leave the basis.a What is the coefficient of xr in the current row 0?b Show that after the current pivot is performed, thecoefficient of xr in row 0 cannot be less than zero.c Explain why a variable that has left the basis on agiven pivot cannot re-enter the basis on the next pivot.arrow_forward
- 1. If constraint has a shadow price of $6, Right-Hand-Side (RHS) is 12, allowable increase is 2, allowable decrease is 4. How would objective function change if the RHS of this constrains changes from 12 to 9? Answer___________arrow_forwardPlease do not give solution in image format thankuarrow_forwardIan Langella faces a decision how large his gasoline station should be. The annual returns wil l depend on both the size of his station and number of marketing factors related to the oil in dustry and demand for gasoline. Ian develop a careful analysis based on the following table: Size of first station Market condition Market conditon Market conditon Good Fair Poor Small 50,000 20,000 -10,000 Medium 80,000 30,000 -20,000 Large 100,000 30,000 -40,000 Very large 300,000 25,000 -160,000 Develop a decision table for this decisionarrow_forward
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