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Chapter: 12 -Problem: 2 >> The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a laptop computer and phone. The fixed cost to launch this new product is $300,000. The variable cost for the product is expected to be between $160 and $240, with a most likely value of $200 per unit. The product will sell for $300 per unit. Demand estimates for the produc
Answer Preview: a. Base case: Profit = (300 - 200) x 4000 - 300,000 = 100,000 Worst case: Profit = (300 - 240) x 0 - …

, Chapter: 1 -Problem: 15 >> Preliminary plans are under way for the construction of a new stadium for a major league baseball team. City officials have questioned the number and profitability of the luxury corporate boxes planned for the upper deck of the stadium. Corporations and selected individuals may buy the boxes for $300,000 each. The fixed construction cost for the upper-deck area is estimated to be $4,500,000, with
Answer Preview: a. Profit = 300,000 x - (4,500,000 + 150,000 x ) …

, Chapter: 1 -Problem: 16 >> Financial Analysts, Inc., is an investment firm that manages stock portfolios for a number of clients. A new client is requesting that the firm handle an $800,000 portfolio. As an initial investment strategy, the client would like to restrict the portfolio to a mix of the following two stocks: x = number of shares of Oil Alaska y = number of shares of Southwest Petroleum a. Develop the objective f
Answer Preview: a. Max 6 x + 4 …

, Chapter: 8 -Problem: 20 >> Options are popular instruments in the world of finance. A call option on a stock gives the owner the right to buy the stock at a predetermined price before the expiration date of the option. For example, suppose that call options are selling for Procter & Gamble stock that give the owner of the option the right to buy a share of stock for $60 within the next 21 days. The asking price on the optio
Answer Preview: Black Scholes Model !PRICE OF CALL OPTION; C = S*@PSN(Z) - X*@EXP(-R*T)*@P…

, Chapter: 6 -Problem: 31 >> An Internet-service provider company uses a fiber-optic network to transmit data between locations. Data are carried through fiber-optic cables and switching nodes. A portion of the company€™s transmission network is shown here. The numbers above each arc show the capacity in gigabits of data per second that can be transmitted over that branch of the network. To keep up with the volume of informat
Answer Preview: The maximum am…

, Chapter: 9 -Problem: 4 >> Assume that the project in Problem 3 has the following activity times (in months): a. Find the critical path. b. The project must be completed in 1.5 years. Do you anticipate difficulty in meeting the deadline? Explain. Transcribed Image Text: Activity | A B C D E F G Time 6 2 6 3 3 5 4
Answer Preview: a. Critical Path: A-D-G b. The critical path activitie…

, Chapter: 3 -Problem: 8 >> Refer to Figure 3.14, which shows the computer solution of Problem 7.a. How much would the return for U.S. Oil have to increase before it would be beneficial to increase the investment in this stock?b. How much would the return for Huber Steel have to decrease before it would be beneficial to reduce the investment in this stock?c. How much would the total annual return be reduced if the U.S. Oil m
Answer Preview: a. By more than $7 00 per share. b. …

, Chapter: 4 -Problem: 27 >> Schneider€™s Sweet Shop specializes in homemade candies and ice cream. Schneider produces its ice cream in-house, in batches of 50 pounds. The first stage in ice cream making is the blending of ingredients to obtain a mix which meets pre-specified requirements on the percentages of certain constituents of the mix. The desired composition is as follows:1. Fat......................................16
Answer Preview: Papa Jacks recipe can just be calculated, whereas the optimized and flexible optimized recipes require linear programming. The following linear programs may be used to calculate the latter two: Let X …

, Chapter: 3 -Problem: 18 >> Davison Electronics manufactures two models of LCD televisions, identified as model A and model B. Each model has its lowest possible production cost when produced on Davison€™s new production line. However, the new production line does not have the capacity to handle the total production of both models. As a result, at least some of the production must be routed to a higher-cost, old production l
Answer Preview: a. The linear programming model is as follows: Min 30AN + 50AO + 25BN + 40BO s t. AN + AO 50,000 BN …

, Chapter: 3 -Problem: 16 >> Tucker, Inc., produces high-quality suits and sport coats for men. Each suit requires 1.2 hours of cutting time and 0.7 hours of sewing time, uses 6 yards of material, and provides a profit contribution of $190. Each sport coat requires 0.8 hours of cutting time and 0.6 hours of sewing time, uses 4 yards of material, and provides a profit contribution of $150. For the coming week, 200 hours of cut
Answer Preview: a. The optimal solution calls for the production of 100 suits and 150 sport coats. Forty hours of cu…

, Chapter: 12 -Problem: 10 >> A project has four activities (A, B, C, and D) that must be performed sequentially. The probability distributions for the time required to complete each of the activities are as follows: a. Construct a spreadsheet simulation model to estimate the average length of the project and the standard deviation of the project length. b. What is the estimated probability that the project will be completed i
Answer Preview: a. Expected project length is 33 91 weeks with a standard deviation of 2 81 weeks b. Probability of …

, Chapter: 3 -Problem: 12 >> Quality Air Conditioning manufactures three home air conditioners: an economy model, a standard model, and a deluxe model. The profits per unit are $63, $95, and $135, respectively. The production requirements per unit are as follows: For the coming production period, the company has 200 fan motors, 320 cooling coils, and 2400 hours of manufacturing time available. How many economy models (E), sta
Answer Preview: a. E = 80, S = 120, D = 0 Profit = $16,440 b. Fan mo…

, Chapter: 12 -Problem: 14 >> A building contractor is preparing a bid on a new construction project. Two other contractors will be submitting bids for the same project. Based on past bidding practices and the requirements of the project, the bid from Contractor A can be described with a uniform distribution between $600,000 and $800,000, while the bid from Contractor B can be described with a normal distribution with a mean o
Answer Preview: a. The building contractor wins the bid about 64% of the time with a bid of $750,000. b. Bidding $76…

, Chapter: 3 -Problem: 17 >> The Porsche Club of America sponsors driver education events that provide high-performance driving instruction on actual race tracks. Because safety is a primary consideration at such events, many owners elect to install roll bars in their cars. Deegan Industries manufactures two types of roll bars for Porsches. Model DRB is bolted to the car using existing holes in the car€™s frame. Model DRW is
Answer Preview: a. Produce 1000 units of model DRB and 800 units of model DRW Total profit contribution = $424,000 b…

, Chapter: 12 -Problem: 4 >> Construct a spreadsheet simulation in which each trial consists of rolling of four dice. That is, there are four random variables each with an outcome of 1, 2, 3, 4, 5, or 6. For each trial, record the value of the first dice, the sum of the first two dice, the sum of the first three dice, and the sum of the first four dice. Using the FREQUENCY command, create a frequency distribution for each of
Answer Preview: As shown in the following plots, as the n…

, Chapter: 12 -Problem: 21 >> What will your portfolio be worth in 10 years? In 20 years? When can you stop working? The Human Resources Department at Four Corners Corporation was asked to develop a financial planning model that would help employees address these questions. Tom Gifford was asked to lead this effort and decided to begin by developing a financial plan for himself. Tom is 40 years old, has a degree in business, a
Answer Preview: 1. Using Goal Seek, we determine that a 9 13% annual investment rate will result in $1,000,000 in 20 years. 2. The spreadsheet needs to be redesigned so that the salary growth rate and portfolio growt…

, Chapter: 12 -Problem: 6 >> The Statewide Auto Insurance Company developed the following probability distribution for automobile collision claims paid during the past year:Payment($)_____________________Probability 0............................................................... 0.83 500........................................................... 0.06 1,000.......................................................  0.05 2,000...
Answer Preview: a. The following screenshot shows the set of intervals. b. The simulation-based estimates of the pay…

, Chapter: 12 -Problem: 12 >> South Central Airlines (SCA) operates a commuter flight between Atlanta and Charlotte. The regional jet holds 50 passengers, and currently SCA only books up to 50 reservations. Past data show that SCA always sells all 50 reservations, but on average, two passengers do not show up for the flight. As a result, with 50 reservations the flight is often being flown with empty seats. To capture addition
Answer Preview: a. Average net profit is $5,165. b. There is a .039 probability that the overbooking strategy will r…

, Chapter: 3 -Problem: 31 >> Gulf Coast Electronics is ready to award contracts to suppliers for providing reservoir capacitors for use in its electronic devices. For the past several years, Gulf Coast Electronics has relied on two suppliers for its reservoir capacitors: Able Controls and Lyshenko Industries. A new firm, Boston Components, has inquired into the possibility of providing a portion of the reservoir capacitors ne
Answer Preview: a. Let B = number of copies done by Benson Printing J = number of copies done b…

, Chapter: 3 -Problem: 13 >> Refer to the computer solution of Problem 12 in Figure 3.17.a. Identify the range of optimality for each objective function coefficient.b. Suppose the profit for the economy model is increased by $6 per unit, the profit for the standard model is decreased by $2 per unit, and the profit for the deluxe model is increased by $4 per unit. What will the new optimal solution be?c. Identify the range of
Answer Preview: a. Range of optimality E 47 5 to 75 S 87 to 126 D No lower limit to 159. b. The optimal solut…

, Chapter: 15 -Problem: 21 >> The Centers for Disease Control and Prevention Office on Smoking and Health (OSH) is the lead federal agency responsible for comprehensive tobacco prevention and control. OSH was established in 1965 to reduce the death and disease caused by tobacco use and exposure to second-hand smoke. One of the many responsibilities of the OSH is to collect data on tobacco use. The following data show the perce
Answer Preview: a. This time series plot indicates a possible negative linea…

, Chapter: 8 -Problem: 25 >> The Corporate Average Fuel Economy (CAFE) regulations were put into law by Congress in 1975 to promote the sale of fuel-efficient automobiles and light trucks. The law requires automakers to boost their fleet gas mileages to certain averages by specified dates. Encouraging consumers to purchase more fuel-efficient vehicles is one way for car manufacturers to meet CAFE standards. This can be done b
Answer Preview: 1. The model is ! PASSENGR CAR MILES PER GALLON; PASSMPG = 30; ! LIGHT TRUCK MILES PER GALLON; LTRUCKMPG = 20; ! PP - PASSENGER CAR PRICE; ! TP - LIGH…

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