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, Chapter: 16 -Problem: 2 >> Harbor Dunes Golf Course was recently honored as one of the top public golf courses in South Carolina. The course, situated on land that was once a rice plantation, offers some of the best views of saltwater marshes available in the Carolinas. Harbor Dunes targets the upper end of the golf market and, in the peak spring golfing season, charges green fees of $160 per person and golf cart fees of $2
Answer Preview: The Crystal Ball simulations show that Option 1 ( green fee of $ 25 per player plus a cart fee of $ …

, Chapter: 8 -Problem: 18 >> Davison Electronics manufactures two LCD television monitors, identified as model A andmodel 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 line.
Answer Preview: a. The linear programming model for this problem can be formulated as follows: Minimize Z = 30AN + 25BN + 50AO + 40BO Subject to: Minimum production f…

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, Chapter: 3 -Problem: 11 >> A survey on British Social Attitudes asked respondents if they had ever boycotted goods for ethical reasons (Statesman, January 28, 2008). The survey found that 23% of the respondents have boycotted goods for ethical reasons.a. In a sample of six British citizens, what is the probability that two have ever boycotted goods for ethical reasons?b. In a sample of six British citizens, what is the prob
Answer Preview: a) In a sample of six British citizens, what is the probability that two have ever boycotted goods f…

, Chapter: 8 -Problem: 13 >> Refer to the sensitivity report in Figure 8.18.   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 feas
Answer Preview: a . The range of optim ality for each objective function coef…

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, Chapter: 7 -Problem: 3 >> Hart Venture Capital (HVC) specializes in providing venture capital for software development and Internet applications. Currently HVC has two investment opportunities: (1) Security Systems, a firm that needs additional capital to develop an Internet security software package, and (2) Market Analysis, a market research company that needs additional capital to develop a software package for conducti
Answer Preview: Managerial Report: The recommended percentage of each project that HVC should fund and the net present value of the total investment: Based on the net …

, Chapter: 14 -Problem: 1 >> Managers at Wagner Fabricating Company are reviewing the economic feasibility of manufacturing a part that the company currently purchases from a supplier. Forecasted annual demand for the part is 3200 units. Wagner operates 250 days per year.   Wagner’s financial analysts established a cost of capital of 14% for the use of funds for investments within the company. In addition, over the past year
Answer Preview: Managerial Report: Holding costs: The average investment in inventory over the past year was $600,000, which includes taxes and insurance costs of $24…

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, Chapter: 17 -Problem: 1 >> The game of blackjack (sometimes called “21”) is a popular casino game. The goal is to have a hand with a value of 21 or as close to 21 as possible without exceeding 21. The player and the dealer are each dealt two cards initially. Both the player and dealer may draw additional cards (called “taking a hit”) in order to improve their hand. If either the player or dealer takes a hit and the value of
Answer Preview: Managerial Report This report provides an analysis of the probability of th…

, Chapter: 7 -Problem: 2 >> Better Fitness, Inc. (BFI) manufactures exercise equipment at its plant in Freeport, Long Island. It recently designed two universal weight machines for the home exercise market. Both machines use BFI-patented technology that provides the user with an extremely wide range of motion capability for each type of exercise performed. Until now, such capabilities have been available only on expensive we
Answer Preview: Managerial Report Introduction Better Fitness, Inc. (BFI) is a manufacturer of exercise equipment, and has recently designed two universal weight machines for the home exercise market. The two machine…

, Chapter: 6 -Problem: 18 >> The following table reports the percentage of stocks in a portfolio for nine quarters from 2007 to 2009.                Quarter               Stock%                1st—2007             29.8                2nd—2007            31.0                3rd—2007             29.9                4th—2007             30.1                1st—2008             32.2                2nd—2008            31.5        
Answer Preview: a. A time series plot is a graph that plots the data over time. In this case, it would show the perc…

, Chapter: 8 -Problem: 27 >> Cranberries can be harvested using either a “wet” method or a “dry” method. Dry-harvested cranberries can be sold at a premium, while wet-harvested cranberries are used mainly for cranberry juice and bring in less revenue. Fresh Made Cranberry Cooperative must decide how much of its cranberry crop should be harvested wet and how much should be dry harvested. Fresh Made has 5000 barrels of cranberr
Answer Preview: a. To develop a linear program for Fresh Made Cranberry Cooperative, we can use …

, Chapter: 8 -Problem: 11 >> Refer to Problem 10 and the sensitivity report shown in Figure 8.17.   a. Suppose the risk index for the stock fund (the objective function coefficient for S) increases from its current value of 8 to 12. How does the optimal solution change, if at all?   b. Suppose the risk index for the money market fund (the objective function coefficient for M) increases from its current value of 3 to 3.5. How
Answer Preview: ANSWER: a. If the risk index for the stock fund increases from …

, Chapter: 12 -Problem: 18 >> Harry Markowitz received the 1990 Nobel Prize for his path-breaking work in portfolio optimization. One version of the Markowitz model is based on minimizing the variance of the portfolio subject to a constraint on return. We use the data and notation developed for the Hauck Index Fund in Section 12.5 to develop an example of the Markowitz mean-variance  model. If each of the scenarios is equally
Answer Preview: The expected return of the portfolio is 8 . 7 %. The variance of the portfolio re…

, Chapter: 8 -Problem: 7 >> Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for a number of clients. A particular portfolio consists of U shares of U.S. Oil and H shares of Huber Steel. The annual return for U.S. Oil is $3 per share and the annual return forHuber Steel is $5 per share. U.S. Oil sells for $25 per share and Huber Steel sells for $50 per share. The portfolio has $80,000 to be invest
Answer Preview: (a) From the table the optimal solution is U=800 and H=1,200. Substitute these values into the objective function to find its value. 3U+SH=3(800) +5(1…

, Chapter: 1 -Problem: 6 >> Suppose that a manager must choose between the following two mathematical models of a given situation: (a) a relatively simple model that is a reasonable approximation of the real situation and (b) a thorough and complex model that is the most accurate mathematical representation of the real situation possible. Why might the model described in part (a) be preferred by the manager?
Answer Preview: The manager may prefer the model in part ( a ) because it …

, Chapter: 14 -Problem: 2 >> The River City Fire Department (RCFD) fights fires and provides a variety of rescue operations in the River City metropolitan area. The RCFD staffs 13 ladder companies, 26 pumper companies, and several rescue units and ambulances. Normal staffing requires 186 firefighters to be on duty every day.   RCFD is organized with three firefighting units. Each unit works a full 24-hour day and then has two
Answer Preview: Managerial Report: Assuming no daily absences and taking into account the need to staff Kelley days, the base number of firefighters needed by each unit would be calculated as follows: Normal staffing …

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, Chapter: 11 -Problem: 2 >> Using aggressive mail promotion with low introductory interest rates, Yeager National Bank (YNB) built a large base of credit card customers throughout the continental United States. Currently, all customers send their regular payments to the bank’s corporate office located in Charlotte, North Carolina. Daily collections from customers making their regular payments are substantial, with an average
Answer Preview: The most efficient lock box location for Y NB would be Phoeni…

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, Chapter: 17 -Problem: 6 >> Rock-Paper-Scissors is a simple game in which two players compete by simultaneously choosing rock, paper, or scissors. According to the classic rules of the game, paper beats rock, scissors beats paper, and rock beats scissors. After watching one particular player compete in this game for many rounds, you have observed that she chooses rock, paper, or scissors based on her previous choice accordin
Answer Preview: a. If the opposing player last chose Rock, the best choice for you in the next round is to choose Pa…

, Chapter: 6 -Problem: 8 >> Refer again to the gasoline sales time series data in Table 6.1.   a. Using a weight of 1/2 for the most recent observation, 1/3 for the second most recent, and 1/6 for third most recent, compute a three-week weighted moving average for the time series.   b. Compute the MSE for the weighted moving average in part (a). Do you prefer this weighted moving average to the unweighted moving average? Rem
Answer Preview: a. The three-week weighted moving average for the time series is 19 5. Week 1: (1/2)17 + (1/3)21 + (…

, Chapter: 16 -Problem: 13 >> Using the PortaCom Risk Analysis worksheet in Figure 16.6 and available at the WEBfile link on the Web site accompanying the text, develop your own worksheet for the PortaCom simulation model.  a. Compute the mean profit, the minimum profit, and the maximum profit.   b. What is your estimate of the probability of a loss?
Answer Preview: a. The mean profit is $77,000, the minimum profit is $55,000, and the maximum profit is $99,000. b. …

, Chapter: 9 -Problem: 5 >> Duke Energy manufactures and distributes electricity to customers in the United States and Latin America. Duke Energy acquired Cinergy Corporation in 2005, which had generating facilities and energy customers in Indiana, Kentucky, and Ohio. For these customers Cinergy has been spending $725 to $750 million each year for the fuel needed to operate its coal-fired and gas-fired power plants; 92% to 9
Answer Preview: Question 1 . Miami Fort Unit 5 Miami Fort Unit 7 Beckjord Unit 1 East Bend Unit 2 Zimmer Unit 1 RAG 0 0 228873 2 121126 8 0 Peabody 16487 4552 145772 8 0 137739 8 0 American 0 0 0 0 275000 Consol 0 30…

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, Chapter: 9 -Problem: 14 >> The production manager for the Classic Boat Corporation must determine how many units of the Classic 21 model to produce over the next four quarters. The company has a beginning inventory of 100 Classic 21 boats, and demand for the four quarters is 2000 units in quarter 1, 4000 units in quarter 2, 3000 units in quarter 3, and 1500 units in quarter 4. The firm has limited production capacity in eac
Answer Preview: a. Formulate a linear programming model: Let X1, X2, X3, and X4 be the number of units produced in q…

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, Chapter: 9 -Problem: 2 >> Phoenix Computer manufactures and sells personal computers directly to customers. Orders are accepted by phone and through the company’s website. Phoenix will be introducing several new laptop models over the next few months, and management recognizes a need to develop technical support personnel to specialize in the new laptop systems. One option being considered is to hire new employees and put
Answer Preview: Managerial Report: The incremental salary and training cost associated with hiring a new employee an…

, Chapter: 11 -Problem: 3 >> Buckeye Manufacturing produces heads for engines used in the manufacture of trucks. The production line is highly complex, and it measures 900 feet in length. Two types of engine heads are produced on this line: the P-Head and the H-Head. The P-Head is used in heavy-duty trucks and the H-Head is used in smaller trucks. Because only one type of head can be produced at a time, the line is set up to
Answer Preview: Introduction: Buckeye Manufacturing produces two types of engine heads, the P-Head and the H-Head, a…

, Chapter: 12 -Problem: 1 >> In Section 12.1 data envelopment analysis was used to evaluate the relative efficiencies of four hospitals. Data for three input measures and four output measures were provided in Tables 12.1 and 12.2.  a. Use these data to develop a linear programming model that could be used to evaluate the performance of General Hospital.   b. The following solution is optimal. Does the solution indicate that G
Answer Preview: a . The linear programming model for evaluating the performance of Genera…

, Chapter: 9 -Problem: 1 >> The Flamingo Grill is an upscale restaurant located in St. Petersburg, Florida. To help plan an advertising campaign for the coming season, Flamingo’s management team hired the advertising firm of Haskell & Johnson (HJ). The management team requested HJ’s recommendation concerning how the advertising budget should be distributed across television, radio, and newspaper advertisements. The budget ha
Answer Preview: To determine the advertising budget allocation for the Flamingo Grill, we will develop a linear programming model. The objective is to maximize the total exposure rating across all media, subject to t…

, Chapter: 16 -Problem: 13 >> Develop your own worksheet for the PortaCom simulation model described in Section 16.1.   a. Compute the mean profit, the minimum profit, and the maximum profit.   b. What is your estimate of the probability of a loss?
Answer Preview: a. Mean Profit - Calculate the total profit from all the scenarios and div…

, Chapter: 15 -Problem: 22 >> A fast-food franchise is considering operating a drive-up window food-service operation. Assume that customer arrivals follow a Poisson probability distribution, with an arrival rate of 24 cars per hour, and that service times follow an exponential probability distribution. Arriving customers place orders at an intercom station at the back of the parking lot and then drive to the service window to
Answer Preview: answer; a. The probability that no cars are in the system is 0 …

, Chapter: 15 -Problem: 1 >> Regional Airlines is establishing a new telephone system for handling flight reservations. During the 10:00 A.M. to 11:00 A.M. time period, calls to the reservation agent occur randomly at an average of one call every 3.75 minutes. Historical service time data show that a reservation agent spends an average of 3 minutes with each customer. The waiting line model assumptions of Poisson arrivals and
Answer Preview: 1 . A detailed analysis of the operating characteristics of the reservation system with one agent as proposed by the vice president of administration . What is your recommendation concerning a single …

, Chapter: 12 -Problem: 21 >> Formulate and solve the Markowitz portfolio optimization model that was introduced in Problem 18 using the return data in columns five, six, and seven of Figure 12.17. In this case, nine scenarios correspond to the yearly returns for years 1 through 9. Treat each scenario as being equally likely.Figure 12.17:
Answer Preview: To solve this problem, we need to use the Markowitz portfolio optimization model, which aims to find …

, Chapter: 16 -Problem: 11 >> Over a five-year period, the quarterly change in the price per share of common stock for a major oil company ranged from -8% to 12%. A financial analyst wants to learn what can be expected for price appreciation of this stock over the next two years. Using the five-year history as a basis, the analyst is willing to assume that the change in price for each quarter is uniformly distributed between -
Answer Preview: a. To use simulation to provide information about the price per share for the stock over the coming …

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, Chapter: 8 -Problem: 5 >> Refer to the Kelson Sporting Equipment problem (Chapter 7, Problem 24). Letting            R = number of regular gloves             C = number of catcher’s mittsleads to the following formulation:Max    5R +  8C s.t.               R +  3/2 C < 900 Cutting and sewing         1/2 R +  1/3 C < 300 Finishing         1/8 R +  1/4 C < 100 Packaging and shipping             R. C > 0The sensitivity report
Answer Preview: LINGO output is following: a) Optimal solution is: R = 500 C = 150 …

, Chapter: 17 -Problem: 3 >> The computer center at Rock-bottom University has been experiencing computer downtime. Let us assume that the trials of an associated Markov process are defined as one-hour periods and that the probability of the system being in a running state or a down state is based on the state of the system in the previous period. Historical data show the following transition probabilities:                   
Answer Preview: a . If the system is initially running , the probab…

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, Chapter: 8 -Problem: 31 >> Gulf Coast Electronics is ready to award contracts for printing its annual report. For the past several years, the four-color annual report has been printed by Johnson Printing and Lakeside Litho. A new firm, Benson Printing, inquired into the possibility of doing a portion of the printing. The quality and service level provided by Lakeside Litho has been extremely high; in fact, only 0.5% of Gulf
Answer Preview: a. To determine the number of copies that should be assigned to each printing firm to …

, Chapter: 8 -Problem: 17 >> The Porsche Club of America sponsors driver education events that provide highperformance driving instruction on actual racetracks. 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 a h
Answer Preview: Answer. a. The optimal solution is 88 units of model DRB and 1000 units of model DRW and the total profit contribution is $344,000. b. Yes, Deegan sho…

, Chapter: 8 -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 cutti
Answer Preview: a. The optimal solution can be found by solving the linear program using the data provided in the pr…

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, Chapter: 8 -Problem: 2 >> Consider the linear program in Problem 1. The value of the optimal solution is 27. Suppose that the right-hand side for constraint 1 is increased from 10 to 11.   a. Use the graphical solution procedure to find the new optimal solution.   b. Use the solution to part (a) to determine the shadow price for constraint 1.   c. The sensitivity report for the linear program in Problem 1 provides the foll
Answer Preview: a . The optimal solution for the new linear program is x 1 = 2 , x 2 = 4 , x 3 = 5 , …

, Chapter: 15 -Problem: 2 >> Office Equipment, Inc. (OEI) leases automatic mailing machines to business customers in Fort Wayne, Indiana. The company built its success on a reputation of providing timely maintenance and repair service. Each OEI service contract states that a service technician will arrive at a customer’s business site within an average of three hours from the time that the customer notifies OEI of an equipmen
Answer Preview: Managerial Report: The arrival rate for each customer per hour is 0 02 (1 call per 50 hours of operation). The service rate in terms of the number of …

, Chapter: 12 -Problem: 6 >> Reconsider the Leisure Airlines problem from Section 12.2. Suppose that as of May 1 the following number of seats have been sold:  a. Determine how many seats are still available for sale on each flight leg.   b. Using the original demand forecasted for each ODIF, determine the remaining demand for each ODIF.   c. Revise the linear programming model presented in Section 12.2 to account for the num
Answer Preview: a . The number of seats still available for sale on each flight leg can be determined by subtract in…

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, Chapter: 9 -Problem: 24 >> Morton Financial must decide on the percentage of available funds to commit to each of two investments, referred to as A and B, over the next four periods. The following table shows the amount of new funds available for each of the four periods, as well as the cash expenditure required for each investment (negative values) or the cash income from the investment (positive values). The data shown (i
Answer Preview: To formulate the optimization model, let's first define the …

, Chapter: 6 -Problem: 15 >> Automobile sales at B. J. Scott Motors, Inc., provided the following 10-year time series:                                Plot the time series, and comment on the appropriateness of a linear trend. What type of functional form would be best for the trend pattern of this time series?
Answer Preview: The given information provides automobile unit sales for 10 y…

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, Chapter: 9 -Problem: 7 >> As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars):   The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at
Answer Preview: a . The minimum cash settlement necessary to fund the annual payments can be found by using linear programming to create a mathematical model that min…

, Chapter: 12 -Problem: 6 >> The purpose of this exercise is to provide practice using the LINGO or Excel solvers. Find the values of X and Y that minimize the functionMin X2 - 4X + Y2 + 8Y + 20Do not assume nonnegativity of the X and Y variables. Recall that by default LINGO assumes nonnegative variables. In order to allow the variables to take on negative values, you can add    @FREE(X); @FREE(Y);Alternatively, if you want
Answer Preview: To minimize the function …

, Chapter: 8 -Problem: 30 >> The program manager for Channel 10 would like to determine the best way to allocate the time for the 11:00–11:30 evening news broadcast. Specifically, she would like to determine the number of minutes of broadcast time to devote to local news, national news, weather, and sports. Over the 30-minute broadcast, 10 minutes are set aside for advertising. The station’s broadcast policy states that at le
Answer Preview: a. To determine the best way to allocate the time for the 11:0011:30 evening news broadcast, …

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, Chapter: 8 -Problem: 14 >> Digital Controls, Inc. (DCI) manufactures two models of a radar gun used by police to monitor the speed of automobiles. Model A has an accuracy of plus or minus 1 mile per hour, whereas the smaller model B has an accuracy of plus or minus 3 miles per hour. For the next week, the company has orders for 100 units of model A and 150 units of model B. Although DCI purchases all the electronic componen
Answer Preview: a. The optimal solution is to manufacture 75 units of model A and 150 units of model B, and purchase …

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8 Reviews for Quantitative Methods for Business Textbook Questions And Answers