Exam Solution Manual for Business Quantitative Techniques
A creamery purchases three different types of cheese: panela cheese at $3.75 per pound, goat cheese at
$7.10 per pound, and Oaxaca cheese at $4.50 per pound. The daily demand for each cheese is 45, 22,
and 63 pounds respectively. The creamery has a dedicated supplier for each type of cheese, and the
ordering cost is $2.00 per order. It is expensive to keep these products in inventory because they are
highly perishable. The holding cost is estimated to be 0.5% of the purchasing price for each type of
cheese. - Answers 951 pounds
A small manufacturer of mountain bikes located in Denver, Colorado, buys tires from a supplier in China.
There is a monthly demand of 200 tires. The cost of placing an order is $200 and the holding cost is $24
per tire per year. If the purchasing price is $45 per tire and the economic order quantity is used, what is
the total annual inventory cost? - Answers $112,800
A textile company produces tablecloths and cloth napkins. The production process includes two steps:
cutting and sewing. Every day at least 2 production hours must be worked in the cutting department and
6 production hours must be worked in the sewing department. The time needed for cutting and sewing
each item as well as the production costs for each item are provided in the table below:
ProductTime Needed to Cut FabricTime Needed to SewProduction CostsTablecloths8 minutes9
minutes$9.50Cloth Napkins1.5 minutes6 minutes$3.50
Let X 1 represent the number of tablecloths to be produced and let X 2 represent the number of cloth
napkins to be produced. What is the equation of the objective function Z that optimizes the production
cost? - Answers Min Z = 9.50X 1 + 3.50X 2
A manufacturing plant produces exactly 10 tons of a combination of three products per day. The
production costs are five, four, and three dollars for products one, two, and three, respectively. The
plant works 480 minutes per day. Each ton of product one, two, and three requires 45, 50, and 55
minutes of processing time, respectively. What is the correct linear programming model for minimizing
the production cost? - Answers Min Z = 5 X 1 + 4 X 2 + 3 X 3Subject to X 1 + X 2 + X 3 = 1045 X 1 + 50 X 2
+ 55 X 3 ≤ 480 X 1, X 2, X 3 ≥ 0
Consider the following linear programming formulation: MIN
26X 1 + 14X 2 +12X 3
Subject to
2X 1+3X 2+1X 3≥30
6X 1+3X 2+1X 3≥50
X 1, X 2, X 3 ≥ 0
, The optimal solution is OBJECTIVE FUNCTION VALUE 1) 228.0000 VARIABLE VALUE REDUCED COST X1
5.000000 26.000000 X2 7.000000 14.000000 X3 0.000000 12.000000 ROW SLACK OR SURPLUS DUAL
PRICES 2) 1.000000 0.000000 3) 1.000000 0.000000 What is the optimal value of X 3? - Answers 0
A sporting goods company makes sports bandanas and flags. It costs $10 to produce one bandana and
$12 to produce one flag. It takes 1/4 yard of material to make one bandana and 1/2 yard of material to
make one flag.What is the constraint in this scenario? - Answers The amount of material available
A local music store that hosts live music has been a very popular hangout for years. However, the owner
is concerned that the increasing popularity of new methods of music delivery will soon make the
business obsolete. The owner is considering building a small recording studio in the basement of the
store. The nearest professional studio is 50 miles away, so a new studio may appeal to local musicians
and increase foot traffic. The owner has all the costs of building the studio and also estimated how much
revenue might increase due to the new studio (from studio rental fees, increased food and drink sales if
more people come to the live music shows, etc.). The owner will use this information to determine net
present value for the studio.Which method of analysis should this owner use to make a determination? -
Answers Quantitative
An employee working for the Highway Safety Department in Albany, New York has the job to predict the
automobile accidents in Albany for the next year. The employee currently has monthly data on the
following variables for the city of Albany: the number of automobiles registered, the sales of alcoholic
beverages, and the rainfall in inches. How can this employee realistically predict the accidents in Albany
for next year? - Answers Use a multiple regression equation using accident as the dependent variable
and others as independent variables
A textile company is a manufacturer of fireproof uniforms in Mexico. The company is planning on
opening operations in the United States and Canada, which requires a capacity expansion of 100%. The
company has three alternatives: build a large plant, build a small plant, or subcontract.There are two
possible states of nature: a favorable market and a moderate market. If the future market is favorable,
the payoffs are $13, $5, and $7 million for building a large plant, building a small plant, and
subcontracting, respectively. Similarly, for a future moderate market, the payoffs are $2, $8, and $3
million for building a large plant, building a small plant, and subcontracting, respectively. The company
has estimated the probability of a favorable market as 0.40. The textile company needs to make a
decision about either building a plant or subcontracting.What is the relationship between uncertainty
and the decision-making - Answers Uncertainty is less relevant to the decision-making process than risk.
Inventory Turns - Answers The number of times inventory is sold or used during a specific period (such
as a year or quarter). A higher figure means a firm is selling products quickly.
Inventory Turns Equation - Answers (Cost of Goods Sold (COGS)/Average Inventory)
Inventory Days Coverage - Answers (Average Inventory/Cost of Goods Sold(COGS))×365=(365/Inventory
Turns)
