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Q: Quantitative ( Answered,   2 Comments )
Question  
Subject: Quantitative
Category: Business and Money > Economics
Asked by: k9queen-ga
List Price: $40.00
Posted: 03 Dec 2003 08:16 PST
Expires: 02 Jan 2004 08:16 PST
Question ID: 283068
1) Solve by graphing, and explain.

The Sue All Law Firm handles 2 types of lawsuits: 
Medical malpractice suits against unscrupulous heart surgeons, for
performing unnecessary surgery, and suits against hard-working math
professors for failing students who do not deserve to pass.  Math
professor lawsuits each require 6 person-months of preparation and the
hiring of 5 expert witnesses,whereas medicallawsuits each require 10
person-months of preparation and the hiring of 3 expert witnesses. 
The firm has a total of 30 person-months to work with and feels that
it cannot afford to hire more than 15 expert witnesses.  It makes an
average profit of $1 million per math professor sued and $5 million
per heart surgeon sued.  How many of each type of lawsuit should it
initiate in order to MAXIMIZE its expected profits?

2) Solve by graphing, and explain.
O'Hagan Bookworm Booksellers buys books from two publishers.  Duffin
House offers a package of 5 mysteries and 5 romance novels for $50,
and Gorman Press offers a package of 5 mysteries and 10 romance novels
for $150. O'Hagan wants to buy at least 2,500 mysteries and 3,500
romance novels, and he jas promised Gorman (who has influence on the
Senate Textbook Committee) that at least 25% of the total number of
packages he purchases will come from Gorman Press.  How many packages
should O'Hagan order from each publisher in order to MINIMIZE his cost
and satisfy Gorman?  What will the novels cost him?

3)Your software company has launched the latest version of its web
browser, "Java Cruise 4.0." As sales manager, you are planning to
promote Java Cruise 4.0 by sending sales forces to software
conventions running concurrently in St. Louis and Detroit.  You have 6
representatives available at each of your Little Rock, Ark. and
Urbana, Ill. branches, and you would like to send at least 5 to the
St. Louis convention and at least 4 to the Detroit convention.  The
St. Louis convention will last for three days, while the Detroit
convention will last for two days.
The airfare from Little Rock to St. Louis is $400;
The airfare from Little Rock to Detroit is $200;
The airfare from Urbana to St. Louis is $100;
The airfare from Urbana to Detroit is $200;
the cost of one night's lodging in St. Louis is $60;
the cost of one night's lodging in Detroit is $100 per night.

a)How many representatives should you send from each branch to each
convention in order to MINIMIZE the total (air travel & accomadation)
cost? What will the total cost amount to ?

b)Change some of the values of the airfare and hotel price that would
cause the results to change.

HINT: There are four choice variables.

Clarification of Question by k9queen-ga on 03 Dec 2003 12:27 PST
Hey Politicalguru,

How did you find those answers?!
I can't get the graphs for #1,and #2
(although number 4 does show up) what
am I doing wrong? Or are they just not there?

K9 - Queen
p.s. I would like to pay/tip you for your help.

Clarification of Question by k9queen-ga on 03 Dec 2003 13:09 PST
Hi Politicalguru,
Do you have any good sites for 
any CLEP tests?
Answer  
Subject: Re: Quantitative
Answered By: elmarto-ga on 07 Dec 2003 16:19 PST
 
Hi k9queen!
Here are the answers to your questions (at last!)

1. Let's first write the objective function and the constraints. Let's
call X to the number of suits against surgeons and Y to the number of
suits against professor. Since the company earns 5 per suit against
surgeons and 1 per suit against professors, we have that the company
must maximize the following function:

Max 5X + Y

Regarding the constraints, the company has a total of 30
person-months. The professor suits take 6 person-months and the
surgeon suits take 10 person-months to prepare. Therefore, one
constraint is:

10X + 6Y <= 30

Similarly, regarding witnesses, the other constraint is:

3X + 5Y <= 15.

Finally, it's clear that both quantities should be positive. In order
to solve this problem graphically we must draw the constraints and
iso-profit curves in a two-dimension graph. Let's first get the
equations for the lines that define the constraints. One of them is:

10X + 6Y <= 30
6Y <= 30 - 10X
 Y <= 5 - (10/6)X     (1)

So if we draw the line Y=5-(10/6)X, all points below this line
(because of the <=) satisfy this constraint. The other constraint
defines the line

3X + 5Y <= 15
5Y <= 15 - 3X
 Y <= 3 - (3/5)X      (2)

Again, all points below this line satisfy this constraint. Since there
are no more constraints, we have that all points that satisfy BOTH
constraint are the *feasible* points. We must choose among this
feasible points when maximizing the functions; otherwise we would be
violating one or both the constraints.

Finally, we have to find the equation for the iso-profit lines.
Iso-profit lines represent different combinations X and Y that
generate the same profit. For example, let's see what combinations of
X and Y gives a profit of 30. To do this, we set:

5X + Y = 30
Y = 30 - 5X

All the points that belong to this line (for example, X=1 and Y=25; or
X=5 and Y=5) generate the same profit (30). Now let the profit level
be unspecified and call it U. We have that isoprofit lines are of the
form:

5X + Y = U
Y = U - 5X

As you can see, all isoprofit lines (in this problem, of course) have
the same slope (-5) and have different intercepts (U).

Now, the problem is to maximize profits. Notice that the isoprofit
lines that correspond to high profits are up and to the right (they
have a higher intercept). The problem is then to choose the "highest"
isoprofit line possible such that at least one of its points is
feasible. Let's see it graphically:

http://www.angelfire.com/alt/elmarto/googleanswers/283068q1.jpg

The blue line represents the first restriction. The green line
represents the second one. The "shaded" are contains the feasible
points: these points are below both restriction lines. Red lines are
the iso-profit lines. As you can see, a profit of 10 is feasible (one
would only need to choose X and Y along this line and inside the
shaded area) but it's not optimum: we can choose a line more rightward
(which represents a higher profit) and still pass through the
feasibility set. Of course, we can't go on indefinitely. The isoprofit
line of 20 profit doesn't pass through the feasibility set. Therefore,
it's not possible to obtain a profit of 20. As you can see. The
isoprofit line of 15 is the best we can do. It touches the feasibility
set only at X=3 and Y=0. This means that the answer to this problem is
that the firm must file 3 surgeon suits and 0 professor suits, for
total profits of 15.


2. The procedure is exactly the same here. There is however a
difference in where the feasibility set is and which way the optimum
is. Let's see the problem. Call X the number of packages from Duffin
House and Y the number of packages from Gorman Press. The function to
minimize is then:

50X + 150Y

Since the firm needs 2,500 mystery novel, and both suppliers offer
packages which contain 5 mystery novels each, we have that one of the
restriction is:

5X + 5Y >= 2500     (1)

Also, the firm needs 3,500 romance novels. Duffin's packages come with
5 romance novels, while Gorman's come with 10. Therefore,

5X + 10Y >= 3500    (2)

Finally, the firm has agreed to buy at least 25% of the total number
of packages to Gorman. So we have that:

Y/(X+Y) >= 1/4
4Y >= X+Y
3Y >= X             (3)

Now, as before, let's rewrite the restrictions so we get the lines in the graph. 

Restriction (1) becomes:

Y >= 500 - X

Restriction (2):

Y >= 350 - (1/2)X

Restriction (3):

Y >= X/3

Here we have the first difference with the previous problem. The
feasible points are *above* the constraint lines and not below,
because of the >= sign. But, just as before, the feasible set is the
set of points that satisfy ALL of the restrictions. Let's also compute
the equuation for the iso-cost lines. We have:

50X + 150Y = U
Y = U/150 - (1/3)X

Notice that, clearly, they are now iso-cost and not iso-profit lines.
This brings the second difference with the previous problem. Here we
have that it's "better" to choose isocost lines that are as low as
possible. Check the graph for this question

http://www.angelfire.com/alt/elmarto/googleanswers/283068q2.jpg

There is no shaded are because it would be to messy to understand.
Keep in mind then that the feasible points are the ones that are above
all 3 restrictions. As you can see in the graph, it's not possible to
go below $42,000 in cost. Trying to get a lower cost violates
restrictions (2) and (3). Therefore $42,000 is the minimum possible
cost. As you can see, the optimum combination of X and Y is where
restriction (2) intersects restriction (3). So let's find X and Y by
finding this intersection (of course, in order to come up with the
42,000 number, I first figured out X and Y from the intersection and
then calculated their associated cost).

Restriction (2): Y = 350 - (1/2)X
Retsriction (3): Y = (1/3)X

From this system of 2 equations and 2 unkowns, we get X=420, Y=140.
That's the optimum in this problem.


3). The problem (objective function and constraints) can be found at
the link politicalguru-ga provides. Let's see why the answer is the
one provided there, which is to send 4 from Little Rock to Detroit and
5 from Urbana to St. Louis.

a) We have to minimize cost and we must send at least 4 to Detroit and
5 to St. Louis. Since sending people representatives is costly,
clearly this constraint will be binding; that is, we'll want to send
EXACTLY 4 people to Detroit and EXACTLY 5 to St. Louis. Now, the
accomodation costs are irrelevant to the choice, because they will
have to be paid the same either if the representatives come from
Urbana or Little Rock. Therefore, we must send representatives from
Urbana to the city to which it's cheaper to travel (St. Louis) and the
same with the people from Little Rock. Since in both places there are
6 people, and we must send 4 to one city and 5 to the other one, it's
feasible to do this. So the solution is the one mentioned before.

b) Changing the hotel price would indeed change the total cost, but it
wouldn't affect the decision of sending 4 from Little Rock to Detroit
and 5 from Urbana to St. Louis. The idea is that it doesn't matter
where the representatives come from, the accomodation cost will have
to be paid anyway. Changing the air fares can change the answer,
though. For example, if traveling from Urbana to both two cities were
cheaper than flying from Little Rock. It would be best to send all 6
representatives from Urbana, some to one city and some to the other
one. This would take advantage of the low air fares from this city.
Something similar could be said if travelling from Little Rock were
very cheap.

You may want to visit the following links to learn more about solving
linear programming problems graphically:

http://www.ms.ic.ac.uk/jeb/or/morelp.html
http://jwilson.coe.uga.edu/EMT668/EMAT6680.F99/McCallum/emat6690/Linear%20Programming/Linear%20Programming.html


Google search strategy
linear programming graphically
://www.google.com/search?sourceid=navclient&ie=UTF-8&oe=UTF-8&q=linear+programming+graphically


I hope this helps! If you have any doubt regarding my answer, please
don't hesitate to request a clarification before rating it. Otherwise
I await your rating and final comments.

Cheers!
elmarto
Comments  
Subject: Re: Quantitative
From: politicalguru-ga on 03 Dec 2003 08:42 PST
 
Dear Queen, 

http://people.hofstra.edu/faculty/Stefan_Waner/RealWorld/Finitequestlp.html 

Provides answers for the problems you presented.
Subject: Re: Quantitative
From: k9queen-ga on 04 Dec 2003 12:47 PST
 
Are you still there? I have not heard back from you!

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