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MT 435

Homework Set 2 Solutions

September 2, 2016

1. A small pet food company has a contract to supply 800 pounds of dog food per week to a
kennel. The food must provide minimal percentages of 3 nutritional components, A, B, and
C as given:
A
12

B
7

C
9

The company makes the dog food by combining various meat by-products; some of these
have weekly quantity limits. The availabilities, costs, and nutritional percentages are:
By-product
1
2
3
4
5

supply (lbs/wk)
500
400
unlimited
300
100

cost (/lb)
43
39
42
34
25

A
5
4
8
3
0

B C
0 4
10 3
7 4
10 5
9 6

Formulate a model that achieves the desired mix at minimal cost. Do not solve the problem;
carefully define your variables.
Solution: Since the company makes 800 pounds per week, we can immediately translate
the minimal percentages of A, B, and C into pounds required of each: .12(800)=96 of A,
.07(800)=56 of B, and .09(800)=72 of C. Let xi = # of pounds of meat product i used per
week, i = 1, . . . , 5. Then the LPP is:

Minimize (cost in cents) 43x1 + 39x2 + 42x3 + 34x4 + 25x5 subject to


Minimize (cost in cents) 43x1 + 39x2 + 42x3 + 34x4 + 25x5 subject to
5x1 +4x2 +8x3 +3x4
96
10x2 +7x3 +10x4 +9x5
56
4x1 +3x2 +4x3 +5x4 +6x5
72
x 1 , x2 , x3 0
2. A recent retiree plans to purchase some bonds to be used to meet some annual expenditures. A bond has a given face value, price, maturity year, and interest rate (called the
coupon rate). At the end of each year until it matures, each share of the bond generates
a payment, called the coupon, that is equal to the coupon rate times the face value. At
1

the end of the maturity year, the face value is also repaid by the bond issuer to the bond
purchaser. (After the maturity year, the bond generates no money.) The price is, of course,
what must be paid to purchase one share of the bond.
Suppose the retiree decides she needs at least $40,000 at the end of the first year, at least
$50,000 at the end of the second year, and at least $36,000 at the end of the third year.
There are 4 dierent bonds that she considers purchasing. Their face values, prices, coupon
rates, and maturity years are:
bond
face value
price
coupon rate
maturity year

1
200
204
5%
1

2
120
118
3.5%
2

3
60
57
1.5%
2

4
80
81
4%
3

Set up a model to determine what she should do about bond purchases. Assume its possible
to buy partial shares of a bond. Clearly define any variables used. Do not (yet) solve the
problem, just formulate the model.
Solution: Let xi =# of shares of bond i purchased, i = 1, . . . , 4. She wants to minimize
total purchase cost, subject to meeting her yearly requirements. Thus:
Minimize 204x1 + 118x2 + 57x3 + 81x4 subject to
(1.05)200x1 + (.035)120x2 + (.015)60x3 + (.04)80x4 40, 000
(1.035)120x2 + (1.015)60x3 + (.04)80x4 50, 000
(1.04)80x4 36, 000
x1 , . . . , x 4 0
The constraints are equivalently written:
210x1 + 4.2x2 + .9x3 + 3.2x4 40, 000
124.2x2 + 60.9x3 + 3.2x4 50, 000
83.2x4 36, 000
x1 , . . . , x 4 0
3. Do problem #10 in 2.3. Formulate the problem and solve it graphically.
Solution: There are several ways to model and solve this problem. If we were simply setting
up a model, the easiest formulation might be to let x1 be the number of frames that are
2

made, x2 the number that are purchased, and x3 the number of cabinets that are installed.
Of course, the number of frames made plus the number bought must equal the number of
cabinets installed and the linear programming problem is:
Maximize 100x3

[(6)5x3 + (6)2x1 + (5)3x3 + (5)x1 + 27x2 ] = 55x3


5x3
3x3
x1

17x1

27x2 subject to

+ 2x1 1750
+ x1
1032
+ x2
= x3
x 1 , x2 , x3 0

Now, to solve this graphically, we need to express this in terms of two variables only; this is
easy to do since x1 + x2 = x3 . One solution then is to replace x3 wherever it appears with
x1 + x2 , leading to the following problem, in which Ive simplified expressions (for example
55(x1 + x2 ) 17x1 27x2 = 38x1 + 28x2 ).
Maximize 38x1 + 28x2 subject to
7x1
4x1

+5x2
+3x2
x 1 , x2

1750
1032
0

350

300

250

200

150

100

50

50

100

150

200

250

The feasible region (shaded) is bounded and so the maximum must exist and occur at one
of the corner points, which are (0, 344), (90, 224), and (250, 0). Evaluating 3x1 + 28x2 at
these points yields 9632, 9692, and 9500, respectively, so the optimal solution is x1 = 90
and x2 = 224. That is, make 90 frames in the shop and purchase 224; use these to install
90 + 224 = 314 cabinets, for a profit of $9692.
An alternate approach is to use variables x1 = number of frames that are made and x3 the
number of cabinets installed. Since x2 = x3 x1 is the number of frames purchased, we can
replace x2 in the three variable model with x3 x1 everywhere that it appears, including the
constraint x2 0. The replacement here yields x3 x1 (this is natural- think about what
this means!) and so this constraint must be included. The model is then:
Maximize 10x1 + 28x3 subject to
2x1
x1
x1

+5x3
+3x3
+x3
x 1 , x3

1750
1032
0
0

The graphical solution (not shown here) will have a dierent looking feasible region and
corner points (dierent variables!) but will have a maximum profit of $9692 as well, with
x1 = 90 and x3 = 314. That is, install 314 cabinets, for which 90 frames will be made in the
shop; of course, this implies that 224 frames will be purchased.

As I mentioned in class, I plan to cover most of the the theory and applications of 2 person
zero-sum game theory, largely through mini-explanations, readings in the text, and problems
on homework assignments. Well cover most of chapter 9 in Thie and Keough. A nice source
(though not necessary to read) is a great set of online notes by Thomas Ferguson (google
thomas ferguson ucla). A fun book, available cheaply through Dover press and free online, is
The Compleat Strategyst, by J.D. Williams. This was the first book on game theory written
for a general audience and assumed little mathematical knowledge. Written in 1954, its
hilarious, though, fortunately, weve advanced beyond the 1954 social norms in a number of
examples.
In a 2 person zero-sum game between Player 1 (P1) and Player 2 (P2), P1 has m possible
strategies: s1 , s2 , . . . , sm and P2 has n possible strategies t1 , t2 , . . . , tn . If P1 uses si and P2
uses tj , then the payo to P1 is denoted aij ; this could be positive, negative, or 0. The
payo to P2 is aij . (The payo to P1 plus the payo to P2 is 0; this is the meaning of
zero-sum.) The payo matrix A is the m n matrix with entry aij in row i and column j.
(Thus, the rows correspond to P1 strategies and the columns to those of P2.) Neither player
knows which strategy the other player will use. For example, let
4

3
4
7 5
6

3
4
A= 2
5

Then P1 has three strategies: s1 , s2 , s3 and P2 has the two strategies t1 , t2 . Suppose P1 plays
s2 . If P2 uses t1 , then P1 wins 2 and P2 wins -2 (that is, loses 2). If P2 instead uses t2 , then
P1 wins -7 and P2 wins 7.

4. In the classic game paper, scissors, rock, two people simultaneously show each other the
sign for paper, for scissors, or for rock. Scissors beats paper (ouch!), paper beats rock (by
covering it), and rock beats scissors (ouch! again). The winner gets $2 for each play. If the
strategies for both players are listed in the order paper, scissors, rock, write the corresponding
payo matrix.
2

Solution: The payo matrix is: A = 4

0
2
2

2
0
2

3
2
2 5
0

5. Joe and Mary simultaneously each call out one of 1, 2, or 3. If the sum is odd, Joe wins;
if its even, Mary wins. The amount the loser pays to the winner is the sum in $. Order the
strategies and write the corresponding payo matrix.
Solution: Let the strategies for2both players be3ordered as choose 1, choose 2, choose 3.
2
3
4
4
5 5
Then the payo matrix is: A = 4 3
4
5
6