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MGSC 1205 ****Final Exam**** Winter 2008

Name:_______________________(print)

Name:________________________(signed)

ID Number:_____________________

Section: ______ Instructor: _________________

MGSC 1205.2

****FINAL EXAMINATION****

Winter 2008

1. You have THREE hours.

2. Your exam paper consists of 8 pages. Please make sure that you have a complete set of exam paper.
The point total is 100.

3. Values of individual questions are indicated in the left margin.

4. Remember that you must define all variables that you introduce and you must give WORD
answers to word problems.

5. Answer all questions on the exam paper. Use the backs of pages for extra work space.

6. If you have questions, ask one of the instructors for clarification.

7. No cell phones, PDA’s and other electronic devices are permitted, except calculators.

Simple Interest F = P (1 + rt ) P = F (1 + rt ) −1

1
F = P (1 + i ) P = F (1 + i )
−n
Compound Interest n
=F
(1 + i ) n

Future Value of an Annuity F =R


(1 + i ) n − 1 R=F
i
i (1 + i ) n − 1

1 − (1 + i ) i
−n
Present Value of an Annuity P=R R=P
1 − (1 + i )
−n
i

reff = (1 + i ) −1
m
Effective interest rate

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MGSC 1205 ****Final Exam**** Winter 2008
#1. Farmer Frank raises pumpkins and squash using two fields. Since the fields are in different locations, there are
differences in yields and costs of growing the two crops, depending on the field used, as given in the table below.
Field I Field II
Field I has 15 hectares and field II has Pumpkins Squash Pumpkins Squash
23 hectares available for planting. yield per hectare 280 pumpkins 820 squash 400 pumpkins 700 squash
Frank wants a total yield of at least cost per hectare $300 $550 $370 $620
8,000 pumpkins and 15,000 squash.
Suppose Frank plants P1 hectares of pumpkins and S1 hectares of squash in field I; P2 hectares of pumpkins and S2
hectares of squash in field II. Formulate an LP model to help him determine how many hectares in each field he
should plant in each crop to minimize his total costs. DO NOT SOLVE.

7 pts

#2. The Recycling Alliance of South Hubbards (TRASH) operates two major collection depots throughout the
south shore area of the province, and ships used newspapers to three processing plants, A, B, and C. The following
table gives the cost per ton shipped from each depot to each plant, along with the maximum amounts that can be
collected at the depots each week and the minimum amounts required each week at the plants for processing.
Formulate an LP model to help TRASH determine that amount of used newspaper to ship from each depot to each
processing plant per week in order to minimize their shipping costs. DO NOT SOLVE.
From\To Plant A Plant B Plant C Max tons avail
Depot I $70 $35 $40 170
Depot II $25 $65 $80 250
Min tons needed 160 125 95
9 pts

#3. A developer of video game software has five proposals for new games. Unfortunately, the company cannot develop
all the proposals because its budget for new projects is limited to $950,000 and it has only 20 programmers to
assign to new projects. The financial requirements, returns, and the number of programmers required by each
project are summarized below.
Project 1 2 3 4 5
Expense 350 275 300 250 145 ($’000)
# programmers Required 7 6 9 5 6
Estimated Profit 650 550 600 450 375 ($’000)
Projects 2 and 5 require specialized programming knowledge that only one of programmers has. Both of these
projects cannot be selected because of the programmer with the necessary skills can be assigned to only one of the
projects. In addition, project 4 requires the technology to be developed in project 3. If project 4 is selected, therefore,
project 3 must be selected, too. Formulate the integer programming model for the problem to maximize the total
estimated profit. DO NOT SOLVE.

7 pts

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MGSC 1205 ****Final Exam**** Winter 2008
#4. Consider the following LP model
Maximize P = 2x +5y
s.t.
3x +2 y ≤ 60 (1)
x +2 y ≤ 40 (2)
x −2 y ≤0 (3)
x, y ≥0

a) Sketch a graph and shade in the feasible region;


5 pts

b) Label all feasible corner points and determine their coordinates. Determine the optimal corner point and the
corresponding objective function value.

4 pts

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MGSC 1205 ****Final Exam**** Winter 2008
#5. Anderson Electronics (AE) is considering the production of four potential products: VCRs, stereos, TVs and DVD
players. The production uses three resources: electronic components, nonelectronic components and assembly
time. The profits per unit for the products are given in the following LP model.
Let V, S, T and D denote the number of VCRs, stereos, TVs and DVD payers to make, respectively.
Maximize total profit: P = 29V + 32 S + 72T + 54 D
Subject to:
3V + 4 S + 4T + 3D ≤ 4700 (electroni c components , units)
2V + 2 S + 4T + 3D ≤ 4500 (nonelectr onic components , units)
V + S + 3T + 2 D ≤ 2500 (assembly time, hours)
V , S,T , D ≥ 0 (non - negativity )

a) Using the LP model in Excel:


(1) Fill in the following blanks with the formulas used to calculate the value in the given cells.

2 pts
F5 =

F8 =

(2) Fill in the Solver setup.


3 pts

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MGSC 1205 ****Final Exam**** Winter 2008
b) What is the maximum profit represented by the objective function?
1 pt

c) In the optimal solution, how many units of each product will be made?
2 pts

d) Which resource(s) is/are binding? What is the corresponding shadow price?

2 pts

e) Which resource(s) is not binding? How many units are not used?

1 pt

f) What is the new profit if the number of nonelectronic components available is down to 4000 units?

1 pt

g) What is the new profit if the number of electronic components is increased by 400 units (to a total of
5100units)?

1 pt

h) If you could hire an extra hand to work in the assembly department, what is the maximum hourly wage you
would like to pay? How many more hours do you like to get?
2 pts

i) What would be the total profit if the management decides to make 100 TV sets?
1 pt

j) What is the minimum profit per unit for VCR before Anderson should consider producing them?

2 pts

k) Now, Anderson plans to have promotional sales on DVD payers. How much could they low the price per unit
for DVD players so that the optimal production plan is not affected? What would be the new profit after the price
is reduced?

2 pts

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MGSC 1205 ****Final Exam**** Winter 2008
#6. Snookers Restaurant is open from 8:00 am to 10:00 pm daily. Besides the hours they are open for business,
workers are needed an hour before opening and an hour after closing for setup and clean up activities. The restaurant
operates with both full-time (8hour shifts) and part-time (4-hour shifts) workers on the following shifts, and the full-
time workers are paid higher than the part-time workers (due to the difference in benefits coverage).
Shift Variable Duration Wage/hour Pay per shift Hours Workers needed
full 1 F1 7 am to 3 pm $12 $96 7 am to 9 am 11
time 2 F2 11 am to 7 pm $12 $96 9 am to 11 am 11
3 F3 3 pm to 11 pm $12 $96 11 am to 1 pm 24
1 P1 7 am to 11 am $10 $40 1 pm to 3 pm 16
part 2 P2 11 am to 3 pm $10 $40 3 pm to 5 pm 10
time 3 P3 3 pm to 7 pm $10 $40 5 pm to 7 pm 22
4 P4 7 pm to 11 pm $10 $40 7 pm to 9 pm 17
9 to 11 pm 6

a) Let F1 = number of full time workers working in the shift 1, from 7 am to 3 pm, similarly for F2, F3, P1, P2,
P3, & P4. Determine the daily labour cost function.
1 pt

b) The number of workers needed is listed in the table above right for each of the indicated time blocks. Develop
a constraint function for each of the eight time blocks, where number of workers working is more than or equal
to the number of workers needed in that time period.

4 pts

c) At least one full time worker must be available during the hour before opening and after closing. Additionally,
at least 30% of the employees should be full-time (8-hour) workers during the restaurant’s busy periods from
11:00 am to 1:00 pm and 5:00 pm to 7:00 pm. Write a constraint for each of the conditions.

4 pts

#7 Angela Tykes, an investment counselor, must plan a $75,000 portfolio for investment over the next year (four
quarters). She has three investment choices. The table below shows all these options with the return rates and
maturities. All the options are available at the beginning of each quarter. Since choice C is relatively risky, Angela
wants no more $20,000 in the option. She must also provide at least $3,000 at the end of quarters 1, 2, & 3, while
maximizing the total portfolio at the end of the year. Formulate the appropriate LP model. DO NOT SOLVE.
Option A B C
Return/period 3% 8% 15%
Maturity 3 months 6 months 1 year

9 pts

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MGSC 1205 ****Final Exam**** Winter 2008
#8. You deposit $200 in an account that pays 4.5% interest compounded monthly.
a) How much interest will you earn from this deposit after 2 years?

2 pts

b) How long does it take for the deposit to be $300 in this account? (Interest is 4.5% compounded monthly)

2 pts

c) How much will you have after 2 years if, after the initial deposit of $200, you also deposit $500 at the end of year 1?

2 pts

#9. Nina wants to open a saving account in a bank. She is facing two options: one saving account offers interest of
7.5% compounded quarterly; the other offers interest of 7.75% compounded annually. Which account should Nina
choose?

2 pts

#10. Suppose you opened an account today with a deposit $1000. If you save $500 at the end of each month for 2
years at the interest of 6% compounded monthly. How much will be in the account at the end of the second year?

3 pts

#11. Peter’s parents established a 4-year term trust fund from which Peter can withdraw $800 every month. If they also
want to have a $5000 balance in the account after 4 years, how large should the trust fund be if the interest is
5.5% compounded monthly?

3 pts

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MGSC 1205 ****Final Exam**** Winter 2008

#12. Chris purchased a condominium recently. He took out a mortgage of $175,000. The interest rate for such a
mortgage amortized over a 20-year period is at 6.75% interest compounded monthly.
a) What is Chris’ monthly payment?
2 pts

b) In Chris’ first payment, how much is towards interest, and how much is applied against the principal of the
mortgage?
2 pts

c) How much interest will Chris pay over the 20-year life of the loan?
2 pts

d) What will the balance of the mortgage be after 15 years?


3 pts

#13. a) Use the information given below to construct an amortization table for the first 3 monthly payments.
4 pts
J K L M N O
6 Mortgage Loan Amortization Table
7 Interest rate 6% Monthly
8 Monthly rate 0.5% Payment $100
9 Initial principal $5,000
10 Initial Amount against New
11 Month Balance Payment Interest Princpal Balance
12 1
13 2
14 3

b) When you setup the amortization table in Excel, formulas could be used in cells K12:O12, & K13, and then,
cells L12:O12 could be copied to L13:O13, and finally cells K13:O13 could be copied to all the remaining
rows. Fill in the following blanks with the formulas needed in calculation.
3 pts
K12 = N12 =
L12 = O12 =
M12 = K13 =

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