Tumelo Omogolo Mapila

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FIT2033

ASSIGNMENT 1

1. a) Fixed cost = $3100 + $1900 = $5000 per month

Variable cost = $630x + 11x + 16(0.5)x + 4(0.25)x = $650x Total cost = $5000 + $650x Therefore x = (total cost - $5000)/ $650 b) Total revenue r(x) = price per unit * number of units r(x) = $700x

Total profit Z(x) = total revenue total cost Z(x) = $700x ($5000 + $650x)

c) Breakeven point of monthly sales of computers 0 = $700x ($5000 + $650x) 0 = $700x - $5000 - $650X 0 = $50x $5000 $5000 = $50x Therefore x = 100 Universal computer must sell 100 UC10 computers in order to breakeven. d) Monthly profit with a production schedule of 500 UC10 computers per month Total profit Z(x) = $50x $5000 = $50(500) - $5000 = $20 000 per month Universal computers will make a profit of $20 000 per month with a production schedule of 500 UC10s per month.

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e 1. The graph shows graphically how Universal computers breaks even. They have to manufacture 100 UC10 computers in order to breakeven.
Cost-volum e analysis
120000 110000 100000 90000 80000

Revenu/ costs ($)

70000 60000 50000 40000 30000 20000 10000 0 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Total Costs Reven ue Fixed cost

UC10 Units (*100)

e 2. After adjusting the fixed costs from $5 000 to $7 000 the breakeven point moved up to 140 UC10 units. This means 140 UC10 computers need to be manufactured in order to breakeven.
Cost-volume analysis
120000 110000 100000 90000 80000

Revenu/ costs ($)

70000 60000 50000 40000 30000 20000 10000 0 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 To tal Co sts Revenue Fixed cost

UC10 Un its (*100)

Tumelo Omogolo Mapila

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FIT2033

e 3. The graph shows the increase change if the variable cost is increased to $700 from $650. The Revenue line and total cost lines never cross hence making constant loss.
Cost-volume analysis
120000 110000 100000 90000 80000

Revenu/ costs ($)

70000 60000 50000 40000 30000 20000 10000 0 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Total Costs Revenue Fixed cost

UC10 Units (*100)

e 4. This graph shows what happens when the unit price is increased from $700 to $800. The new breakeven point is approximately 33.33 units in order to breakeven. NB: they cannot manufacture 0.33 of a UC10 computer so the company must make 40 computers.

Tumelo Omogolo Mapila

20504071
Cost-volume analysis

FIT2033

120000 110000 100000 90000 80000

Revenu/ costs ($)

70000 60000 50000 40000 30000 20000 10000 0 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 To tal Co sts Reven ue Fixed cost

UC10 Un its (*100)

2. a) Attached excel document Question 2 xi = the number of seats where i = the number of variables 1 to 5. Decision variables: X1 = number of seats produced by CPI in Q1 X2 = number of seats produced by DAP in Q1 X3 = number of seats carried in inventory form Q1 to Q2 X4 = number of seats produced by CPI in Q2 X5 = number of seats produced by DAP in Q2 Objective function: Minimize (Z) = $10.25x1 + $12.50 x2 + $10.25 x4 + $13.75 x5 + $1.50 x3 Constraints: x1 + x2 x3 >= 3700 seats (Demand in Q1) x4 + x5 + x3 >= 4300 seats (Demand Q2) x3 <= 300 (Maximum inventory) x1 <= 3800 (Max production Q1) x4 <= 3800 (Max production Q2)
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Tumelo Omogolo Mapila

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FIT2033

x1 + x2 + x3 + x4 + x5 >= 0, integer The number of seats produced by CPI in Q1 and Q2 respectively is 3800 and 3800 seats. The number of seats purchased from DAP in Q1 and Q2 respectively is 0 and 300 seats. The number of seats carried in inventory is 100 from Q1. The optimal minimum cost is $82 175.00.

b) If the cost per inventory increased from $1.50 to $2.50 the optimal solution would not change but the optimal value of the objective function would change to $82 275.00.

c) If the Q2 cost per-seat increased by $1.25 and DAP did not increase its price per seat the optimal solution would not change but the optimal minimal value of the objective function would increase to $86 550.00.

d) If DAP reduced its per-seat selling in Q1 from $12.50 to $12.25, CPI would rather purchase 200 seats from DAP in Q1 and 100 seats in Q2 to meet the optimal minimum cost function.

e) If CPI increased its inventory capacity from 300 to 400 seats it would not be worth anything. This is also affected by the limited maximum capacity that CPI can produce per quarter. f) If CPI increased its production capacity by 100 seats in both quarters it is able to save up to $550.00 on its optimal minimal cost function. NB: $82 175.00 - $81 625.00 = $550.00 in savings.

3. a) Let xi = the subject choice where i = the subject number 1 to 7 Decision variables: Management I = x1
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Principles of accounting = x2 Corporate finance = x3 Quantitative methods = x4 Marketing management = x5 C programming = x6 English = x7

Objective function: Minimize (Z) = 5x1 + 10x2 + 8x3 + 12x4 + 7x5 + 10x6 + 8x7 Constraints: X2 + x3 + x4 + x6 <= 2 X1 + x2 + x6 + x7 >= 3 X1, x7 = binary (0 or 1) 3(x1 + x2 + x3 + x4 + x5 + x6 + x7) >= 12 (9 x1 + 6x2 + 6x3 +3x4 + 6x5 + 3x6 + 9x7) / (3(x1 + x2 + x3 + x4 + x5 + x6 + x7)) >= 2.0 b) Attached excel file QUESTION 3 B. John must take Management 1, Principles of accounting, Marketing management and English in order to remain a full time student and continue receiving financial aid. He also was able to take no more than two subjects with a lot of computing and mathematics and he is also on schedule and meets the prerequisites.

c) John should expect to work for 30 hours/week with a minimum Grade point average of 3.0.

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FIT2033

4. a)

Decision Variables: 1. Colorado = C 2. Minnesota = M 3. North Dakota = N 4. Wisconsin = W 5. Ohio = O

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FIT2033

6. Missouri = R 7. Iowa = I 8. Virginia = V 9. Pennsylvania = P 10. Georgia = G 11. Texas = T Tones of potatos = x

Objective function: Minimize (Z) cost $/ton = $1000CO + $1.09CR + $1.26CI + $0.89MO + $1.32MR + $1.17MI + $0.78NO + $1.22NR + $1.36NI + $1.19WO + $1.25WR + $1.42WI + $4.56OV + $3.98OP + $4.94OG + $1000OT + $3.43RV + $5.74RP + $4.65RG + $5.01RT + $5.39IV + $6.35IP + $5.70IG + $4.87IT

Constraints:
XCO + XCR + XCI <= 1600 tones XMO + XMR + XMI <= 1100 XNO + XNR + XNI <= 1400 XWO + XWR + XWI <= 1900 XCO + XMO + XNO + XWO <= 1800 XCR+ XMR +XNR + XWR <= 2200 XCI +XMI +XNI + XWI <= 1600 XOV + XRV + XIV >= 1200 XOP + XRP + XIP >= 900 XOG + XRG + XIG >= 1100 XOT + XRT + XIT >= 1500 CO, CR, CI, MO, MR, MI, NO, NR, NI, WO, WR, WI, CO, MO, NO, WO, CR, MR, NR, WR, CI, MI, NI, WI, OV, RV, IV, OP, RP, IP, OG, RG, IG, OT, RT, IT >= 0

b) Attached excel file QUESTION 4 B.

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The optimal monthly shipments from farms to distribution centers and from distribution centers to the plants in orders to minimize total shipment and processing costs is given below:

5. a) Each specific color is a route that was taken.

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Routes:
1 2 5 7 maximum flow = 2 1 4 7 maximum flow = 3 1 3 6 7 maximum flow = 3 1 2 4 6 7 maximum flow = 1 1 2 4 3 6 7 maximum flow = 1 Total flow = 10 flights

b) xij = number of flights from i = source to j = destination. Decision variables:

x12, x13, x14, x25, x24, x45, x47, x46, x34, x36, x67, x57, x43, x71

Objective function: Maximize (Z) = x71

Constraints: Continuity constraints x71 - x12 - x14 - x13 = 0 x12 - x25 - x24 = 0 x13 - x34 - x36 = 0 x13 + x43 - x36 = 0 x24 + x14 x43 x46 x47 = 0 x25 x57 = 0 x46 + x36 x67 = 0 x12 <= 4 x13 <= 3 x14 <= 4 x25 <= 3 x24 <=2 x45 <= 3 x47 <= 3 x46 <= 1 x34 <= 3 x36 <= 6 x67 <= 5
10

Capacity constraints:

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FIT2033

x57 <= 2 x43 <= 5 x71 <= 10

c) The excel solver proved that the manual calculations were correct because the number of flights matched the number of flights I had calculated, 10 flights per day from Perth to Brisbane.

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