Assignment 1. Linear Programming Case Study
Your instructor will assign a linear programming project for this assignment according to the following specifications.
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It will be a problem with at least three (3) constraints and at least two (2) decision variables. The problem will be bounded and feasible. It will also have a single optimum solution (in other words, it won’t have alternate optimal solutions). The problem will also include a component that involves sensitivity analysis and the use of the shadow price.
You will be turning in two (2) deliverables, a short writeup of the project and the spreadsheet showing your work.
Your writeup should introduce your solution to the project by describing the problem. Correctly identify what type of problem this is. For example, you should note if the problem is a maximization or minimization problem, as well as identify the resources that constrain the solution. Identify each variable and explain the criteria involved in setting up the model. This should be encapsulated in one (1) or two (2) succinct paragraphs.
After the introductory paragraph, write out the L.P. model for the problem. Include the objective function and all constraints, including any non-negativity constraints. Then, you should present the optimal solution, based on your work in Excel. Explain what the results mean.
Finally, write a paragraph addressing the part of the problem pertaining to sensitivity analysis and shadow price.
As previously noted, please set up your problem in Excel and find the solution using Solver. Clearly label the cells in your spreadsheet. You will turn in the entire spreadsheet, showing the setup of the model, and the results.
Case Problem ( Page # 109)
“The Possibility” Restaurant
Angela Fox and Zooey Caulfield were food and nutrition majors at State University, as well as close friends and roommates. Upon graduation Angela and Zooey decided to open a French restaurant in Draperton, the small town where the university was located. There were no other French restaurants in Draperton, and the possibility of doing something new and somewhat risky intrigued the two friends. They purchased an old Victorian home just off Main Street for their new restaurant, which they named “The Possibility.”
Angela and Zooey knew in advance that at least initially they could not offer a full, varied menu of dishes. They had no idea what their local customers’ taste in French cuisine would be, so they decided to serve only two full course meals each night , one with beef and the other with fish. Their chef, Pierre, was confident he could make each dish so exciting and unique that two meals would be sufficient, at least until they could assess which menu items were more popular. Pierre indicated that with each meal he could experiment with different
appetizers, soups, salads, vegetable dishes, and desserts until they were able to identify a full selection of menu items.
The next problem for Angela and Zooey was to determine how many meals tp prepare for each night so they could shop for ingredients and set up the work schedule. They could not afford too much waste. They estimated that would sell a maximum of 60 meals each night. Each fish dinner, including all accompaniments requires 15 minutes to prepare, and each beef dinner takes twice as long. There is a total of 20 hours of kitchen staff labor available each day. Angela and Zooey believe that because of the health consciousness of their potential clientele, they will sell at least three fish dinners for every two beef dinners. However, they also believe that at least 10% of their customers will order beef dinners. The profit from each fish dinner will be approximately $12, and the profit from a beef dinner will be about $16.
If Angela and Zooey increased the menu price on the fish dinner so that the profit for both dinners was the same, what effect would that have on their solution? Suppose Angela and Zooey reconsidered
If Angela and Zooey increased the menu price on the fish dinner so that the profit for both dinners was the same, what effect would that have on their solution? Suppose Angela and Zooey reconsidered the demand for beef dinners and decided that at least 20% of their customers would purchase beef dinners. What effect would this have on their meal preparation plan?
In the case problem, Angela and Zooey wanted to develop a linear programming model to help determine the number of beef and fish meals they should prepare each night. Solve Zooey and Angela’s linear programming model by using Excel or computer.
Angela and Zooey are considering investing in some advertising to increase the maximum number of meals they serve. They estimate that if they spend $30 per day on a newspaper ad, it will increase the maximum number of meals they serve per day from 60 to 70. Should they make the investment?
Zooey and Angela are concerned about the reliability of some of their kitchen staff. They estimate that on some evenings they could have a staff reduction of as much as 5 hours. How would this affect their profit level?
The final question they would like to explore is raising the price of the fish dinner. Angela believes the price for a fish dinner is a little low and that it could be closer to the price of a beef dinner without affecting customer demand. However, Zooey has noted that Pierre has already made plans based on the number of dinners recommended by the linear programming solution. Angela has suggested a price increase that will increase profit for the fish dinner to $14. Would this be acceptable to Pierre, and how much additional profit would be realizes?
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