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    Assignment One 2024

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    gimmyspenser

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    © All Rights Reserved
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    Assignment One 2024

    Uploaded by

    gimmyspenser
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    Copyright:

    © All Rights Reserved
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    Download as docx, pdf, or txt
    0 views4 pages

    Assignment One 2024

    Uploaded by

    gimmyspenser

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    ASSIGNMENT ONE 2024

    PREAMBLE
    “Mathematical Modeling is the Cornerstone of Quantitative Methods. However,
    Qualitative Factors, such as human behaviour must be accounted for in the FINAL
    DECISION”.

    QUESTION ONE
    Currently, there is a banana trader in Kibera. He may decide to continue selling the
    bananas in Kibera or may decide to go to the Central Business District (CBD) in
    Nairobi City, where he expects to sell twice as many bananas as he sells in Kibera.
    But to reach Central Business District (CBD), the trader must take a bus which takes
    one hour.
    WHICH PLACE IS MORE PROFITABLE FOR THE TRADER?

    To answer this question, indicate:


    (a) The kind of data the trader will need, and
    (b) The relationships that exist in the data.

    REQUIRED
    Answer the question with Linear Programme formulation in mind.

    QUESTION TWO
    You have a five-week business committment between Nairobi (NRB) and Mombasa
    (MBS).
    You fly out of Nairobi on Mondays and return on Wednesdays. A regular round trip
    ticket costs sh. 400, but a discount of 20% is granted if the dates of the ticket span a
    week. A one-way ticket in either direction costs 75% of the regular ticket-price.

    HOW SHOULD YOU BUY FOR THE 4-WEEK PERIOD?


    REQUIRED
    Take this as a DECISION-MAKING problem whose solution requires answering
    three questions:
    (a) What are the decision making alternatives?
    (b) Under what restrictions is this alternative to be made?
    (c) What is the appropriate objective criterion for evaluating the alternatives?
    Answer these questions.

    QUESTION THREE
    PORTFOLIO SELECTION
    The Agro Promotion Bank is trying to select investment portolio for a cotton farmer.
    The bank has chosen a set of five investment alternatives, with subjective estimates of
    rates of return and risk as follows:
    INVESTMENT ANNUAL RATE OF RISK
    RETURN (%)
    Tax-free government bonds 6.0 1.3
    Corporate bonds 8.0 1.5
    High grade common stock 5.0 1.9
    Mutual fund 7.0 1.7
    Real estate 15.0 2.7

    The bank officer in charge of the portfolio would like to maximize the average annual
    rate of returns on the portfolio. However, the wealthy invstor has specified that the
    average risk of the portfolio should not exceed 2.0 and does not want more than 20%
    of the investment to be put into real estate.

    REQUIRED
    Formulate as a linear programming mathematical model.
    QUESTION FOUR
    ADVERTISING MEDIA SELECTION
    An advertising company wishes to plan its advertising strategy in three different
    media-television, radio and magazines. The purpose of advertising it to reach as large
    number of potential customers as possible. The following data has been obtained
    from market survey:
    TELEVISION RADIO MAGAZINE 1 MAGAZINE 2
    Cost of advertising unit Sh 30,000 Sh 20,000 Sh 15,000 Sh 10,000
    Number of potential 200,000 600,000 150,000 100,000
    customers reached per
    unit
    Number of female 150,000 400,000 70,000 50,000
    customers reached per
    unit

    The company wants to spend not more than sh 450,000 on advertising. Following are
    further requirements that must be met:
    (i) At least 1 million exposure take place among female customers
    (ii) Advertising on magazines be limited to sh 150,000.
    (iii) At least 3 advertising units to be bought on magazine 1 and 2 units on
    magazine 2.
    (iv) The number of advertising units on television and radio should reach
    between 5 and 10.

    Formulate as a linear programming mathematical model.


    QUESTION FIVE
    PRODUCTION ALLOCATION
    A firm produces three products. These products are processed on three different
    machiens. The time required to manufacture one unit of each of the three products
    and the daily capacity of the three machiens are given in the table below:
    TIME PER UNIT (MINUTES
    PRODUCT 1 PRODUCT 2 PRODUCT MACHINE CAPACITY
    MACHINE 3
    M1 2 3 2 440
    M2 4 - 3 470
    M3 2 5 - 430

    The profit per unit for products 1, 2 and 3 is sh 4, sh 3 and sh 6 respectively. It is


    assumed that all the amounts produced are consumed in the market.

    REQUIRED
    Formulate this as a linear programing mathematical model.

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