1.

The International City Trust (ICT) invests in short-term trade credits, corporate bonds, gold stocks, and
construction loans. To encourage a diversified portfolio, the board of directors has placed limits on the
amount that can be committed to any one type of investment. ICT has $5 million available for immediate
investment and wishes to do two things: (1) maximize the interest earned on the investments made over
the next on year and (2) satisfy the diversification requirements as set by the board of directors. The
specifics of the investment possibilities are as follows:
Investment Interest earned (%) Maximum investment
($ millions)
Trade credit 7 1.0
Corporate bonds 11 2.5
Gold stocks 19 1.5
Construction loans 15 1.8

In addition, the board specifies that at least 55% of the funds invested must be in gold stocks and
construction loans, and that no less than 15% be invested in trade credit.
Develop the LP model.
2. The XYZ poultry Farm has 20,000 broilers that are fed for 8 weeks before being processed and
marketed. The average weekly consumption during the 8 weeks is 1 Kg per broiler. The nutritional
contain of the ingredients used to make the feed is given below:

Protein per Kg. of ingredient

Ingredient Cost($) per Kg.
Calcium Protein Crude Fiber
Limestone 0.38 - - 0.04
Corn 0.001 0.09 0.02 0.15
Soya bean 0.002 0.50 0.08 0.40

The feed mix must contain:

 At least 0.8% but not more than 1.2% calcium.
 At least 22% protein.
 At most 5% crude fiber.

XYZ Poultry needs to determine the number of kilograms (for 8 weeks) of the three ingredients at
minimum cost provided that the nutritional needs and the quantity of the feed mix are realized.

3. MSA is a marketing and computer research firm based in Washington. That handles consumer surveys.
One of its clients is a national press service that periodically conducts political polls on issues of
widespread interest. In a survey for he press service, MSA determines that it must fulfill several
requirements in order to draw statistically valid conclusions on the sensitive issue of new US immigration
laws:
1. Survey at least 2,300 US households in total.
2. Survey at least 1,000 households whose heads are 30 years of age or younger.
3. Survey at least 600 households whose heads are between 31 and 50 years of age,
4. Ensure at least 15% of those surveyed live in a stat that borders Mexico.
5. Ensure that no more than 20% of those surveyed who are 51 years of age or over live in a state that
borders Mexico.
MSA decides that all surveys should be conducted in person. It estimates that the costs of reaching
people in each age and region category are as follows:
Cost Per Person Surveyed (In Us$)
Region Age<=30 Age 31-50 Age>=51
State Bordering Mexico 7.5 6.8 5.5
State not bordering Mexico 6.9 7.25 6.1

MSA/s goal is to meet the above sampling requirements at the least possible cost.
4. You need to buy some filing cabinets. You know that Cabinet X costs $10 per unit, requires six square
feet of floor space, and holds eight cubic feet of files. Cabinet Y costs $20 per unit, requires eight square
feet of floor space, and holds twelve cubic feet of files. You have been given $140 for this purchase,
though you don't have to spend that much. The office has room for no more than 72 square feet of
cabinets. How many of which model should you buy, in order to maximize storage volume?

5. You have $12,000 to invest, and three different funds from which to choose. The municipal bond fund
has a 7% return, the local bank's CDs have an 8% return, and the high-risk account has an expected
(hoped-for) 12% return. To minimize risk, you decide not to invest any more than $2,000 in the high-risk
account. For tax reasons, you need to invest at least three times as much in the municipal bonds as in
the bank CDs. Assuming the year-end yields are as expected, what are the optimal investment
amounts?

5. XYZ bank has 12 full time tellers. The number of teller required per hour is given below.

Time No. of teller Required

9 – 10 10
10 – 11 12
11 – 12 14
12 – 1 16
1–2 18
2–3 17
3–4 15
4–5 10

The bank is considering hiring some part time tellers. If it is economically viable, they will reduce the
number of full time employees.

Full Time Tellers

• Work from 9 AM – 5 PM
• Take a 1 hour lunch break, half at 11, the other half at noon
• Cost $90 per day (salary & benefits)

Part Time Tellers

• Work 4 consecutive hours (no lunch break)

• Are paid $7 per hour ($28 per day)
• Part time teller hours cannot exceed 50% of the day’s minimum requirement

Develop the LP Model