36 Test Item File

Excel Problems
1.

An investment company currently has $1 million dollar available for investment in five
different stocks. The company wants to maximize the interest earned over the next year.
The five investment possibilities along with the expected interest earned are shown
below. To manage risk, the investment firm wishes to have at least 35% of the
investment in stocks A and B. Furthermore, no more than 15% of the investment may be
in stock E. Model and solve this problem in Excel.
Investment
Stock A
Stock B
Stock C
Stock D
Stock E

Expected Interest Earned (%)

7
9
8
10
11

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2. The following table contains information on the cost to run four jobs (1, 2, 3, and 4) on four
available machines (A, B, C, and D). Use Excel to model and solve this problem to
determine the least costly job-machine assignment.

Job

1
2
3
4

Machine
B
C

$12
$9
$15
$10

$16
$8
$12
$13

$10
$7
$11
$16

$14
$13
$9
$15

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3.

Refer to the data provided in question number 2. Assume that job number 4 was canceled
and will no longer be processed. How will this affect the job-machine assignment? Use
Excel to model and solve this problem to determine the least costly assignment.

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4.

A production manager wants to determine how many units of each product to produce
weekly to maximize weekly profits. Production requirements for the products are shown
in the following table.
Product
A
B
C

Material 1 (lbs.)
3
1
5

Material 2 (lbs.)
2
4
none

Labor (hours)
4
2
3.5

Material 1 costs $7 a pound, material 2 costs $5 a pound, and labor costs $15 per hour.
Product A sells for $101 a unit, product B sells for $67 a unit, and product C sells for
$97.50 a unit. Each week there are 300 pounds of material 1; 400 pounds of material 2;
and 200 hours of labor. Also, there is a weekly demand of 10 units of product C each
week. Use Excel to formulate and solve this problem.

Chapter Three 40

5.

A beer distributor wants to prepare an aggregate plan for the next 6 weeks. Demand can
be met using regular time production, overtime production, or a combination of both as
illustrated below:
Week
1
2
3
4
5
6
Demand (cases)
165
155
140
155
130
155
Capacity (cases)
Regular
150
150
150
150
150
150
Overtime
20
10
10
10
10
10
Cost per Unit
Regular time
Overtime
Inventory per week

$50
$75
$5

Assume that beginning inventory is zero. Use Excel to formulate and solve this
multiperiod production problem to minimize total costs.

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6.

Refer to question number 5. Assume that the beer distributor has the option of
subcontracting beer cases to supplement the existing capacity. Subcontracting can
handle a maximum of 5 cases per week. Subcontracting cost per case is $80. Also, due
to an upcoming holiday season, the beer distributor wants to maintain a safety stock of at
least 5 cases per week. Use Excel to formulate and solve this multiperiod production
scheduling problem.

Chapter Three 42

7.

A company wants to determine how to allocate its $200,000 advertising budget to market
a new cereal. The company is considering newspaper ads, television ads, and radio ads.
The following table illustrates the cost of advertising in these different media and the
exposure to new customers reached by increasing the number of ads in each medium.
Media and Number of Ads
Newspaper: 1-5
Newspaper: 6-10
Television: 1-10
Television: 11-20
Radio: 1:10
Radio: 11-20

No. of New Customers reached Cost per ad

700
$500
500
$400
9000
$5000
7500
$4000
4000
$2000
300
$1500

Use Excel to formulate and solve this problem to maximize audience exposure.

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8.

An insurance company has three secretaries, A, B, and C that each is capable of

processing four different types of insurance claims. The amount of time required by each
secretary to process a particular type of a claim is summarized in the following table.

Secretary

A
B
C

Processing Time in Hours

Claim Type
1
2
3
4
2
3
2
4
4
5
3
1
3
2
1
5

On a typical week, the insurance firm has 5 type 1 claims, 4 type 2 claims, 2 type 3
claims, and 3 type 4 claims. Each secretary works a maximum of 40 hours per week. The
office manager wants to know how many of each type of an insurance claim should be
processed by each secretary to minimize the total processing time. Use Excel to
formulate and solve this problem.

Chapter Three 44

9.

Consider the following data that illustrates demand, production costs and expected
capacity for a given product.

Demand (units)
Production cost/Unit
Production Capacity (units)

1
100
$20
150

Month
2
125
$25
150

3
200
$30
150

4
175
$35
150

Inventory carrying costs are estimated at $4 per unit per month. The firm wants to
produce at least 50 units per month to uniformly utilize its existing resources. Assume
that beginning inventory is zero. Use Excel to formulate and solve this problem to
determine how many units of the product should be produced monthly to meet the
expected demand at minimal cost.

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10.

A company can ship its product from any of its three factories, F1, F2, and F3, to any of
its retail outlets, R1, R2, and R3. The capacity, demand, and shipping cost information is
provided as follows:
Demand (units)
R1: 300
R2: 500
R3: 200

F1
F2
F3

Capacity (units)
F1: 250
F2: 350
F3: 400

Shipping Cost/unit ($)

R1
R2
R3
1
3
2
3
4
2
2
2
3

The company wants to come up with an optimal shipping strategy to minimize its total
shipping cost. Use Excel to formulate and solve this problem.

Chapter Three 46

11.

Consider the same information provided in question 10. However, now assume that
demand for retail outlet three (R3) has increased to 300 units. How will this affect the
prior solution to question 10? Use Excel to formulate and solve this problem.

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12.
Consider the same information provided in question 10. However, now assume that the
road leading from factory F1 to retail outlet R1 is currently closed due to construction. How will
this affect the prior solution to question 10? Use Excel to formulate and solve this problem.

Chapter Three 48

13.

A company manufactures two types of lawn mowers: riding mowers and push mowers.
The company has the option of manufacturing the mowers in-house, or outsourcing the
entire operation. In-house manufacturing requires the following four operations:
production, assembly, electrical wiring, and final inspection. The following table
summarizes the weekly hours of processing time available and the processing time
required by each operation.

Production
Assembly
Electrical Wiring
Final Inspection

Hours Required per Mower

Riding Mower
Push Mower
3
1.5
5
2
1
0.5
0.5
0.25

Hours Available
40
30
45
40

The company has a weekly demand of 5 riding mowers and 3 push mowers. The
company makes its riding mowers in-house for $500 each and its push mower for $200
each. Alternatively, it can outsource its riding and push mowers for $550 and $225 each,
respectively. Use Excel to formulate and solve this make or buy problem.

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14.

A factory operates 7 days a week. Due to labor union regulations, employees are allowed
to work a maximum of 5 consecutive days. The minimum number of employees that are
needed on a given day is provided as follows:
Day
Number of Employees Needed
Sunday
20
Monday
30
Tuesday
35
Wednesday
40
Thursday
37
Friday
30
Saturday
25
Use Excel to formulate and solve this labor planning problem to determine the minimum
number of employees needed each day.

Chapter Three 50

15.

In a small suburban town, firefighters work 8-hour shifts. Assume there are six shifts
each day that are divided into six 4-hour periods. The minimum number of firefighters
needed on each shift is illustrated below.
Shift
Midnight-4 a.m.
4 a.m.-8 a.m.
8 a.m.-Noon
Noon-4 p.m.
4 p.m.-8 p.m.
8 p.m.-Midnight

Number of Firefighters Needed

5
6
10
12
8
5

Firefighters must report to work at the beginning of the above time periods and must
work eight consecutive hours. Use Excel to formulate and solve this labor planning
problem to determine the minimum number of firefighters needed on each shift.

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16.

A furniture manufacturer produces three products, desks, tables, and chairs. These
products can be produced during either the morning shift or the evening shift. The
morning shift has a labor cost of $20 per hour with a maximum availability of 20,000
hours. The evening shift has a labor cost of $25 per hour and is limited to 15,000 hours.
The labor, lumber, and demand requirements are given as follows:
Resource
Labor (hours)
Lumber (pounds)
Nails (pounds)

Desk
0.75
7
0.5

Table
2
15
2

Chair
0.5
4
0.25

Demand:

50

75

100

Assume that there are 20,000 pounds of lumber and 20,000 pounds of nails available for
both shifts.
Use Excel to formulate and solve this problem to minimize total labor cost.

Chapter Three 52

17.

A manufacturer of 19 LCD monitors encounters the following quarterly production cost,

demand, and production capacity for its monitors:

Production Cost/LCD
Demand
Maximum Production Capacity

1
$290
500
600

Quarter
2
3
$275 $265
550
600
700
600

4
$255
550
700

To maintain a stable workforce, the manufacturer wants to produce at least 500 units each
quarter. To meet unexpected fluctuation in demand, the company wants to hold at least
100 monitors in stock each quarter. The cost of carrying a monitor in stock is $5 each
quarter. Assume that beginning inventory is zero. Use Excel to formulate and solve this
problem to determine to minimize production and inventory costs.

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18.

A real estate developer is planning to build an office complex. Currently, there are three
office sizes under consideration: small, medium, and large. Small offices can be rented
for $600 per month, medium offices can be rented for $750 per month, and large offices
can be rented for $1000 per month. Each small office requires 600 square feet, each
medium office requires 800 square feet, and each large office requires 1000 square feet.
The current plot of land available to the developer is 100,000 square feet. The developer
wants to ensure that the office complex has at least 3 units of each office size. Use
Excel to formulate and solve this problem to maximize total revenue.

Chapter Three 54

19.

Speedy Lube has 4 bays in its shop and 3 cars waiting for an oil change. The estimated
time (in minutes) to change the oil and filter for each car in each bay is given as follows:
Bay
1
2
3
4

A
10
15
14
13

Car
B
12
13
12
11

C
9
12
10
12

Which car should be assigned to which bay if Speedy Lube wants to minimize its total
service time? Use Excel to formulate and solve this problem.

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20.

A company is considering various advertising media to promote its new toy. Pertinent
information regarding potential customers reached and costs per advertisement is
illustrated below:
Media
Daytime TV
Evening TV
Daytime Radio
Evening radio
Newspaper

No. of Customers
Reached
1000
3000
500
750
900

Maximum Times
Available per Month
10
8
15
15
4

Cost per
Advertisement
$2000
$3500
$1000
$1500
$500

Currently, the company has a monthly advertising budget of $150,000. The marketing
department has imposed the following restrictions:
No more than $20,000 may be spent on radio advertising each month
At least 5 TV ads must be used each month
Use Excel to formulate and solve this problem to maximize monthly audience exposure.