Hartman Company is trying to determine how much of each of two products should be produced over the coming planning period. The only serious constraints involve labor availability in three departments. Shown below is information concerning labor availability, labor utilization, overtime, and product profitability.

If all production is done in a standard workweek, then Profit per Unit includes the cost to pay for the workforce. But, if overtime is needed in each department, then the Profit Function needs to be reduced by the Cost per Hour of Overtime in Each Department multiplied by the Number of Overtime Hours Used in Each Department. For example, if we used 5 hours of Overtime in Department A, we would need to Subtract $15*5 from our Profit equation.


Setup and Solve the Linear Programming Problem and determine the number of units of Product 1 and Product 2 to produce to Maximize Profit. Add an Additional Constraint to your LP to make sure that ALL of the Variables are INTEGERS


Hint: You will need 5 Decision Variables, 2 of them to determine the production quantities, and 3 of them to determine how much overtime to use in each of the departments.


Max Profit = $

(Do Not Use Commas) Hint: Max Profit is Between $3328 and $3578
Number of Units of Product 1 to Produce =

Number of Units of Product 2 to Produce =

Overtime in Department A =

hours
Overtime in Department B =

hours
Overtime in Department C =

hours

Layton Machining Company (LMC) manufactures two versions of a basic machine tool. One version is a standard model and one is a custom model, which requires some additional work and slightly higher-grade materials. The manufacturing process at LMC requires that each product go through two departments, Grinding and Finishing. The process in each department uses a single type of machine. Total machine capacity in Grinding is 51,000 hours, and in Finishing, total machine capacity is 31,000 hours. (Each department has multiple machines.) Total market demand is limited to 102,000 standard units and 122,000 custom units monthly. LMC is currently producing 92,000 standard units and 53,000 custom units each month. Cost and machine-usage data for the two products follow:

a. What is the optimal production schedule for LMC? In other words, how many standard units and custom units should the company produce each month to maximize monthly profit?

Standard Units ____

Custom Units ____

b. If LMC produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?

Increase profits by ____

Eliminating Entries, Previously Unreported Intangibles, Goodwill

Pirin Company acquires all of the voting stock of Skoda Automotive for $40 million in cash. Skoda’s balance sheet accounts at the date of acquisition are listed below.

Date-of-acquisition book values approximate fair value for all reported assets and liabilities. The following previously unreported intangibles are identified as belonging to Skoda, along with their estimated fair values at the date of acquisition (in millions):

Required

a. Prepare a schedule calculating the goodwill to be recognized for this acquisition.

Do not use negative signs with your answers.

Enter answers in millions (do not round answers).

b. Prepare the eliminating entries necessary to consolidate the balance sheet accounts of Pirin and Skoda at the date of acquisition.  

Enter answers in millions. Do not round answers.

Investment companies and performance evaluation

1) Consider two different hedge funds with the following data related to performance:

Hedge fund Alpha Beta

Fund A   5% 1.6

Fund B   3% 0.8

Assuming that beta is consistent with the type of investing we expected in both cases, which fund performed better.
A. Fund A, because it had the higher return
B. Fund A, because it had the higher alpha
C. Fund B, because its alpha is more impressive than Fund A when we consider how much less risk the fund took.
D. Fund B, because the beta is closer to 1.

2) When we analyze the performance of an actively managed mutual fund we find that the fund generated a beta of 1 and an alpha of zero.

A. this result shows that the manager took no risk when investing

B. this result shows that the manager did not add any value to performance with his/her decision-making

C. both (A) and (B) are true

D. none of the above

3) Consider two different hedge funds with the following data related to performance:

Hedge fund Alpha Beta

Fund A   1% 0.8

Fund B   3% -0.3
Assuming that beta is consistent with the type of investing we expected in both cases, which fund performed better?

A. Fund A, because Fund B should have negative alpha to match its negative beta
B. Fund A, because it had a higher beta than Fund B
C. Fund B, because its alpha is higher than Fund A.
D. Fund A, because the beta is closer to 1.

4) A positive alpha for a mutual fund means:

A. the fund invested in high-risk strategies

B. the fund manager’s performance was bad

C. both (A) and (B)

D. none of the above

Question 6 options:

Hartman Company is trying to determine how much of each of two products should be produced over the coming planning period. The only serious constraints involve labor availability in three departments. Shown below is information concerning labor availability, labor utilization, overtime, and product profitability.

If all production is done in a standard workweek, then Profit per Unit includes the cost to pay for the workforce. But, if overtime is needed in each department, then the Profit Function needs to be reduced by the Cost per Hour of Overtime in Each Department multiplied by the Number of Overtime Hours Used in Each Department. For example, if we used 5 hours of Overtime in Department A, we would need to Subtract $13*5 from our Profit equation.


Setup and Solve the Linear Programming Problem and determine the number of units of Product 1 and Product 2 to produce to Maximize Profit. Add an Additional Constraint to your LP to make sure that ALL of the Variables are INTEGERS


Hint: You will need 5 Decision Variables, 2 of them to determine the production quantities, and 3 of them to determine how much overtime to use in each of the departments.


Max Profit = $

(Do Not Use Commas) Hint: Max Profit is Between $3393 and $3743
Number of Units of Product 1 to Produce =

Number of Units of Product 2 to Produce =

Overtime in Department A =

hours
Overtime in Department B =

hours
Overtime in Department C =

hours

Problem 13-09 (Algorithmic)

Myrtle Air Express decided to offer direct service from Cleveland to Myrtle Beach. Management must decide between a full-price service using the company’s new fleet of jet aircraft and a discount service using smaller capacity commuter planes. It is clear that the best choice depends on the market reaction to the service Myrtle Air offers. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service to Myrtle Beach: strong and weak. The following table shows the estimated quarterly profits (in thousands of dollars):

1. What is the decision to be made, what is the chance event, and what is the consequence for this problem?
   
   The input in the box below will not be graded, but may be reviewed and considered by your instructor.
   
   
   
   How many decision alternatives are there?
   
   Number of decision alternatives =
   
   How many outcomes are there for the chance event?
   
   Number of outcomes =
   
2. If nothing is known about the probabilities of the chance outcomes, what is the recommended decision using the optimistic, conservative and minimax regret approaches?
   

   Optimistic approach
   Conservative approach
   Minimax regret approach

3. Suppose that management of Myrtle Air Express believes that the probability of strong demand is 0.7 and the probability of weak demand is 0.3. Use the expected value approach to determine an optimal decision.
   
   Optimal Decision :  
   
4. Suppose that the probability of strong demand is 0.8 and the probability of weak demand is 0.2. What is the optimal decision using the expected value approach?
   
   Optimal Decision :  
   
5. Determine the range of demand probabilities for which each of the decision alternatives has the largest expected value. If required, round your answer to four decimal places.
   
     is the best choice if probability of strong demand is less than or equal to . For values of  greater than , the full price service is   choice.

Question 9 options:

Hartman Company is trying to determine how much of each of two products should be produced over the coming planning period. The only serious constraints involve labor availability in three departments. Shown below is information concerning labor availability, labor utilization, overtime, and product profitability.

If all production is done in a standard workweek, then Profit per Unit includes the cost to pay for the workforce. But, if overtime is needed in each department, then the Profit Function needs to be reduced by the Cost per Hour of Overtime in Each Department multiplied by the Number of Overtime Hours Used in Each Department. For example, if we used 5 hours of Overtime in Department A, we would need to Subtract $17*5 from our Profit equation.


Setup and Solve the Linear Programming Problem and determine the number of units of Product 1 and Product 2 to produce to Maximize Profit. Add an Additional Constraint to your LP to make sure that ALL of the Variables are INTEGERS


Hint: You will need 5 Decision Variables, 2 of them to determine the production quantities, and 3 of them to determine how much overtime to use in each of the departments.


Max Profit = $

(Do Not Use Commas) Hint: Max Profit is Between $4237 and $4537
Number of Units of Product 1 to Produce =

Number of Units of Product 2 to Produce =

Overtime in Department A =

hours
Overtime in Department B =

hours
Overtime in Department C =

Hartman Company is trying to determine how much of each of two products should be produced over the coming planning period. The only serious constraints involve labor availability in three departments. Shown below is information concerning labor availability, labor utilization, overtime, and product profitability.

If all production is done in a standard workweek, then Profit per Unit includes the cost to pay for the workforce. But, if overtime is needed in each department, then the Profit Function needs to be reduced by the Cost per Hour of Overtime in Each Department multiplied by the Number of Overtime Hours Used in Each Department. For example, if we used 5 hours of Overtime in Department A, we would need to Subtract $22*5 from our Profit equation.


Setup and Solve the Linear Programming Problem and determine the number of units of Product 1 and Product 2 to produce to Maximize Profit. Add an Additional Constraint to your LP to make sure that ALL of the Variables are INTEGERS


Hint: You will need 5 Decision Variables, 2 of them to determine the production quantities, and 3 of them to determine how much overtime to use in each of the departments.

Max Profit = $

(Do Not Use Commas) Hint: Max Profit is Between $3169 and $3569
Number of Units of Product 1 to Produce =

Number of Units of Product 2 to Produce =

Overtime in Department A =

Overtime in Department B =

Overtime in Department C =

(hours)

The Economic Order Quantity (EOQ) model is a classical model used for controlling inventory and satisfying demand. Costs included in the model are holding cost per unit, ordering cost and the cost of goods ordered. The assumptions for that model are that only a single item is considered, that the entire quantity ordered arrives at one time, that the demand for the item is constant over time, and that no shortages are allowed.

Suppose we relax the first assumption and allow for multiple items that are independent except for a restriction on the amount of space available to store the products. The following model describes this situation:

The decision variables are Q_j, the amount of item j to order. The model is:

In the objective function, the first term is the annual cost of goods, the second is the annual ordering cost (D_j/Q_j is the number of orders), and the last term is the annual inventory holding cost (Q_j/2 is the average amount of inventory).

Set up a spreadsheet model for the following data:

W = $21,000

i = 0.3

Solve the problem using Excel Solver. Hint: You will need to start with decision variable values that are greater than 0 for Solver to find a solution.

If required, round your answers to two decimal places.

Optimal Solution:

Q₁ =  

Q₂ =  

Q₃ =  

If required, round your answer to the nearest dollar. Do not round intermediate calculations.

Total cost = $

The Economic Order Quantity (EOQ) model is a classical model used for controlling inventory and satisfying demand. Costs included in the model are holding cost per unit, ordering cost and the cost of goods ordered. The assumptions for that model are that only a single item is considered, that the entire quantity ordered arrives at one time, that the demand for the item is constant over time, and that no shortages are allowed.

Suppose we relax the first assumption and allow for multiple items that are independent except for a restriction on the amount of space available to store the products. The following model describes this situation:

The decision variables are Q_j, the amount of item j to order. The model is:

In the objective function, the first term is the annual cost of goods, the second is the annual ordering cost (D_j/Q_j is the number of orders), and the last term is the annual inventory holding cost (Q_j/2 is the average amount of inventory).

Set up a spreadsheet model for the following data:

W = $21,000

i = 0.3

Solve the problem using Excel Solver. Hint: You will need to start with decision variable values that are greater than 0 for Solver to find a solution.

If required, round your answers to two decimal places.

Optimal Solution:

Q₁ =  

Q₂ =  

Q₃ =  

If required, round your answer to the nearest dollar. Do not round intermediate calculations.

Total cost = $