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TJs Inc, makes three nut mixes for sale to grocery chains located in the
Southeast. The three mixes, referred to as the Regular Mix, the Deluxe Mix,
and the Holiday Mix, are made by mixing different percentages of five types
of nuts.
In preparation for the fall season, TJs has just purchased the following
shipments of nuts at the prices shown:
Type of Nut
Almond
Brazil
Filbert
Pecan
Walnut

Shipment Amount
(pounds)
6000
7500
7500
6000
7500

Cost per Shipment ($)

7500
7125
6750
7200
7875

The Regular Mix consists of 15% almonds, 25% Brazil nuts, 25% filberts,
10% pecans, and 25% walnuts. The Deluxe Mix consists of 20% of each
type of nut, and the Holiday Mix consists of 25% almonds, 15% Brazil nuts,
15% filberts, 25% pecans, and 20% walnuts.
TJs accountant analyzed the cost of packaging materials, sales price per
pound, and so forth, and determined that the profit contribution per pound is
$1.65 for the Regular Mix, $2.00 for the Deluxe Mix, and $2.25 for the
Holiday Mix. These figures do not include the cost of specific types of nuts in
the different mixes because that cost can vary greatly in the commodity
markets.
Customer orders already received are summarized here:
Types of Mix
Regular
Deluxe
Holiday

Orders (pounds)
10000
3000
5000

Because demand is running high, it is expected that TJs will receive many
more orders than can be satisfied.
TJs is committed to using the available nuts to maximize profit over the fall
seasons; nuts not used will be given to a local charity. Even if it is not

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profitable to do so, TJs president indicated that the orders already received
must be satisfied.
Management Report
Perform an analysis of TJs product-mix problem, and prepare a report for
TJs president that summarizes your findings. Be sure to include information
and analysis on the following:
1. The cost per pound of the nuts included in the Regular, Deluxe and
Holiday mixes.
2. The optimal product mix and the total profit contribution
3. Recommendations regarding how the total profit contribution can be
increased if additional quantities of nuts can be purchased.
4. A recommendation as to whether TJs should purchase an additional
1000 pounds of almonds for $1000 from a supplier who overbought
5. Recommendations on how profit contribution could be increased (if at
all) if TJs does not satisfy all existing orders.

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The voltex company produces an air conditioner/heating unit. The company

currently has firm orders for 6 months into the future. The company can
schedule its production over the next 6 months to meet order on either a
regular or on overtime basis. Consider orders and the associated production
costs for the next 6 months are as follows:
Month

Januar
y
590
50

Februar
y
610
52

Marc
h
650
51

Apri
l
700
55

Ma
y
500
47

Jun
e
700
50

Order
Cost/unit (Rs.) Regular
Production
Cost/unit (Rs.) Overtime
62
58
63
60
55
52
Production
Maximum number of units which can be produced on regular and overtime
basis are 500 and 300 respectively.
With 75 air-conditioners in stock at the beginning of January, the company
wishes to have at least 100 air-conditioners in stock at the end June. The
inventory-carrying cost for air-conditioners is Rs. 10 per unit per month.
Formulate LP model.

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Relax-and-Enjoy Lake Development Corporation is developing a lakeside community at a

privately owned lake. The primary market for the lakeside lots and homes includes all middleand upper-income families within approximately 100 miles of the development. Relax-and-Enjoy
has employed the advertising firm of Boone, Phillips and Jackson (BP&J) to design the
promotional campaign.
After considering possible advertising media and the market to be covered, BP&J has
recommended that the first month's advertising be restricted to five media. At the end of the
month, BP&J will then reevaluate its strategy based on the month's results. BP&J has collected
data on the number of potential customers reached, the cost per advertisement, the maximum
number of times each medium is available, and the exposure quality rating for each of the five
media. The quality rating is measured in terms of an exposure quality unit, a measure of the
relative value of one advertisement in each of the media. This measure, based on BP&J's
experience in the advertising business, takes into account factors such as audience demographics
(age, income, and education of the audience reached), image presented, and quality of the
advertisement. The information collected is presented in Table below.
Relax-and-Enjoy provided BP&J with an advertising budget of $30,000 for the first month's
campaign. In addition, Relax-and-Enjoy imposed the following restrictions on how BP&J may
allocate these funds: At least 10 television commercials must be used, at least 50,000 potential
customers must be reached, and no more than $18,000 may be spent on television
advertisements.
Questions:
a Formulate the above media mix problem as an LPP.
b Interpret the report attached, and make suitable recommendations to management.

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Table: ADVERTISING MEDIA ALTERNATIVES FOR THE RELAX-AND-ENJOY LAKE
DEVELOPMENT CORPORATION
Number of
Cost ($) per Maximum Times
Exposure
Potential
Advertising Media
Advertisem
Available per
Quality
Customers
ent
Month*
Units
Reached
Daytime TV (1 min), station
1000
1500
15
65
WKLA
Evening TV (30 sec), station
2000
3000
10
90
WKLA
Daily newspaper (full page), The
1500
400
25
40
Morning Journal
Sunday newspaper magazine
(1/2 page color), The Sunday
2500
1000
4
60
Press
Radio, 8:00 A.M. or 5:00 P.M.
300
100
30
20
news (30 sec), station KNOP
* The maximum number of times the medium is available is either the maximum number of
times the advertising medium occurs (e.g., four Sundays per month or the maximum
number of time BP&J recommends that the medium be used).
The report generated using Solver add-in in Excel was as follows:
Adjustable Cells
Final
Cell
$B$3
$C$3
$D$3
$E$3
$F$3

Name

Reduce
d

Value
10
0
25
2
30

Cost
0
-65
0
0
0

Objective
Coefficien
t
65
90
40
60
20

Final
Value
10
0
25

Shadow
Price
0
0
16

Allowable

Allowable

Increase
25
65
unbounded
40
unbounded

Decrease
65
unbounded
16
16.6667
14

Constrain
t
R.H. Side
15
10
25

Allowable
Increase
unbounded
unbounded
5

Allowable
Decrease
5
10
5

unbounded

30

14

30

20

20

total budget

30000

0.06

30000

2000

2000

min. TV ads

10

-25

10

1.3333

1.3333

TV ad budget

15000

18000

unbounded

3000

customer reach

61500

50000

11500

unbounded

DTV
ETV
DN
SN
R

Constraints

Cell
$H$7
$H$8
$H$9
$H$1
0
$H$1
1
$H$1
2
$H$1
3
$H$1
4
$H$1
5

Name
availability of DTV
availability of ETV
availability of DN
availability of SN
availability of R

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