Classify the following descriptions of constraints as bounds, limitations, requirements, proportional relationships, or balance
constraints: a. Each serving of chili should contain a quarter-pound of beef.
b. Customer demand for a cereal is not expected to exceed 800 boxes during the next month.
c. The amount of cash available to invest in March is equal to the accounts receivable in February plus investment yields due on February 28.
d. A can of premium nuts should have at least twice as many cashews as peanuts.
e. A warehouse has 3,500 units available to ship to customers.
f. A call center needs at least 15 service representatives on Monday morning.
g. An ice cream manufacturer has 40 dozen fresh eggs at the start of the production shift.
First the descriptions of Constraints shall.be described first to better understand the the questions.
Bounds are constraints where the value of a variable is not allowed to exceed a level.
Limitations are Constraints whereby there is only a limited number of the variable in question.
Requirements are constraints that refer to the minimum levels of a variable required.
Proportional Relationships are constraints that describe the relationship between Variables in terms of how they relate or are mixed and the like.
Balance Constraints refer to acheving a balance between Variables.
Classifying them therefore we have,
a. Each serving of chili should contain a quarter-pound of beef.
PROPORTIONAL RELATIONSHIPS
b. Customer demand for a cereal is not expected to exceed 800 boxes during the next month. BOUNDS.
c. The amount of cash available to invest in March is equal to the accounts receivable in February plus investment yields due on February 28. BALANCE CONSTRAINTS.
d. A can of premium nuts should have at least twice as many cashews as peanuts. PROPORTIONAL RELATIONSHIPS.
e. A warehouse has 3,500 units available to ship to customers. LIMITATIONS.
f. A call center needs at least 15 service representatives on Monday morning. REQUIREMENTS.
g. An ice cream manufacturer has 40 dozen fresh eggs at the start of the production shift. LIMITATIONS.
Since the payment is made monthly in advance for the period of 5 years, therefore the present value of annuity formula shall be used for the purpose of calculating the Present value of lease, which is given as follow:
Present value of annuity=R+R[(1-(1+i)^-n)/i]
In the given question
R=Rent per month paid in advance=$1,000
i=interest compounded monthly=10%/12=0.83%
n=number of payments involved=(12*5)-1=59
Present value of annuity=1,000+1,000[(1-(1+0.83%)^-59)/0.83%]
Explanation:Part 1). Answer :- Sales of Ford Mustangs will decrease by 15 % (1.5 * 10 %).
Explanation :- Camaro and Ford Mustangs are substitute goods because the cross-price elasticity between Ford Mustangs and Camaro is in positive. Accordingly, with the decrease in price of camaro, the quantity sold of Ford Mustangs will also decrease.
Part 2). Answer :- Quantity of Ford Mustangs will decrease by 16 % (0.80 * 20 %).
Explanation :- Gasoline and Ford Mustangs are complementary goods because the cross-price elasticity between Ford Mustangs and Camaro is in negative. Accordingly, with the increase in price of gasoline, the quantity sold of Ford Mustangs will decrease.
Part 3). Answer :- Quantity of Ford Mustangs will increase by 15 % (3 * 5 %).
Explanation :- With the increase in income of consumer, the demand for normal good also increase. Accordingly, with the increase in consumer's income, quantity demanded of Ford Mustangs will also increase.
