Problem A-7 You are trying to create a budget to optimize the use of a portion o

Question

Problem A-7 You are trying to create a budget to optimize the use of a portion of your disposable income. You have a maximum of $2,200 per month to be allocated to food, shelter, and entertainment. The amount spent or food and shelter combined must not exceed $1,200. The amount spent on shelter alone must not exceed $900. Entertainment cannot exceed $600 per month. Each dollar spent on food has a satisfaction value of 4, each dollar spent on shelter has a satisfaction value of 6, and each dollar spent on entertainment has a satisfaction value of 6. Assuming a linear relationship, use the Excel Solver to determine the optimal allocation of your funds. Round your answers to the nearest whole number.) Decision for F Decision for S Decision for E Total Satisfaction Resources Used Total budget $ on food and shelter $ on shelter $ on entertainment

Explanation / Answer

Let the amount spent on food be “f”, on shelter be “s” and on entertainment be “e”.

Total satisfaction = 4f+6s+6e. This is the objective function and has to be maximized.

Constraints:

1. f+s+e<=2200

2. f+s<=1200

3. s<=900

4. e<=600

5. f,s,e<=0 (non-negativity)

Using excel’s solver function the following solution is obtained:

Thus the answers are:

$ amount (as determined by excel's solver) Food 300.00 Shelter 900.00 Entertainment 600.00 Formula Total utility 10,200.00 4f+6s+6e Constraints 1,800.00 <= 2,200.00 f+s+e<=2200 1,200.00 <= 1,200.00 f+s<=1200 900.00 <= 900.00 s<=900 600.00 <= 600.00 e<=600

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.