Excel & Solver: Hands-On Modeling Practice Exercises

[Pages:15]Excel & Solver: Hands-On Modeling Practice Exercises

EXCEL REVIEW 2001-2002

The Excel modeling problems here are similar to problems you're likely to encounter in

Fuqua's Decision Models course.

You can create Excel models on your own to solve these problems, or use the

notes and tips included here as a guide.

Also see the accompanying Excel workbook

named MorePractice.xls available online at this URL:



Contents

Page Blue Ridge Hot Tubs...................................................................... 1 Wood Walker .................................................................................. 5 Electro-Poly Corporation .............................................................. 8

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Blue Ridge Hot Tubs

The Problem

Blue Ridge Hot Tubs, Inc. sells two models of hot tubs: The Aqua-Spa and the Hydro-Lux. The company purchases prefabricated fiberglass hot tub shells and installs a common water pump and the appropriate amount of tubing into each hot tub. The number of hours it takes to install each model, the tubing required, and the profit for each of the two models is described in the table below.

Hot Tub

Model Aqua Spa Hydro-Lux

Installation

Labor Hours 9 6

Tubing

Required 12 16

Profit

$350 $300

The company expects to have 200 pumps, 1,566 hours of labor, and 2,880 feet of tubing available during the next production cycle. The company can sell all the hot tubs it makes.

Create a spreadsheet model to determine the optimal number of Aqua-Spa and Hydro-Lux hot tubs to produce in order to maximize profits.

Modeling notes and tips follow.

1

Blue Ridge Hot Tub Modeling Notes & Tips

I.

Arrange the Data in the Spreadsheet

(See the "Blue Ridge Basic" Worksheet)

Below is an illustration of the data we know from the problem arranged in a logical way, with:

?= space for the decision variables (number to make; here zeros), and

?= a label for information we want to know (e.g.- maximum total profit).

Note that the constraint information (which is very important) is part of this worksheet.

Blue Ridge Hot Tubs

Total Profit:

Number to make: Unit profit:

Aqua-Spa 0

$350

Constraints:

Pumps required:

1

Labor required:

9

Tubing required:

12

Hydro-Lux 0

$300

1 6 16

Used:

Available: 200 1,566 2,880

II. Add Formulas to the Model (See the "Blue Ridge Formulas" Worksheet.)

Remember to use cell references (not typed-in values) when creating formulas in order to keep the numbers in the model easy-to-change.

Total Profit: =B7*B8+C7*C8

Aqua-Spa Number to make: 0

Unit profit: 350

Hydro-Lux 0 300

Constraints:

Pumps required: 1 Labor required: 9 Tubing required: 12

Total Profit

Used:

Available:

1

=$B$7*B11+$C$7*C11 200

6

=$B$7*B12+$C$7*C12 1566

16

=$B$7*B13+$C$7*C13 2880

2

Figure out the total profit formula and put it in place. Number to make X unit profit for each model, with the results added together.

Constraints Figure out formulas to represent the constraints. These formulas go in the "Used" column, for pumps, labor, & tubing. Note: Create the first formula (for pumps) and copy it down the column (but be sure to use absolute addressing to refer to number-tomake).

III. Try Solving the Problem Manually

Try entering values for #-to-make, maximizing total profit but not violating constraints. Not easy!

IV. Use Solver to Find the Best Solution (See the "Blue Ridge Solver" worksheet.)

Set up the Solver and let it find the maximum Total Profit.

Information required to define the problem in Solver includes: ?= Target call: Total Profit, maximize

?= Changing cells: Decision variables; number to make of each tub model

?= Constraint cells: Available pumps, labor, tubing. That is, each of these values must be ................
................

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