assume you own you own 1200 acres of land, and have $142,500 to invest

13
Assume you own you own 1200 acres of land, and have $142,500 to invest. Your land is most suited for tree farming or raising cattle. You want to decide what is the best mix of trees and cattle to maximize your income. Cattle require 1 acre per animal, and cost $75 Trees require 1 acre per 500, and cost $300 per lot of 1000 Annual returns are $9/steer, and $10 per acre of trees

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Assume you own you own 1200 acres of land, and have $142,500 to invest. Your land is most suited for tree farming or raising cattle. You want to decide what is the best mix of trees and cattle to maximize your income. Cattle require 1 acre per animal, and cost $75 - PowerPoint PPT Presentation

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Page 1: Assume you own you own 1200 acres of land,  and have $142,500 to invest

Assume you own you own 1200 acres of land, and have $142,500 to invest.

Your land is most suited for tree farming or raising cattle. You want to decide what is the best mix of trees and cattle to maximize your income.

Cattle require 1 acre per animal, and cost $75

Trees require 1 acre per 500, and cost $300 per lot of 1000

Annual returns are $9/steer, and $10 per acre of trees

Page 2: Assume you own you own 1200 acres of land,  and have $142,500 to invest

0 250 500 750 1,000 1,2500

250

500

750

X1 Number of Cattle

X2

Lo

ts o

f T

rees

0 250 500 750 1,000 1,2500

250

500

750

X1 Number of Cattle

X2

Lo

ts o

f T

rees

Z=$9,000

Z=$5,000

Objective Function Z = 9X1 + 20X2

Page 3: Assume you own you own 1200 acres of land,  and have $142,500 to invest

0 250 500 750 1,000 1,2500

250

500

750

X1 Number of Cattle

X2

Lo

ts o

f T

rees

Z=$5,000

Z=$9,000

Z=$10,800

Page 4: Assume you own you own 1200 acres of land,  and have $142,500 to invest

0 250 500 750 1,000 1,2500

250

500

750

X1 Number of Cattle

X2

Lo

ts o

f T

rees

Since each cattle requires 1 acre of land, and eachlot of 1000 trees requires 2 acres of land, and you have only 1200 acres,

1X1 + 2X2 =< 1200

Feasible Region

Infeasible Region

Page 5: Assume you own you own 1200 acres of land,  and have $142,500 to invest

0 250 500 750 1,000 1,2500

250

500

750

X1 Number of Cattle

X2

Lo

ts o

f T

rees

Since each cattle costs $75 and eachlot of 1000 trees costs $300, and you have only $142,500,

75X1 + 300X2 =< 142500

Feasible Region

Infeasible Region

Page 6: Assume you own you own 1200 acres of land,  and have $142,500 to invest

0

250

500

750

1,000

1,250

0

250

500

750

X1 Number of Cattle

X2

Lo

ts o

f T

rees

Infeasible Region

Feasible Region

Considering both constraints simultaneously

Page 7: Assume you own you own 1200 acres of land,  and have $142,500 to invest

Feasible Region

Considering both constraints simultaneously

0

250

500

750

1,000

1,250

0

250

500

750

X1 Number of Cattle

X2

Lo

ts o

f T

rees

Page 8: Assume you own you own 1200 acres of land,  and have $142,500 to invest

0

100

200

300

400

500

600

700

0 250 500 750 1000 1250 1500

X1 Number of Cattle

X2

Lot

s of

Tre

esConstraints and Ranging Analysis

Optimum – 500 cattle 350 lots of trees

Land Constraint

CapitalConstraint

Page 9: Assume you own you own 1200 acres of land,  and have $142,500 to invest

300

320

340

360

380

450 470 490 510 530 550

X1 Number of Cattle

X2

Lot

s of

Tre

es“Zoom in” near optimum to see Results of Ranging Analysis better

Z=9X1 + 20X2 500 steer, 350 lots of trees =$11,500

Page 10: Assume you own you own 1200 acres of land,  and have $142,500 to invest

300

320

340

360

380

450 470 490 510 530 550

X1 Number of Cattle

X2

Lot

s of

Tre

es“Zoom in” near optimum to see Results of Ranging Analysis better

Z=9X1 + 20X2 500 steer, 350 lots of trees =$11,500

Z=5X1 + 20X2 500 steer, 350 lots of trees=$9,500

Page 11: Assume you own you own 1200 acres of land,  and have $142,500 to invest

0

100

200

300

400

500

600

300 550 800 1050

X1 Number of Cattle

X2

Lot

s of

Tre

esChanges in “Technological Coefficients”

And Shadow Prices

Z=9X1 + 20X2 500 steer, 350 lots of trees =$11,500Z=9X1 + 20X2 700 steer, 300 lots of trees =$12,300$800 gain by adding 100 acres

Old land constraint

New land Constrain add 100 acres

Capital constraint

Page 12: Assume you own you own 1200 acres of land,  and have $142,500 to invest

Formal Structure of LP problem

Maximize

Z = C1X1 + C2X2 + C3X3…

Such that,

A11X1 + A12X2 + A13X3 … <=B1A21X1 + A22X2 + A23X3 … <=B2A31X1 + A32X2 + A33X3 … <=B3A41X1 + A42X2 + A43X3 … <=B4

X1>=0X2>=0…

Ci = Objective function coefficients (cost coefficients)Aij = Technological coefficientsBi = Right hand side constraints

Page 13: Assume you own you own 1200 acres of land,  and have $142,500 to invest

Integer Programming

0

1

2

3

4

5

6

7

8

0 1 2 3 4

Number of Prey 1 eaten

Num

ber

of P

rey

2 ea

ten