Assignment 2

MUHAMMAD AZRUL ARSHAD BIN SALKI 25600

ZAHID SYUQRI BIN ZULKFFLI 23466
RAJA HASBUNALLAH BIN RAJA HUSSIN 25605

QUESTION 3
A group of enterprising engineering students has developed a process for extracting combustible methane
gas from cow manure (don’t worry, the exhaust is odorless).With a specially adapted internal combustion
engine, the students claim that an automobile can be propelled 15 miles per day from the “cow gas”
produced by a single cow. Their experimental car can travel 60 miles per day for an estimated cost of $5
(this is the allocated cost of the methane process equipment -the cow manure is essentially free)
a- How many cows would it take to fuel 1,000,000 miles of annual driving by a fleet of cars? What
is the annual cost?

ANSWER
Number of cows require for fueling 1,000,000 miles:
¿
= Miles¿ be fueled / year ( Number of days per year ) x Miles per day
1 000 000 per year
= 365 days x 15 miles
1000 000
= 5 475

= 182.648 ~ 183 cows

b- How does your answer to Part (a) compare to a gasoline-fueled car averaging 30 miles per gallon
when the cost of gasoline is $3.00 per gallon?

ANSWER
Milestravel per day
Annual cost = Miles per year x
Miles cover∈a day
5
= 1 000 000 x 60

= $ 83,333.33

QUESTION 5
A municipal solid-waste site for a city must be located at Site A or Site B. After sorting, some of
the solid refuse will be transported to an electric power plant where it will be used as fuel. Data
for the hauling of refuse from each site to the power plant are shown in Table P2-4.

If the power plant will pay $8.00 per cubic yard of sorted solid waste delivered to the plant,
where should the solid-waste site be located? Use the city’s viewpoint and assume that 200,000
cubic yards of refuse will be hauled to the plant for one year only. One site must be selected.
(2.1)

CHOOSING THE BEST SITE

Cost = Rent + (Distance (area) x Area of hauling x Hauling cost)
Site A
= 5 000 + (4 miles x 200, 000 x $1.5)
=$5,000 + (1,200,000)
= $1, 205, 000
Site B
= 100 000 + ( 3 miles x 200 000 x $ 1.5)
= 100 000 + (900 000)
= $ 1, 000, 000

*Conclusion:
Site B is much cheaper compare to site A. It is wise to choose site B compare to site A
QUESTION 13
A large company in the communication and publishing industry has quantified the relationship
between the price of one of its products and the demand for this product as Price = 150−0.01 ×
Demand for an annual printing of this particular product. The fixed costs per year (i.e., per
printing) = $50,000 and the variable cost per unit=$40.What is the maximum profit that can be
achieved if the maximum expected demand is 6,000 units per year? What is the unit price at this
point of optimal demand?
ANSWER

Relation of price and demand: P = 150 – 0.01(Demand)

Fixed cost = $50, 000
Variable cost = $$40/unit
Expected demand = 6, 000 unit/year

Maximizing profit = total revenue – total cost

= (price x Demand) – (Fixed cost + (Variable cost x demand))
= (150demand -0.01Demand2) – (Fixed Cost + Variable cost (Demand))

Maximum profit = (150(6, 000) – (0.01) (6, 000)2) – ((50, 000) + (40) (60, 000))
= $ 250, 000

Maximum profit per unit

P = 150 – 0.01 (Demand)
P = 150 – 0.01 (6, 000)
= $90
QUESTION 15
A company produces and sells a consumer product and is able to control the demand for the
product by varying the selling price. The approximate relationship between price and demand is
p= $38+ (2,700 /D) – (5,000 /D2), for D > 1, where p is the price per unit in dollars and D is the
demand per month. The company is seeking to maximize its profit. The fixed cost is $1,000 per
month and the variable cost(cv) is $40 per unit.
a. What is the number of units that should be produced and sold each month to maximize profit?
Total cost = Fixed cost + variable cost
= 1, 100 + 45D
Profit Function = Total Revenue + Total Cost
= Profit Demand – Total Cost
2, 800 4 ,900
= ( 35 + + )D – 1,100 – 45D
D D2
4 ,900
= (35D + 2,800 - - 1, 100 – 45D
D
4,900
= 1, 700 – 10D -
D
d ( Profit Function) 4 ,900
= -10 +
dDemand D2
4 ,900
0 = -10 +
D2
4 ,900
10 =
D2
D2 = 490
D = √ 490
= ±22.1
The company should sell about 22 product each month to maximize its profits
b. Show that your answer to Part(a) maximizes profit
d ( Profit Function) 4 ,900
= -10 +
dDemand D2

d 2 (Profit Function) (−2 ) 4 , 900

D= 22.13 =
dDeman d 2 22.13 3
= -0.9042
 The level of output calculated is above the profit maximizer

QUESTION 29
One component of a system’s life-cycle cost is the cost of system failure. Failure costs can be
reduced by designing a more reliable system. A simplified expression for system life-cycle cost,
C, can be written as a function of the system’s failure rate:

a- Assume that CI, CR, and t are constants. Derive an expression for λ, say λ∗, that optimizes
C.

dC
=0
dπ

−C
+ CR t = 0
λ2

C
λ2 = ±
C Rt
 b- Does the equation in Part (a) correspond to a maximum or minimum value of C? Show all
work to support your answer.

dC −C
❑ = + CR t
dλ λ2

d2C 2C
2 =
dλ λ3

Depending on the λ, if it has the value of negative, so part (a) would have the corresponding to
maximum value
Depending on the λ, if it has the value of positive, so part (a) would have the corresponding to
minimum value

c- What trade-off is being made in this problem?

Based on this problem, trade off means sacrificing one thing to get the benefits of another
thing. In this problem, decreasing the system’s life cycle cost would increase the failure
rate.