Objective:

• Apply the optimization tools presented in class.
• Show that you understand the components and conditions of making an optimal decision.

Task:

• Using an industry you are interested in, describe an optimization (maximization or minimization) decision that a manager/owner must make. Identify the objective and the constraints that must be considered in making the decision. Also, with words, describe the optimal condition that will identify the optimal decision (MRS equal to the negative price ratio, MRTS equal to the negative price ratio, MR=MC, etc.). (Approximately 1-3 paragraphs.)

• Setup an Excel spreadsheet to solve your optimization problem. If real data isn’t available, use hypothetical values. With the base setup, describe the optimal outcome. Change one component of your optimization problem (a constraint, a cost, a price, etc.), and describe how the change affected the optimal outcome. From the base setup, change a different component of your optimization, and describe how the change affected the optimal outcome. (Approximately 1-2 paragraphs.)

• Finally, summarize how the decision maker could incorporate changing conditions into their decision making process. Also discuss how potential other unknowns in the market may impact their decision. (Approximately 1-2 paragraphs.)

Grading & Format:

• This report is worth 40 points total, of that, 15 points are allocated towards the spreadsheet setup, 15 points are allocated towards appropriately discussing/describing the problem and the outcomes, and 10 points are allocated towards effort/thoroughness.

• I expect the report will contain about two pages of single-spaced text. The page and paragraphs guides, are suggestion Use the number of paragraphs and pages you need to write a cohesive narrative to accompany your optimization problem set up.

• In addition to submitting your report, submit your spreadsheet (or other computer code) as a separate file. Your spreadsheet/code should have clear descriptions, and be understandable on its own.

• This work is to be done individually. Given the number of markets to discuss, I do not expect to see multiple reports on the same market or with the same optimization problem and solver.

• If you use outside sources, cite your sources and include a works cited at the end of your report. Please specify which citation style you are using.