Exam 5: Advanced Linear Programming Applications
In data envelopment analysis, the percentage of an individual operating unit's resources that are available to the composite operating unit is the
A
Describe the steps used to determine when a two-person, zero-sum game has a pure-strategy solution.
To determine when a two-person, zero-sum game has a pure-strategy solution, you can follow these steps:
1. Define the game: Start by defining the game in terms of the players, their strategies, and the payoffs associated with each combination of strategies.
2. Construct the payoff matrix: Create a payoff matrix that shows the payoffs for each player for every possible combination of strategies.
3. Identify dominant strategies: Look for any dominant strategies, where one player has a strategy that is always better than any other strategy, regardless of the other player's choice.
4. Check for saddle points: A saddle point occurs when the maximum payoff for one player in a row is also the minimum payoff for the other player in the corresponding column. If a saddle point exists, the game has a pure-strategy solution.
5. Use the minimax theorem: If there is no dominant strategy and no saddle point, you can use the minimax theorem to determine if the game has a pure-strategy solution. This involves finding the maximum of the minimum payoffs for each player and checking if they are equal.
By following these steps, you can determine whether a two-person, zero-sum game has a pure-strategy solution. If a pure-strategy solution exists, it means that there is a set of strategies that both players can choose to guarantee a specific outcome, without any randomness or mixed strategies involved.
In game theory, the player seeking to maximize the value of the game selects a maximax strategy.
False
DEA does not necessarily identify the operating units that are relatively efficient.
Explain the logic of a DEA model. On what basis can the facility being evaluated be judged as relatively inefficient?
It is possible for DEA to show all operating units to be relatively inefficient.
DEA is used to measure the relative efficiency of two (or more) units in different industries, such as a bank and a school.
For a two-person, zero-sum, mixed-strategy game, it is necessary to solve the LP for only one of the players to learn the optimal strategies for both players.
A linear programming application used to measure the relative efficiency of operating units with the same goals and objectives is
A DEA linear programming model involving 4 input measures and 3 output measures will have
DEA will show all but one operating unit to be relatively inefficient in the case where an operating unit producing the most of every output and also consumes the least of every input.
Portfolio manager Max Gaines needs to develop an investment portfolio for his conservative clients. His task is to determine the proportion of the portfolio to invest in each of the five mutual funds listed below so that the portfolio provides the best return possible with a minimum risk. Formulate the maximin linear program.

Explain the difference between a pure strategy and a mixed strategy in game theory.
Modern revenue management systems maximize revenue potential for an organization by helping to manage
The overall goal of portfolio models is to create a portfolio that provides the best balance between
List several industries in which revenue management has been applied and list several different types of decisions
being made with the aid of the methodology.
In general, every DEA linear programming model will include a constraint that requires the weights for the operating units to sum to
In a two-person, zero-sum, pure-strategy game, there is no advantage to either player to switch from its strategy even if one of the players discovers the other player's strategy in advance.
Mountainside State Park has four visitor centers. To study the operation of these centers, a DEA model has been developed that compares inputs (size, number of staff, weekly hours of operation) and outputs (% of visitors attending educational program, daily sales in gift shop). The computer solution is shown below. What can you conclude about the efficiency of the North center?
LINEAR PROGRAMMING PROBLEM
Min
1E+0wn+0ws+0we+0ww
s.t.
1) −400E+400wn+1200ws+2400we+1500ww<0
2) −3E+3wn+6ws+10we+7ww<0
3) −56E+56wn+108ws+92we+108ww<0
4) −49E+49wn+83ws+56we+72ww>0
5) −38E+38wn+425ws+1200we+630ww>0
6) +1wn+1ws+1we+1ww=1
OPTIMAL SOLUTION
Objective Function Value = 1.000



Hervis Car Rental in Austin, TX has 50 high-performance Shelby-H Mustangs in its rental fleet. These cars will be in greater demand than usual during the last weekend in July when the Central Texas Mustang Club holds its annual rally in Austin. At times like this, Hervis uses a revenue management system to determine the optimal number of reservations to have available for the Shelby-H cars.
Hervis has agreed to have at least 60% of its Shelby-H Mustangs available for rally attendees at a special rate. Although many of the rally attendees will request a Saturday and Sunday two-day package, some attendees may select a Saturday only or a Sunday only reservation. Customers not attending the rally may also request a Saturday and Sunday two-day package, or make a Saturday only or Sunday only reservation. Thus, six types of reservations are possible. The cost for each type of reservation is shown here.
The anticipated demand for each type of reservation is as follows:
Hervis Car Rental would like to determine how many Shelby-H Mustangs to make available for each type of reservation in order to maximize total revenue.
a.
Define the decision variables.
b.
Formulate a linear programming model for this revenue management application.


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