CITM 501 Spring/Summer 2014

CITM 501 Spring/Summer 2014

Homework Assignment 3

Due June 17, 2014 @5 PM via Bb

ABC is now considering adding two more lines (in addition to their already existing CRM line) to their offering: data warehousing and data backup solutions. The VP of operations that will be overseeing these three lines has a yearly operating budget of $ 1,500,000. ABC makes roughly $0.3 per year for each dollar they spend (which accounts for personnel, bandwidth, hardware and software and other overhead costs) on CRM services. Some small-scale market research suggests that these figures will be $0.27 for data warehousing, and $0.25 for data backup services.

The company has a monthly capacity of 4 TB (4,000,000 MB) that they should now dedicate to these two new lines in addition to the already existing CRM line. So far, roughly every dollar (per year) spent on the CRM services leads to monthly transactions that require 1.8 MB of data transfer. They expect these figures will be 1.3 MB for data warehousing, and 1.9 MB for data backup services.

In addition, processing of every 1MB on CRM requires 1.85 minutes of the capacity of the computing machinery. These figures are 2.25 minutes for both data warehousing and data backup services. ABC will have a cluster of 20 dedicated computers that run around the clock to provide this capacity.

ABC wants to offer a balanced portfolio; therefore, they want the budget allocated to each of the three offerings to be at most 40% of their total spending for the three services.

Your task is to create a LP model to advice the VP of operations how to allocate their budget between these three offerings.

Do not try to solve the problem, just model it.

Submit your model in a MS Word document. The file name should begin with your first initial ending with #3 (i.e. <first initial>_<lastname>3.docx, e.g. n