BUS 111 Lecture Notes - Lecture 1: Feasible Region, Mortgage Insurance

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Many times we wish to maximize or minimize some quantity while still satisfying some restrictions. One way to solve these types of optimization problems linear programming. In a linear programming problem, our goal is to find the maximum or minimum of some quantity called the objective function. While doing this, we want to stay within some bounds that we call constraints. If only two variables are involved, graphing the constraints can solve a linear program. One of the corner points of the feasible region will be the max or min for the objective function. Plug the corner points into the objective function and choose the correct value. The minimum cost is obtained at either (2,1) or (4,0). *get in the habit of writing down your results for what they are* Example: an insurance agent has decided to expand his client base by introducing two new types of insurance. Special risk insurance nets a profit of /policy, while.

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