using solver to complete a table

  • Thread starter Thread starter justhrowit
  • Start date Start date
J

justhrowit

I've been taking some econmics classes. Our teacher has showed us some
problems using solver to complete tables.
Wondering if anyone out there can help.

We have a company who uses units of labor (L) and material (m) to
produce a certain quantity of output (q). The price of labor is $1 per
unit of L and the price of materials is also $1 per unti of M.
The prduction function is Q=L(raised to 4th power)XM(raised to 6th
power)...sorry don't know how to type in exponents.

Anyway, we're basically given a table (spreadsheet) with Q as the first
column..labled 1 down to 9. Then column 2 is L, Column 3 is M, and then
the final column is Total Cost.

Basically, I'm trying to find the cost minimizing quantities of L and M
that should be used to produce each quantity of output. So far, I've
had little luck using calculus. How can this be done using solver?

Thanks in advance!
 
I've been playing with this a bit.
I guess I'm just unsure on how to enter the formulas into the cells.
I'm sure there are many other things I'm failing to comprehend here. I
just end up getting 1 for all the cells.

J
 
Patience, it sometimes takes a while for these people to come up with
solutions.

I didn't find the calculus of this problem to be that difficult:
TC=$1*M+$1*L
Q=L^4*M^6
L=(Q*M^-6)^1/4: Assume L must be >0 so that negative root is ignored.
TC=$1*M+$1*(Q*M^-6)^1/4
Take derivative, set equal to 0, solve for M, then obtain L from 3rd
eqn, then check to make sure this represents a minimum.

Solver can obtain the same results, it's just a little more tedious,
because you either have to manually call solver for each row, or you
need to write a VBA Sub procedure that will loop through the rows and
call solver for you. Either way, the basic setup is:
L=(Q*M^-6)^1/4
M=initial guess for M
TC=$1*M+$1*L
Set solver to minimize TC by changing M.
 
HAHA...Patience has never been my strong suit! I'm going to hit this
and see if I can get this to work! Your help is VERY MUCH Appreciated!


Jay
 
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