(solution) Fulgencio Batista led Cuba with a cold heart and iron fist—greedily stealing from poor citizens,…

(solution) Fulgencio Batista led Cuba with a cold heart and iron fist—greedily stealing from poor citizens,…

Fulgencio Batista led Cuba with a cold heart and iron fist—greedily stealing from poor citizens, capriciously ruling the Cuban population that looked to him for guidance, and violently murdering the innocent critics of his politics. In 1958, tired of watching his fellow Cubans suffer from corruption and tyranny, Fidel Castro led a guerilla attack against the Batista regime and wrested power from Batista in January 1959. Cubans, along with members of the international community, believed that political and economic freedom had finally triumphed on the island. The next two years showed, however, that Castro was leading a Communist dictatorship—killing his political opponents and nationalizing all privately held assets. The United States responded to Castro’s leadership in 1961 by invoking a trade embargo against Cuba. The embargo forbade any country from selling Cuban products in the United States and forbade businesses from selling American products to Cuba. Cubans did not feel the true impact of the embargo until 1989 when the Soviet economy collapsed. Prior to the disintegration of the Soviet Union, Cuba had received an average of $5 billion in annual economic assistance from the Soviet Union. With the disappearance of the economy that Cuba had almost exclusively depended upon for trade, Cubans had few avenues from which to purchase food, clothes, and medicine. The avenues narrowed even further when the United States passed the Torricelli Act in 1992 that forbade American subsidiaries in third countries from doing business with Cuba that had been worth a total of $700 million annually. Since 1989, the Cuban economy has certainly felt the impact from decades of frozen trade. Today poverty ravages the island of Cuba. Families do not have money to purchase bare necessities, such as food, milk, and clothing. Children die from malnutrition or exposure. Disease infects the island because medicine is unavailable. Optical neuritis, tuberculosis, pneumonia, and influenza run rampant among the population. Few Americans hold sympathy for Cuba, but Robert Baker, director of Helping Hand, leads a handful of tender souls on Capitol Hill who cannot bear to see politics destroy so many human lives. His organization distributes humanitarian aid annually to needy countries around the world. Mr. Baker recognizes the dire situation in Cuba, and he wants to allocate aid to Cuba for the coming year. Mr. Baker wants to send numerous aid packages to Cuban citizens. Three different types of packages are available. The basic package contains only food, such as grain and powdered milk. Each basic package costs $300, weighs 120 pounds, and aids 30 people. The advanced package contains food and clothing, such as blankets and fabrics. Each advanced package costs $350, weighs 180 pounds, and aids 35 people. The supreme package contains food, clothing, and medicine. Each supreme package costs $720, weighs 220 pounds, and aids 54 people. Mr. Baker has several goals he wants to achieve when deciding upon the number and types of aid packages to allocate to Cuba. First, he wants to aid at least 20 percent of Cuba’s 11 million citizens. Second, because disease runs rampant among the Cuban population, he wants at least 3,000 of the aid packages sent to Cuba to be the supreme packages. Third, because he knows many other nations also require humanitarian aid, he wants to keep the cost of aiding Cuba below $20 million. Mr. Baker places different levels of importance on his three goals. He believes the most important goal is keeping costs down since low costs mean that his organization is able to aid a larger number of needy nations. He decides to penalize his plan by 1 point for every $1 million above his $20 million goal. He believes the second most important goal is ensuring that at least 3,000 of the aid packages sent to Cuba are supreme packages, since he does not want to see an epidemic develop and completely destroy the Cuban population. He decides to penalize his plan by 1 point for every 1,000 packages below his goal of 3,000 packages. Finally, he believes the least important goal is reaching at least 20 percent of the population, since he would rather give a smaller number of individuals all they need to thrive instead of a larger number of individuals only some of what they need to thrive. He therefore decides to penalize his plan by 7 points for every 100,000 people below his 20 percent goal. Mr. Baker realizes that he has certain limitations on the aid packages that he delivers to Cuba. Each type of package is approximately the same size, and because only a limited number of cargo flights from the United States are allowed into Cuba, he is only able to send a maximum of 40,000 packages. Along with a size limitation, he also encounters a weight restriction. He cannot ship more that 6 million pounds of cargo. Finally, he has a safety restriction. When sending medicine, he needs to ensure that the Cubans know how to use the medicine properly. Therefore, for every 100 supreme packages, Mr. Baker must send one doctor to Cuba at a cost of $33,000 per doctor. (a) Identify one of the techniques described in this chapter that is applicable to Mr. Baker’s problem. (b) How many basic, advanced, and supreme packages should Mr. Baker send to Cuba? (c) Mr. Baker reevaluates the levels of importance he places on each of the three goals. To sell his efforts to potential donors, he must show that his program is effective. Donors generally judge the effectiveness of a program on the number of people reached by aid packages. Mr. Baker therefore decides that he must put more importance on the goal of reaching at least 20 percent of the population. He decides to penalize his plan by 10 points for every half a percentage point below his 20 percent goal. The penalties for his other two goals remain the same. Under this scenario, how many basic, advanced, and supreme packages should Mr. Baker send to Cuba? How sensitive is the plan to changes in the penalty weights? (d) Mr. Baker realizes that sending more doctors along with the supreme packages will improve the proper use and distribution of the packages’ contents, which in turn will increase the effectiveness of the program. He therefore decides to send one doctor with every 75 supreme packages. The penalties for the goals remain the same as in part (c). Under this scenario, how many basic, advanced, and supreme packages should Mr. Baker send to Cuba? (e) The aid budget is cut, and Mr. Baker learns that he definitely cannot allocate more than $20 million in aid to Cuba. Due to the budget cut, Mr. Baker decides to stay with his original policy of sending one doctor with every 100 supreme packages. How many basic, advanced, and supreme packages should Mr. Baker send to Cuba assuming that the penalties for not meeting the other two goals remain the same as in part (b)?