Operations Research I

Introduction
September 4, 2012
Operations Research
What is Operations Research?
Discipline by means of which it is possible to allocate scarce resources to
the operations of a rm.

How to conduct and coordinate the operations (activities) of an

organization

Research: Use of the scientic method to investigate the problem

of interest
OR Models
Characteristics
All OR models share the same characteristics:

Decision Alternatives

Restrictions, due to the scarcity of resources available

Objective Criterion (Function)

OR Models
General Format
Optimize an Objective Function
subject to
Constraints
Optimize: either Minimize or Maximize (according to the case at hand).
OR Models
An Example
We are to produce soda cans with a volume of 355 ml and with smallest
surface. Determine

Decision Alternatives

Restrictions (Constraints)

The objective function

OR Models
An Example Solution
Model: The can can be thought of as a cylinder, with radius r and
height h. Thus,
Objective Min z = 2r
2
+ 2rh
Constraint 1 r
2
h = 355
Constraint 2 r 0, h 0
(In the initial modeling phase, physical units are not considered.)
Which are all the feasible decision alternatives?
This is an example of a nonlinear programming model.
Standard OR Tools

Linear Programming (Dantzig, late 40s)

Dynamic Programming (Bellmann, 50s)

Queueing Theory

Inventory Theory

Nonlinear Programming (Economics)

etc. . .
This course of Operations Research 1 will be devoted to the study of
Linear Programming (LP) and how LP can be used to solve relatively
simple problems in Engineering.
Introduction to Linear Programming
Toy Model
Flinks Furniture produces inexpensive tables and chairs.
The production process is similar in that both products require a certain
number of carpentry work and a certain number of labor hours in the
painting and varnishing department.
Each chair requires 3 hours in carpentry and 1 hour in painting and
varnishing.
Each table takes 4 hours of carpentry and 2 hours in the painting and
varnishing shop.
Introduction to Linear Programming
Toy Model
During the current production time, 240 hours of carpentry time are
available, and 100 hours in painting and varnishing time are available.
Each table sold yields a prot of $7; each chair produced is sold for a $5
prot.
Determine the best possible combination of tables and chairs in order to
reach the maximum prot.
Toy Model
The mathematical formulation of this problem is as follows
1
: We want to
Max z = 5x
1
+ 7x
2
subject to
3x
1
+4x
2
240
x
1
+2x
2
100
with x
i
0, i = 1, 2.
1
We shall use x
1
to denote chairs and x
2
to denote tables
Linear Programming Properties

There must be one objective function

Presence of constraints

There must be alternatives available

Mathematical relationships are linear

Linear Programming Assumptions

Certainty

Proportionality

Additivity

Divisibility

Nonnegative variables
Problem 1
The Apex Television Company has to decide on the number of 27- and
20-inch sets to be produced at one of its factories. Market research
indicates that at most 40 of the 27-inch sets and 10 of the 20-inch sets
can be sold per month. The maximum number of work-hours available is
500 per month. A 27-inch set requires 20 work-hours and a 20-inch set
requires 10 work-hours. Each 27-inch set sold produces a prot of $120
and each 20-inch set produces a prot of $80. A wholesaler has agreed to
purchase all the television sets produced if the numbers do not exceed
the maxima indicated by the market research.
Formulate a linear programming model for this problem.
Problem 1
Solution
Let x
1
(resp. x
2
) be the number of 27-inch (resp. 20-inch) TV sets
produced. Let Z be the total prot per month.
The mathematical formulation of the model is
Max Z = 120x
1
+ 80x
2
subject to
x
1
40
x
2
10
20x
1
+10x
2
500
with x
1
0, x
2
0.
Problem 2
Dwight is an elementary school teacher who also raises pigs for
supplemental income. He is trying to decide what to feed his pigs. He is
considering using a combination of pig feeds available from local
suppliers. He would like to feed the pigs at minimum cost while also
making sure each pig receives an adequate supply of calories and
vitamins. The cost, calorie content, and vitamin content of each feed are
given in the table below.
Contents Feed Type A Feed Type B
Calories (per pound) 800 1,000
Vitamins (per pound) 140 units 70 units
Cost (per pound) $0.40 $0.80
Each pig requires at least 8,000 calories per day and at least 700 units of
vitamins. A further requirement (constraint) is that no more than
one-third of the diet (by weight) can consist of Feed Type A, since it
contains an ingredient which is toxic if consumed in too large a quantity.
Formulate a linear programming model for this problem.
Problem 2
Solution
Let A and B be the quantity (pounds) of Feed Type A and Feed Type B,
respectively, used per day.
The mathematical formulation is
A Diet Problem
Winston, Chapter 3
My diet requires that all the food I eat come from one of the four basic
food groups (chocolate cake, ice cream, soda and cheesecake). At
present, the following four foods are available for consumption: brownies,
chocolate ice cream, cola and pineapple cheesecake. Each brownie costs
$0.50, each scoop of chocolate ice cream costs $0.20, each bottle of cola
costs $0.30 and each piece of pineapple cheesecake costs $0.80. Each
day, I must ingest at least 500 calories, 6 oz of chocolate, 10 oz of sugar,
and 8 oz of fat. The nutritional content per unit of each food is shown in
the table below.
Formulate a linear programming model that can be used to satisfy my
daily nutritional requirements at minimum cost.
A Diet Problem
Winston, Chapter 3
Table: Nutritional Values
Calories Chocolate (oz) Sugar (oz) Fat (oz)
Brownie 400 3 2 2
Chocolate Ice Cream
(1 scoop) 200 2 2 4
Cola (1 bottle) 150 0 4 1
Pineapple
Cheesecake 500 0 4 5
Problem 1, Problem Set 2.3A
A realtor is developing a rental housing and retail area. The housing area
consists of eciency departments, duplexes and single-family homes.
Maximum demand by potential renters is estimated to be 500 eciency
departments, 300 duplexes and 250 single-family homes, but the number
of duplexes must equal at least 50% of the number of eciency
departments and single-family homes. Retail space is proportional to the
number of home units at the rates of at least 10 ft
2
, 15 ft
2
and 18 ft
2
per
eciency departments, duplexes and single-family homes, respectively.
However, land availability limits retail space to no more than 10,000 ft
2
.
The monthly rental income is estimated at $600, $750 and $1200 for
eciency-, duplex- and single-family units, respectively. The retail space
rents for $100/ft
2
.
Formulate a linear programming model that can be used to determine the
optimal retail space area and the number of family residences.
Problem 4, Problem Set 2.3D
The demand for ice cream during the three summer months (June, July
and August) at All-Flavors Parlor is estimated at 500, 600 and 400
20-gallon cartons, respectively. Two wholesalers, 1 and 2, can supply
All-Flavors with its ice cream. Although the avors from the two
suppliers are dierent, they are interchangeable. The maximum number
of cartons either supplier can provide is 400 per month. Also, the prices
each supplier charges from one month to the next varies, according to
the schedule
June July August
Supplier 1 $100 $110 $120
Supplier 2 $115 $108 $125
(price per carton)
Problem 4, Problem Set 2.3D
To take advantage of price uctuations, All-Flavors can purchase more
than is needed for a month and store the surplus to satisfy the demand in
a later month. The cost of refrigerating an ice cream carton is $5 per
month. It is realistic in the present situation to suppose that the
refrigeration cost is a function of the average number of cartons on hand
during the month.
Develop an optimal schedule for buying ice cream from the two suppliers.
Problem 2, Problem Set 2.3F
A hospital employs volunteers to sta the reception desk between 08:00
and 22:00. Each volunteer works three consecutive hours except those
starting at 20:00 who works for two hours only.The minimum need for
volunteers is approximated by a step function over 2-hour intervals
starting at 08:00 as 4, 6, 8, 6, 4, 6, 8.
Because most volunteers are retired individuals, they are willing to oer
their services at any hour of the day (08:00-22:00).
However, because of the large number of charities competing for their
services, the number must be kept as low as possible.
Formulate a linear programming model that can be used to nd an
optimal schedule for the start time of the volunteers.
Problem 3.4-8, HL
Web Mercantile sells many household products through an online
catalog. The company needs substantial warehouse space for storing its
goods. Plans are now being made for leasing warehouse storage space
over the next 5 months. Just how much space will be required in each of
these months is known. However, since these space requirements are
quite dierent, it may be most economical to lease only the amount
needed each month, on a month-by-month basis. On the other hand, the
additional cost for leasing space for additional months is much less than
for the rst month, so it may be less expensive to lease the maximum
amount needed for the entire 5 months. Another option is the
intermediate approach of changing the total amount of space leased (by
adding a new lease and/or having an old lease expire) at least once, but
not every month. The space requirements and the leasing costs for the
various leasing periods are as follows.
Problem 3.4-8, HL
Month Required space Leasing period Cost per sq ft
(sq ft) (months) Leased
1 30,000 1 $65
2 20,000 2 $100
3 40,000 3 $135
4 10,000 4 $160
5 50,000 5 $190
Formulate a linear programming model that will minimize the total
leasing cost for meeting the space requirements.
Transportation Problem
Three orchards supply crates of oranges to four retailers. The daily
demand amounts at the four retailers are 150, 150, 400, and 100 crates,
respectively. Supplies at the three orchards are dictated by the available
regular labor and are estimated at 150, 400, and 250 crates daily. The
transportation costs per crates from the orchards to the retailers are
given in the next slide.
Formulate the problem as a transportation model.
Problem 11, Problem Set 5.1A
Retailer 1 Retailer 2 Retailer 3 Retailer 4
Orchard 1 $1 $2 $3 $2
Orchard 2 $2 $4 $1 $2
Orchard 3 $1 $3 $5 $3
Problem 11, Problem Set 5.1A
Three orchards supply crates of oranges to four retailers. The daily
demand amounts at the four retailers are 150, 150, 400, and 100 crates,
respectively. Supplies at the three orchards are dictated by the available
regular labor and are estimated at 150, 200, and 250 crates daily.
However, Orchards 1 and 2 have indicated that they can supply more
crates, if necessary, by using overtime labor. Orchard 3 does not oer
this option. The transportation costs per crates from the orchards to the
retailers are given in the next slide.
Formulate the problem as a transportation model.
Problem 11, Problem Set 5.1A
Retailer 1 Retailer 2 Retailer 3 Retailer 4
Orchard 1 $1 $2 $3 $2
Orchard 2 $2 $4 $1 $2
Orchard 3 $1 $3 $5 $3
Problem 3.4-9, HL
Larry Edison is the director of the Computer Center for Buckly College.
He now needs to schedule the stang of the center. It is open from 8AM
until midnight. Larry has monitored the usage of the center at various
time of the day and determined that the following number of consultants
are required:
Time of day Minimum number of consultants
required to be on duty
8AM Noon 4
Noon 4PM 8
4PM 8PM 10
8PM Midnight 6
Problem 3.4-9, HL
Two types of computer consultants can be hired: full-time and part-time.
The full-time consultants work for 8 consecutive hours in any of the
following shifts: morning (8AM4PM), afternoon (noon8PM), and
night (4MPmidnight). Full-time consultants are paid $14 per hour.
Part-time consultants can be hired to work any of the you shifts listed in
the table above and are paid $12 per hour.
An additional requirement is that during any time period, there must be
at least 2 full-time consultants on duty for every part-time consultant on
duty.
Formulate a linear programming model that will allow Larry to determine
how many full-time and part-time consultants should work each shift to
meet the above requirement at the minimum possible cost.
Investment Problem
Taha, Problem 1, Problem Se 2.3C
Fox Enterprises is considering six projects for possible construction over
the next four years. The expected (present value) returns and cash
outlays for the projects are given below. Fox can undertake any of the
projects partially or completely. A partial undertaking of a project will
prorate both the return and the cash outlay proportionately.
Investment Problem
Taha, Problem 1, Problem Se 2.3C
Table: Cash Outlays
Project Year 1 Year 2 Year 3 Year 4 Return
($1000)
1 10.5 14.4 2.2 2.4 32.4
2 8.3 12.6 9.5 3.1 35.8
3 10.2 14.2 5.6 4.2 17.75
4 7.2 10.5 7.5 5 14.9
5 12.3 10.1 8.3 6.3 18.2
6 9.2 7.8 6.9 5.1 12.35
Available 60 70 35 20
Funds ($1000)
Investment Problem
Taha, Problem 1, Problem Se 2.3C
1. Formulate the problem as a linear program. Ignore the time value of
money.
2. Suppose that if a portion of project 2 is undertaken, then at least an
equal portion of project 6 must be undertaken as well. Modify the
formulation of the model.
3. In the original model, suppose that any funds left at the end of a
year are used in the next year. Modify the formulation of the linear
program.
Blending Model
The Metalco Compan desires to blend a new alloy of 40 percent zinc, 35
percent tin, and 24 percent lead from several available alloys having the
following properties:
Table: Alloy
Property 1 2 3 4 5
% zinc 60 25 45 20 50
% tin 10 15 45 50 40
% lead 30 60 10 30 10
Cost ($/lb) 22 20 25 24 27
The objective is to determine the proportions of these alloys that should
be blended to produce the desired new alloy at minimum cost. Formulate
a linear programming model that ca be used to that purpose.
Transportation Model
Taha, Problem Set 5.1A, Problem 6
Three electric power plants with capacities of 25, 40, and 30 million kWh
supply electricity to three cities. The maximum demands at the three
cities are estimated at 30, 35, and 25 million kWh. The price per million
kWh at the three cities is given by the table below:
Table: Price/Million kWh
City 1 $600 $700 $400
City 2 $320 $300 $350
City 3 $500 $480 $450
During the month of August, there is a 20% increase in demand at each
of the three cities, which can be met purchasing electricity from another
network at a premium rate of $1000 per million kWh. The network is not
linked to City 3, however. The company wishes to determine the most
economical plan for the distribution and purchase of the electricity.
Formulate the problem as a transportation model.
Transportation Model
Taha, Problem Set 5.2A, Problem 6
The demand for a special small engine over the next ve quarters is 200,
150, 300, 250, and 400 units, respectively. The manufacturer supplying
the engine has dierent production capacities estimated at 180, 230, 430,
300, and 300 units for the ve quarters. Backordering is not allowed, but
the manufacturer can use overtime to ll the immediate demand, if
necessary. The overtime capacity for each period is half the regular
capacity.
The production costs per unit for the ve periods are $100, $96, $116,
$102, and $106, respectively. The overtime production costs are 50%
higher than the regular production costs.
If an engine is produced now for use in later periods, an additional
storage cost of $4per engine per period is incurred.
Formulate the problem as a transportation model.
A Multiperiod Model
An earth-moving company is planning a training program so that its new
employees are able to operate the large earth-moving machines properly.
Employees who are already trained will be the instructors of newly hired
employees; the new employees must complete the training successfully in
order to stay on the payroll of the company. The ratio instructor:new
employee will be 1:10 and, from existing data, seven out of ten new
employees will complete successfully the training program.
A Multiperiod Model
The number of trained employees that the company needs in the next
four months (January through April) are:

January: 100

February: 150

March: 200

April: 250
At the beginning of January the company has 130 trained operators.
A Multiperiod Model
Payroll costs are as follows:

New employee in training: $400.

Trained employee: $700

Idle trained employee: $500

(Idle trained employees are not red, as per companys policy.)
The company wishes to nd the way to have 250 trained employees at
the end of April while minimizing total costs of hiring, training and
operating the machines.
A Multiperiod Model
Formulation Decision Variables
The decision variables are the number of trained operators who act as
instructors and the number of idle trained operators. In any given period
(month) the number of trained operators working the machines is given
by the corresponding monthly requirements.
So, we dene x
T,j
as the number of trained operators employed as
instructors, and x
Id,j
as the number of trainde operators who are idle in
month j = January (J), February (F), March (M) and April (A).
A Multiperiod Model
Formulation Constraints
The total number of trained operators at the beginning of each month
has to equal the number of instructors plus the number of idle trained
operators plus the number of trained employees operating the machines.
Thus:
100 + x
T,J
+ x
Id,J
= 130 (January)
150 + x
T,F
+ x
Id,F
= 130 + 7x
T,J
(February)
200 + x
T,M
+ x
Id,M
= 130 + 7x
T,J
+ 7x
T,F
(March)
250 = 130 + 7x
T,J
+ 7x
T,F
+ 7x
T,M
(April)
A Multiperiod Model
Formulation Objective Function
The objective function need not include the payroll cost of the trained
employees working the machines because it is a constant cost. Pertinent
costs are

Training costs (instructors and trainees)

Idle trained operators

Thus, the linear programming model is
A Multiperiod Model
Formulation The LP Model
Min z =400 (10x
T,J
+ 10x
T,F
+ 10x
T,M
) + 700 (x
T,J
+ x
T,F
+ x
T,M
)
+ 500 (10x
Id,J
+ 10x
Id,F
+ 10x
Id,M
)
subject to
x
T,J
+x
Id,J
= 30
7x
T,J
x
T,F
x
Id,F
= 20
7x
T,J
7x
T,F
x
T,M
x
Id,M
= 70
7x
T,J
+7x
T,F
+7x
T,M
= 120
All variables are positive or zero.
Multi-period Production Model
A company has contracted to produce two products, A and B, over the
months of June, July and August. The total production capacity
(expressed in hours) varies monthly and is equal to 3000, 3500 and 3000
hours for the month of June, July and August, respectively.
The demand for product A (units) is 500, 500 and 750, while the demand
of product B (units) is 1000, 1200, 1200 (June, July and August). The
production rates (units per hour) are 1.25 and 1.00 per products A and
B, respectively.
All demand must be met. However, demand for a later month may be
lled from the production in an earlier period. For any carryover from one
month to the next, holding costs of $0.90 and $0.75 per unit per month
are charged for product A and B, respectively.
The unit production costs for the two products are $30 and $28 for
products A and B, respectively.
Determine the optimum production schedule for the two products.
Optimal Allocation of Aircrafts to Routes
Aircraft type Capacity (passengers) Number of aircrafts 1 2 3 4
1 50 5 3 2 2 1
2 30 8 4 3 3 2
3 20 10 5 5 4 2
Daily number of customers 1000 2000 900 1200
Associated costs, including penalties for losing customers because of space unavailability, are:
Aircraft type 1 2 3 4
1 1000 1100 1200 1500
2 800 900 1000 1000
3 600 800 800 900
Penalty ($) per lost customer 40 50 45 70
Develop a linear model for determining the optimum allocation of aircrafts to routes.
Number of daily trips on route
Operating costs ($) per trip on route
Optimal Allocation of Aircrafts to Routes
Let x
ij
= number of aircraft of type i allocated to route j , i = 1, 2, 3,
j = 1, 2, 3, 4. Let S
j
= the number of passengers not served on route j ,
j = 1, 2, 3, 4.
The objective function is to minimize total operating costs plus the
penalty for each lost customer
Table: Objective function
Minimize z = 1000(3x
11
+1100(2x
12
) +1200(2x
13
) +1500(x
14
)
800(4x
21
) +900(3x
12
) +1000(3x
13
) +1000(2x
24
)
600(5x
31
) +800(5x
32
) +800(4x
13
) +900(2x
14
)
40S
1
+50S
2
+45S
3
+70S
4
The constraints are given in the following slides.
Optimal Allocation of Aircrafts to Routes
Number of aircrafts available:
4

j =1
x
1j
5,
4

j =1
x
2j
8,
4

j =1
x
3j
10
Daily number of customers:
50(3x
11
) + 30(4x
21
) + 20(5x
31
) S
1
= 1000
50(2x
12
) + 30(3x
22
) + 20(5x
32
) S
2
= 2000
50(2x
13
) + 30(3x
23
) + 20(4x
33
) S
3
= 900
50(x
14
) + 30(2x
24
) + 20(2x
34
) S
4
= 1200
Nonnegativity: x
ij
0, S
j
0, i = 1, 2, 3, j = 1, 2, 3, 4.
Blending Models
Hawaii Sugar Company produces brown sugar, processed (white) sugar,
powdered sugar and molasses from sugar cane syrup. The company
purchases 4000 tons of syrup weekly and is contracted to deliver at least
25 tons weekly of each type of sugar. The production process starts by
manufacturing brown sugar and molasses from the syrup. A ton of syrup
produces 0.3 tons of brown sugar and 0.1 ton of molasses. White sugar is
produced by processing brown sugar; it takes 1 ton of brown sugar to
produce 0.8 tons of white sugar. Powdered sugar is produced from white
sugar through a special grinding process that has a 95% conversion
eciency (1 ton of white sugar produces 0.95 ton of powdered sugar).
The prot per ton for brown sugar, white sugar, powdered sugar and
molasses are $150, $200, $230 and $35, respectively. Formulate the
problem of determining the optimal weekly production schedule as a
linear program.
Blending Models
Solution
Let x
1
= tons of brown sugar produced per week; let x
2
= tons of white
sugar produced per week; let x
3
= tons of powdered sugar produced per
week; and let x
4
= tons of molasses produced per week.
A schematic of the production process is given below:
1:0.8
0.1
0.3
One ton
of syrup
0.1
1:0.95
x4
x3
x2
x3/0.95
x2+(x3/0.95)
x1
1/(0.8)(x2+(x3/0.95))
x
1
+
(
1
/
(
0
.
8
)
(
x
2
+
(
x
3
/
0
.
9
5
)
)
)
Blending Models
Solution
The complete LP model is Max z = 150x
1
+ 200x
2
+ 230x
3
+ 35x
4
subject to
x
1
+
1
0.8

x
2
+

x
3
0.95

0.3(4000)
x
4
0.1(4000), x
1
25, x
2
25, x
3
25
x
4
0.
Mixing Model
Two alloys are made from four metals M1, M2, M3 and M4 according to
the following specications
Alloy Specifications Selling price
At most 80% of M1
At most 30% of M2
At least 50% of M4
Between 40% and 60% 0f M2
At least 30% of M3
At most 70% of M4
A
B
$200
$300
Mixing Model
The four metals, in turn, are extracted from three ores according to the
following data:
Max Qty Price/ton
Ore (tons) M1 M2 M3 M4 Others ($)
1 1000 20 10 30 30 10 30
2 2000 10 20 30 30 10 40
3 3000 5 5 70 20 0 50
Develop a linear programming model for determining the optimum alloy production.
Constituents (%)
Mixing Model
Solution
Dene x
ij
= tons of ore i allotted to alloy k; w
k
= tons of alloy k
produced.
The objective function is
Max z = 200W
1
+300W
2
30(x
1A
+x
1B
) 40(x
2A
+x
2B
) 50(x
3A
+x
3B
)
subject to
Specs constraints . . .
&
Ore constraints . . .
Linear Programming Models
September 4, 2012
Production Models
Toolco has contracted with AutoMate to supply their automotive
discount stores with wrenches and chisels. AutoMates weekly demand
consists of at least 1500 wrenches has 1200 chisels. Toolcos present
one-shift capacity is not large enough to produce the requested units and
it must use overtime and possibly subcontracting with other tool shops.
The result is an increase in the production cost per unit, as shown in the
following table. Market demand restricts chisels to wrenches ratio to a
ratio of at least 2:1.
Production Models
Table: Relevant Data
Tool Production type Weekly production Unit costs ($)
range (units)
Wrenches Regular 0 550 2.00
Overtime 551 800 2.80
Subcontracting 801 3.00
Chisels Regular 0 620 2.10
Overtime 621 900 3.20
Subcontracting 901 4.20
Formulate the problem as a linear program.
Production Models
Solution
Let W
r
, C
r
be the number of wrenches and chisels manufactured using
regular time; let W
o
, C
o
be the number of wrenches and chisels
manufactured using overtime; nally, let W
s
, C
s
be the number of
wrenches and chisels manufactured using subcontracting.
The objective function is Max
z = 2W
r
+ 2.80W
o
+ 3W
s
+ 2.10C
r
+ 3.20C
o
+ 4.20C
s
.
The proportion of chisels to wrenches gives
(C
r
+ C
o
+ C
s
) 2(W
r
+ W
o
+ W
s
)
Other constraints are
W
r
550, C
r
620
W
o
250, C
o
280
W
r
+ W
o
+ W
s
1500, C
r
+ C
o
+ C
s
1200
All variables are 0.
Investment Problem
A business executive has the option of investing money in three plans:
Plan A guarantees that each dollar invested will earn $0.70 one year later;
plan B guarantees that each dollar invested will earn $3.00 after two
years; and plan C guarantees $4.50 after four years.
Investments can be made annually in the three plans.
How should the executive invest $100,000 to maximize earnings at the
end of 5 years? Propose a linear programming model for this problem.
Blending Model
Taha, Section 2.3
HI-V produces three types of canned juice drinks, A, B, and C, using
fresh strawberries, grapes and apples. The daily supply is limited to 200
tons of strawberries, 100 tons of grapes and 150 tons of apples. The cost
per ton of strawberries, grapes and apples is $200, $100, and $90,
respectively. Each ton makes 1500 lb of strawberry juice, 1200 lb of grape
juice and 1000 lb of apple juice. Drink A is a 1:1 mix of strawberry and
grape juice. Drink B is a 1:1:2 mix of strawberry, grape and apple juice.
Drink C is a 2:3 mix of grape and apple juice. All drinks are canned in
16-oz (1 lb) cans. The price per can is $1.15, $1.25 and $1.20 for drinks
A, B and C. Determine the optimal production mix of the three drinks.
Blending Model
SolutionObjective Function
Dene the following decision variables:

x
s
, x
g
and x
a
tons of strawberry, grapes and apples purchased daily,
respectively.

x
A
, x
B
, x
C
cans of drink A, B, C produced daily. (Each can holds 16
oz.)

x
sA
, x
sB
pounds of strawberries used in drink A, B; x
gA
, x
gB
, x
gC
pounds of grapes used in drink A, B, C; x
aB
, x
aC
pounds of apples
used in drink B, C. (1 lb = 16 oz.)
The objective function is Maximize
z = 1.15x
A
+ 1.25x
B
+ 1.2x
C
200x
s
100x
g
90x
a
Blending Model
SolutionConstraints
We have three types of constraints:

Raw material.

Transformation from raw material to fruit juice.

Mixing the dierent fruit juices to prepare the three types of drinks
(proportion rates).
Blending Model
SolutionConstraints
Raw Material
x
s
200, x
g
100, x
a
150
Transformation
x
sA
+x
sB
= 1500x
s
, x
gA
+x
gB
+x
gC
= 1200x
g
, x
aB
+x
aC
= 1000x
a
x
A
= x
sA
+ x
gA
, x
B
= x
sB
+ x
gB
+ x
aB
, x
C
= x
gC
+ x
aC
,
Proportion rates
x
sA
= x
gA
, x
sB
= x
gB
, x
gB
= 0.5x
aB
, 3x
gC
= 2x
aC
All variables are positive.
Blending Model
Taha, Section 2.3Extra Homework
Same as in the previous problem, except that we are using metric units.
Consider that one liter of fruit juice is approximately one kilogram. The
cans hold 355 ml. Modify the LP model for this new situation.
Multiperiod Financial Models
Winston, Section 3.11
Finco Investment Corporation must determine the investment strategy for
the rm during the next three years. At present (time 0) $100,000 is
available for investment. Investments A, B, C, D, E are all available. The
cash ow associated with investing $1 in each investment is given in the
table below:
0 1 2 3
A $1 +$0.50 +$1 $0
B $0 $1 +$0.50 +$1
C $1 +$1.20 $0 $0
D $1 $0 $0 +$1.9
E $0 $0 $1 +$1.50
For example, $1 invested in investment B requires $1 cash outow at
time 1 and returns $0.50 at time 2 and $1 at time 3.
Multiperiod Financial Models
Winston, Section 3.11
To ensure that the companys portfolio is diversied, Finco requires that
at most $75,000 be placed in any single investment. In addition to
investments AE, Finco can earn interest at 8% per year by keeping
uninvested cash in money market funds.
Returns from investments may be immediately reinvested. For example,
the positive cash ow received from investment C at time 1 may be
immediately reinvested in investment B.
Finco cannot borrow funds, so the cash available for investment at any
time is limited to the cash on hand.
Formulate a linear program that will maximize cash on hand at time 3.
Programming Human Resources
Problem 2
Oxbridge University maintains a powerful mainframe computer for
research use by its faculty, PhD students and research associates. During
all work hours, an operator must be available to operate and maintain
the computer, as well as to perform some programming services. Beryl
Ingram, the director of the computer facility, oversees the operation.
It is now the beginning of the semester and Beryl is confronted with the
problem of assigning dierent working hours to her operators. Because all
the operators are currently enrolled at the university, they are able to work
only a limited number of hours each day, as shown in the table below.
Programming Human Resources
Table: Maximum Hours of Availability
Operator Wage Rate Mon Tue Wed Thurs Fri
K.C. $10.00/hour 6 0 6 0 6
D.H. $10.10/hour 0 6 0 6 0
H.B. $9.90/hour 4 8 4 0 4
S.C. $9.80/hour 5 5 5 0 5
K.S. $10.80/hour 3 0 3 8 0
N.K. $11.30/hour 0 0 0 6 2
There are six operators (four undergraduate students and two graduate
students). They all have dierent wages because of their experience in
with computers and in their programming ability. The above table shows
their wage rates, together with the maximum number of hours that each
can work each day.
Programming Human Resources
Each operator is guaranteed a minimum number of hours each week that
will maintain an adequate knowledge of the operation. This level is set
arbitrarily at 8 hours per week for the undergraduate students and 7
hours per week for the graduate students.
The computer facility is to be open from 8AM to 10PM Monday through
Friday with exactly one operator on duty between these hours. On
Saturday and Sunday, the center is operated by other sta.
Because of a tight budget, Beryl has to minimize cost. She wishes to
determine the number of hours she should assign to each operator on
each day. Formulate a linear programming model for this problem.
Programming Human Resources
A large department store operates 7 days a week. The manager estimates
that the minimum number of salespersons required to provide prompt
service is 12 for Monday, 18 for Tuesday, 20 for Wednesday, 28 for
Thursday, 32 for Friday and 40 for each Saturday and Sunday. Each
salesperson works 5 days a week, with the two consecutive o-days
staggered throughout the week. For example, if 10 workers starts on
Monday, then a possible allocation of o-days is that 2 salespersons can
take their o-days on Tuesday and Wednesday, 5 on Wednesday and
Thursday and 3 on Saturday and Sunday. How many salespersons should
be contracted and how should their o-days be allocated?
Programming Human Resources
Let y
ij
the number starting their working day on day i and having their
two days o on day j , j = i . The total number starting on day i
(regardless of when they have their days o) is
x
i
=
7

j =1
y
ij
, j = i
The objective function is to minimize the total number of workers:
Min z = x
1
+ x
2
+ x
3
+ x
4
+ x
5
+ x
6
+ x
7
subject to . . .
(Complete the LP model.)
Blending Model
Shale Oil, located on the island of Aruba, has a capacity of 600,000
barrels of crude oil per day. The nal products from the renery include
two types of unleaded gasoline: regular and premium. The rening
process encompasses three stages: (1) a distillation tower that produces
feedstock; (2) a cracker unit that produces gasoline stock by using a
portion of the feedstock produced from the distillation tower; and (3) a
blender unit that blends the gasoline stock from the cracker unit and the
feedstock from the distillation tower.
Both regular and premium gasoline can be blended from either the
feedstock or the gasoline stock at dierent production costs. The
company estimates that the net prot per barrel of regular gasoline is
$7.70 and $5.20, depending on whether it is blended from feedstock or
from gasoline stock. The corresponding prot values for the premium
grade are $10.40 and $12.30.
Blending Model
Design specications require 5 barrels of crude oil to produce 1 barrel of
feedstock. The capacity of the cracker unit is 40,000 barrels of feedstock
a day. All remaining feedstock is used directly in the blender unit to
produce end-product gasoline. The demand limits for regular and
premium gasoline is 80,000 and 50,000 barrels a day, respectively.
Develop a linear program for determining the optimum production
schedule for the renery.
Blending Model
Solution
Consider the following picture, which sums up the production process:
D
i
s
t
i
l
l
a
t
i
o
n
R
R
P
P
C
r
a
c
k
e
r
B
l
e
n
d
e
r
Crude
5:1
x22
x21
x12
x11
Blending Model
SolutionLP Model
The objective is to maximize
z = 7.70x
11
+ 5.20x
21
+ 10.40x
12
+ 12.30x
22
subject to
5 (x
11
+ x
12
+ x
21
+ x
22
) 600, 000
x
21
+ x
22
40, 000
x
11
+ x
21
80, 000
x
12
+ x
22
50, 000
x
ij
0, i , j = 1, 2.
Production Process Models
Winston, Section 3.9
AmeriCo Oil has three dierent processes that can be used to
manufacture various type of gasoline (G1, G2, G3). Each process involves
blending oils in the companys catalytic cracker.
Running Process 1 for one hour costs $5 and require 2 barrels of C1 and
3 barrels of C2. The output from running process one for one hour is 2
barrels of G1and 1 barrel of G2.
Running Process 2 for one hour costs $4 and require 1 barrel of C1 and 3
barrels of C2. The output from running process one for one hour is 3
barrels of G2.
Running Process 3 for one hour costs $1 and require 2 barrels of C2 and
3 barrels of G2. The output from running process three for one hour is 2
barrels of G3.
Production Process Models
Winston, Section 3.9
Each week, 200 barrels of C1, at $2/bbl, and 300 barrels of C2, at
$3/bbl, may be purchased. All gasoline produced can be sold at the
following per-barrel prices: G1, $9; G2, $10; G3, $24.
Formulate an LP whose solution will maximize total prot (revenue
minus costs). Assume that only 100 hours are available at the catalytic
cracker each week.
Production Process Models
SolutionObjective Function
Dene g
i
= barrels of gasoline i produced weekly, i = 1, 2, 3; o
k
= barrels
of oil type k, k = 1, 2; x
j
= hours used in process j , j = 1, 2, 3.
The objective function is maximize
z = 9g
1
+ 10g
2
+ 24g
3
5x
1
4x
2
x
3
2o
1
3o
2
Production Process Models
SolutionConstraints
To better understand the constraints, let us consider the following table
with the relevant information:

Input Output
Hours of
process
Barrels of
Oil
Barrels of
gasoline
Barrels of
gasoline
x1 2o1, 3o2 - 2g1, g2
x2 1o1, 3o2 - 3g2
x3 2o2 3g2 2g3
Thus:
o1 = 2x1 + x2
o2 = 3x1 + 3x2 + 2x3
g2 + 3x3 = x1 + 3x2
o1 < 2
o2 < 3
x1 + x2 + x3 < 1
g1 = 2x1
g3 = 2x3
!ll "aria#les are positi"e, or $ero%
Blending Model
Winston, Section 3.8
SunCo Oil manufactures three types of gasoline (G1, G2, G3). Each type
is produced by blending three tys of crude oil (C1, C2, C3). The sales
price per barrel (bbl) of gasoline and the purchase price per bbl of crude
oil are given in the table below. SunCo can purchase 5000 bbl of each
type of crude daily.
The three types of crude dier in their octane rating and sulfur content.
The octane ratings and sulfur content of each type of crude is given in a
second table below. The crude oil blended to form G1 must have an
average (per volume) octane rating of at least 10 and contain at most
1% sulfur. The crude oil blended to form G2 must have an average
octane rating of at least 8 and contain at most 2% sulfur. The crude oil
blended to form G3 must have an average octane rating of at least 6 and
contain at most 1% sulfur. It costs $4 to transform one barrel of oil into
one barrel of gasoline, and SunCos renery can produce up to 14,000
barrels of gasoline daily.
Blending Model
Winston, Section 3.8
SunCos customers requires the following quantities of gasoline each day:
G13000 barrels; G22000 barrels; G31000 barrels. The company
considers an obligation to meet its customers demands.
Formulate an LP that will enable SunCo to maximize daily prots. To
simplify matters, consider that the gasoline cannot be stored, so it must
be sold the day it is produced.
Sales Price/bbl Purchase Price/bbl
G1 $70 C1 $45
G2 $60 C2 $35
G3 $50 C3 $25
Table: Per Barrel of Crude
Octane Rating Sulfur Content
C1 12 0.5%
C2 6 2.0%
C3 8 3.0%
Winston, Section 3.8
SolutionDecision Variables
Let x
ij
= the number of barrels of crude i used to produce gasoline j
(i , j = 1, 2, 3).
Thus,
x
i 1
+ x
i 2
+ x
i 3
, i = 1, 2, 3
is the number of barrels of crude i used daily, and
x
1j
+ x
2j
+ x
3j
, j = 1, 2, 3
is the number of barrels of gasoline j produced daily.
Winston, Section 3.8
SolutionObjective Function
The objective function is the daily total prot, which is calculated as
total revenues from selling gasoline minus total purchasing costs of
crude oil minus total transformation costs.
Max z =70 (x
11
+ x
21
+ x
31
) + 60 (x
12
+ x
22
+ x
32
)
+ 50 (x
13
+ x
23
+ x
33
)
45 (x
11
+ x
12
+ x
13
) 35 (x
21
+ x
22
+ x
23
)
25 (x
31
+ x
32
+ x
33
)
4 (x
11
+ x
12
+ x
13
+ x
21
+ x
22
+ x
23
+ x
31
+ x
32
+ x
33
)
Thus, the objective is to maximize
z = 21x
11
+ 11x
12
+ x
13
+ 31x
21
+ 21x
22
+ 11x
23
+ 41x
31
+ 31x
32
+ 21x
33
Winston, Section 3.8
SolutionDemand Constraints
The gasoline j , j = 1, 2, 3, produced daily should equal its demand:
x
11
+ x
21
+ x
31
= 3000 Demand G1
x
12
+ x
22
+ x
32
= 2000 Demand G2
x
13
+ x
23
+ x
33
= 3000 Demand G3
Winston, Section 3.8
SolutionCrude Supply Constraints
At most a certain quantity of crude i , i = 1, 2, 3, can be purchased daily:
x
11
+ x
12
+ x
13
5000 Supply C1
x
21
+ x
22
+ x
23
5000 Supply C2
x
31
+ x
32
+ x
33
5000 Supply C3
Winston, Section 3.8
SolutionLimited Renery Capacity
At most 14,000 barrels of gasoline can be produced daily:
x
11
+ x
21
+ x
31
+ x
12
+ x
22
+ x
32
+ x
13
+ x
23
+ x
33
14, 000
Winston, Section 3.8
SolutionOctane Specications
G1 must have an average octane rating of at least 10:
(12x
11
+ 6x
21
+ 8x
31
) 10 (x
11
+ x
21
+ x
31
)
G2 must have an average octane rating of at least 8:
(12x
12
+ 6x
22
+ 8x
32
) 8 (x
12
+ x
22
+ x
32
)
G3 must have an average octane rating of at least 6
2
:
(12x
13
+ 6x
23
+ 8x
33
) 6 (x
13
+ x
23
+ x
33
)
2
This constraint is redundant
Winston, Section 3.8
SolutionSulfur Specications
G1 must contain at most 1% of sulfur:
(0.005x
11
+ 0.02x
21
+ 0.03x
31
) 0.01 (x
11
+ x
21
+ x
31
)
G2 must contain at most 2% of sulfur:
(0.005x
12
+ 0.02x
22
+ 0.03x
32
) 0.02 (x
12
+ x
22
+ x
32
)
G3 must contain at most 1% of sulfur:
(0.005x
13
+ 0.02x
23
+ 0.03x
33
) 0.01 (x
13
+ x
23
+ x
33
)
Blending Model
Extra Homework
Consider the same problem as above. Assume, moreover, that SunCo can
increase the sale of the gasoline it sells by advertising. More precisely, for
each dollar spent in advertising a particular type of gasoline, the daily
demand will increase by the following amounts: 10 barrels, for G1; 15
barrels for G2; and 12 barrels, for G3. For example, if SunCo spends $10
in advertising G2, then its demand will increase by 10(15) = 150 barrels.
Modify the above LP model to take into account this extra assumption.