MANAGERIAL DECISION ANALYSIS

(MGT 780)

ASSIGNMENT 5
INTEGER AND GOAL PROGRAMMING

PREPARED FOR:

DR. TAN PECK LEONG

PREPARED BY:

SYURGA FATHONAH BINTI ARIS@AZIS

DATE OF SUBMISSION:
31 OCTOBER 2014

2013343955

10-19 Triangle Utilities provides electricity for three cities.The company has four electric generators that
are used to provide electricity. The main generator operates 24 hours per day, with an
occasional shutdown for routine maintenance. Three other generators (1, 2, and 3) are
available to provide additional power when needed. A startup cost is incurred each time one of
these generators is started. The startup costs are $6,000 for 1, $5,000 for 2, and $4,000 for 3.
These generators are used in the following ways: A generator may be started at 6:00 A.M. and
run for either 8 hours or 16 hours, or it may be started at 2:00 P.M. and run for 8 hours (until
10:00 P.M.). All generators except the main generator are shut down at 10:00 P.M. Forecasts
indicate the need for 3,200 megawatts more than provided by the main genera- tor before 2:00
P.M., and this need goes up to 5,700 megawatts between 2:00 and 10:00 P.M. Generator 1 may
provide up to 2,400 megawatts, generator 2 may provide up to 2,100 megawatts, and
generator 3 may provide up to 3,300 megawatts. The cost per megawatt used per eight hour
period is $8 for 1, $9 for 2, and $7 for 3.
(a) Formulate this problem as an integer programming problem to determine the least-cost way to
meet the needs of the area.
(b) Solve using computer software.

SOLUTION

Objective: To minimize cost

6000(G1X1+G1X2+G1X3) + 5000(G2X1+G2X2+G2X3) + 4000(G3X1+G3X2+G3X3) +
8(G1Y1+G1Y2) + 9(G2Y1+G2Y2) + 7(G3Y1+G3Y2)
Variables:
G1X1=Generator 1 functioning at 6am-2pm
G1X2=Generator 1 functioning at 2pm-10pm
G1X3=Generator 1 functioning at 6am-10pm
G2X1=Generator 2 functioning at 6am-2pm
G2X2=Generator 2 functioning at 2pm-10pm
G2X3=Generator 2 functioning at 6am-10pm
G3X1=Generator 3 functioning at 6am-2pm
G3X2=Generator 3 functioning at 2am-10pm
G3X3=Generator 3 functioning at 6am-10pm
G1Y1=Megawatt produced by Generator 1 functioning at 6am-2pm
G1Y2=Megawatt produced by Generator 1 functioning at 2pm-10pm
G2Y1=Megawatt produced by Generator 2 functioning at 6am-2pm
G2Y2=Megawatt produced by Generator 2 functioning at 2pm-10pm

Constraint:
G1Y1 + G2Y1 + G3Y1 3200
G1Y2 + G2Y2 + G3Y2 5700

Requirement for megawatts at 6am-2pm

Requirement for megawatts at 2pm-10pm

G1Y1 2400 (G1X1 + G1X3)

G1Y1 2400G1X1 2400G1X3 0

Max megawatts generator 1 (6am-2pm)

G1Y2 2400(G1X2 + G1X3)

G1Y2 2400G1X2 -2400G1X3 0

Max megawatts generator 1 (2pm-10pm)

G2Y1 2100(G2X1 + G2X3)

G2Y1 2100G2X1 2100G2X3 0

Max megawatts generator 2 (6am-2pm)

G2Y2 2100(G2X2 + G2X3)

G2Y2 2100G2X2 2100G2X3 0

Max megawatts generator 2 (2pm -10pm)

G3Y1 3300(G3X1 + G3X3)

G3Y1 3300G3X1 3300G3X3 0

Max megawatts generator 3 (6am-2pm)

G3Y2 3300(G3X2 + G3X3)

G3Y2 3300G3X2 3300G3X3 0

Max megawatts generator 3 (2pm-10pm)

G1X1 + G1X2 + G1X3 1

G2X1 + G2X2 + G2X3 1
G3X1 + G3X2 + G3X3 1

Generator 1 start up
Generator 2 start up
Generator 3 start up

Data

Orignal problem with answer

Solution

G1X2=Generator 1 functioning at 2-10

G3X3=Generator 3 functioning at 6am-10pm
From the solution, generator 1 will be utilized in the period 2pm-10pm (G1X2) which generate
2,400 megawatts of electricity. Meanwhile, for generator 3, it will be utilized for 16 hours in the
period of 6am to 10pm(G3X3). It generates 3,200 megawatt at 6am-2pm (G3Y1)and 3,300
megawats at 2pm-10pm (G3Y2).

10-21 Geraldine Shawhan is president of Shawhan File Works, a firm that manufactures two types of
metal file cabinets. The demand for her two-drawer model is up to 600 cabinets per week;
demand for a three- drawer cabinet is limited to 400 per week. Shawhan File Works has a weekly
operating capacity of 1,300 hours, with the two-drawer cabinet taking 1 hour to produce and
the three-drawer cabinet requiring 2 hours. Each two-drawer model sold yields a $10 profit,
and the profit for the large model is $15. Shawhan has listed the following goals in order of
importance:
(a) Attain a profit as close to $11,000 as possible each week.
(b) Avoid underutilization of the firms production capacity.
(c) Sell as many two- and three-drawer cabinets as the demand indicates.
Set this up as a goal programming problem
10-22 Solve Problem 10-21. Are any goals unachieved in this solution? Explain.

SOLUTION
10-21:
X1 : two-drawer cabinet produced per week
X2 : three-drawer cabinet produced per week
Minimize deviation: P1D1- + P1D1+ +P2D2-+ P3D3-+P3D41. 10X1 + 15X2 +D1- - D1+ = 11000
2. 1X1 + 2X2 + D2- - D2+ = 1300
3. X1 + D3- - D3+ = 600
X2 + D4- - D4+ = 400
All Xi, Di variables 0

10-22

Data

The solution is to produce 500 two-drawer (X1) , and 400 three-drawer (X2) . Based on priority
analysis, priority 3 =100. This means that the sales goal is underachieved by 100.
100, meaning the two-drawer sales goal is underachieved by 100.

10-23 Hilliard Electronics produces specially coded com- puter chips for laser surgery in 64MB,
256MB, and 512MB sizes. (1MB means that the chip holds 1 mil- lion bytes of information.) To
produce a 64MB chip requires 8 hours of labor, a 256MB chip takes 13 hours, and a 512MB
chip requires 16 hours. Hilliards monthly production capacity is 1,200 hours. Mr. Blank, the
firms sales manager, esti- mates that the maximum monthly sales of the 64MB, 256MB,
and 512MB chips are 40, 50, and 60, respectively. The company has the following goals
(ranked in order from most important to least important):
1. Fill an order from the best customer for thirty 64MB chips and thirty-five 256MB chips.
2. Provide sufficient chips to at least equal the sales estimates set by Mr. Blank.
3. Avoid underutilization of the production capacity.
Formulate this problem using goal programming.

SOLUTION

X1 : 64MB chip
X2 : 256MB chip
X3 : 512MB chip
Minimize deviation: P1D1- + P1D2+ +P2D3-+ P2D4-+P2D5- +P3D61. X1 +D1- - D1+ = 30
X2 + D2- - D2+ = 35
2. X1 + D3- - D3+ = 40
X2 + D4- - D4+ = 50
X3 + D5- - D5+ = 60
3. 8X1+13X2+16X3 + D6- - D6+ = 1200
All Xi, Di variables 0

Using goal programming:

Data

Solution

Solution is to produce 40 64MB chip (X1) , 50 256MB chip (X2) and 60 512MB chip (X3) .

10-26 Mick Garcia, a certified financial planner (CFP) has been asked by a client to invest $250,000.
This money may be placed in stocks, bonds, or a mutual fund in real estate. The expected return
on investment is 13% for stocks, 8% for bonds, and 10% for real estate. While the client would
like a very high expected re- turn, she would be satisfied with a 10% expected re- turn on her
money. Due to risk considerations, several goals have been established to keep the risk at an acceptable level. One goal is to put at least 30% of the money in bonds. Another goal is that the
amount of money in real estate should not exceed 50% of the money invested in stocks and
bonds combined. In ad- dition to these goals, there is one absolute restriction. Under no
circumstances should more than $150,000 be invested in any one area.
(a) Formulate this as a goal programming problem.Assume that all of the goals are equally
important.
(b) Use any available software to solve this problem.
How much money should be put in each of the investment options? What is the total return?
Which of the goals are not met?
SOLUTION
X1 : Stock
X2 : Bond
X3 : Real Estate
Expected return :
Minimize deviation: P1D1- + P1D2- + P1D3+
1. 0.13X1 + 0.08X2 + 0.10X3 +D1- - D1+ = 0.1 ( Return on investment )
2. X2 + D2- - D2+ = 75000
(30% of the money in the bond)
3. X3 + D3- - D3+ = 0.5 (X1+X2) ( not exceed 50% money invested in stock and bonds combine)
X3 - 0.5X1 - 0.5X2 + D3- - D3+ = 0

Condition
X1 + X2 + X3 250000
X1 150000
X2 150000
X3 150000

All Xi, Di variables 0

Data

Solution

The solution is to invest $150000 in stock (X1), $75000 in bonds (X2) and $25000 in real estate
(X3). The total return of 10% is $25000 (10/100* $250000). Based on the solution, all goal are
met.