LP lec3 FORMAULATION OF LP MODELS

21. b. If the objective is to maximize the discount show that the LP model is :








Explain how we get this model.

X = No of km of highway built by A
Y = No of km of expressway built by A
Then
200-x = No of km of highway built by B
100-y= No of km of expressway built by B

D=x+6y+2(200-x)+5(100-y)=900-x+y
ConstarinT 1: As construction limit :


Constraint 2: Bs construction limit
( ) ( )
Constraint 3: Min Contract for A in millions of dollars


Constraint 4: Min contract for B: ( )
Constraint 5:Total highway built is 200km


Constraint 6: Total expressway built is 100 km



Transportation Model
To minimize total transportation cost while ensuring that
i) the no of units shipped from any origin does not exceed the no of units
available at that origin,
ii) the demand at each destination is met

App: In a city there are two locations at which salt and sand stockpile are
maintained for use during winter. Sall and sand are distributed from these two
locations to any of the four city zones.
Stockpile capacities and demand are given below;
1 2 3 4 Max supply
Stockpile 1 $2 $3 $1.50 $2.50 900
Stockpile 2 $4 $3.50 $2.50 $3 750
Demand 300 450 500 350


Decision variables are
eight:

Set up the LP model.

Min cost=

Capital Budgeting Models

Involves allocation of limited funds among competing investment alternatives.
To Maximize benefits subject to budgetary constraints and others.

App:
An agency has $1 billion to invest in research projects in energy alternatives. Six
projects were selected. The net benefit per dollar invested in each project over
the next 10 years is given below:



Project
1. Net benefit per dollar
invested
Requested funding in
millions of dollars
1.Solar 4.4 220
2.Solar 3.8 180
3.Synthetic fuels 4.1 250
4.Coal 3.5 150
5.Nuclear 5.1 400
6.Geothermal 3.2 120
The combined award to the two solar projects must be at least 300 million. The
nuclear project must be awarded at least 50% of the requested amount.

Set up the LP model to determine the amounts of money awarded to each
project in order to maximize total net benefits in dollars.

Let

Max z =

Z is in millions of dollars as x_j is in millions of dollars.

Max awards for projects lead to the following 6 constraints.

For nuclear project

()

For solar project

Non-negativity constraint: