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 firm.
I

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

organization

Research: Use of the scientific method to investigate the problem

of interest

OR Models
Characteristics

All OR models share the same characteristics:

I

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
I

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 profit of $7; each chair produced is sold for a $5
profit.
Determine the best possible combination of tables and chairs in order to
reach the maximum profit.

Toy Model

The mathematical formulation of this problem is as follows1 : We want to

Max z = 5x1 + 7x2
subject to
3x1
x1

+4x2
+2x2

240
100

with xi 0, i = 1, 2.

1 We

shall use x1 to denote chairs and x2 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 profit of $120
and each 20-inch set produces a profit 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 x1 (resp. x2 ) be the number of 27-inch (resp. 20-inch) TV sets

produced. Let Z be the total profit per month.
The mathematical formulation of the model is
Max Z = 120x1 + 80x2
subject to
x1
20x1
with x1 0, x2 0.

x2
+10x2

40
10
500

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
Calories (per pound)
Vitamins (per pound)
Cost (per pound)

Feed Type A
800
140 units
$0.40

Feed Type B
1,000
70 units
$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

Brownie
Chocolate Ice Cream
(1 scoop)
Cola (1 bottle)
Pineapple
Cheesecake

Calories
400

Chocolate (oz)
3

Sugar (oz)
2

Fat (oz)
2

200
150

2
0

2
4

4
1

500

Problem 1, Problem Set 2.3A

A realtor is developing a rental housing and retail area. The housing area
consists of efficiency departments, duplexes and single-family homes.
Maximum demand by potential renters is estimated to be 500 efficiency
departments, 300 duplexes and 250 single-family homes, but the number
of duplexes must equal at least 50% of the number of efficiency
departments and single-family homes. Retail space is proportional to the
number of home units at the rates of at least 10 ft2 , 15 ft2 and 18 ft2 per
efficiency departments, duplexes and single-family homes, respectively.
However, land availability limits retail space to no more than 10,000 ft2 .
The monthly rental income is estimated at $600, $750 and $1200 for
efficiency-, duplex- and single-family units, respectively. The retail space
rents for $100/ft2 .
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 flavors from the two
suppliers are different, 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 fluctuations, 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 staff 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 offer
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 find 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 different, 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 first 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
1
2
3
4
5

Required space
(sq ft)
30,000
20,000
40,000
10,000
50,000

Leasing period
(months)
1
2
3
4
5

Cost per sq ft
Leased
$65
$100
$135
$160
$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

Orchard 1
Orchard 2
Orchard 3

Retailer 1
$1
$2
$1

Retailer 2
$2
$4
$3

Retailer 3
$3
$1
$5

Retailer 4
$2
$2
$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 offer
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

Orchard 1
Orchard 2
Orchard 3

Retailer 1
$1
$2
$1

Retailer 2
$2
$4
$3

Retailer 3
$3
$1
$5

Retailer 4
$2
$2
$3

Problem 3.4-9, HL

Larry Edison is the director of the Computer Center for Buckly College.
He now needs to schedule the staffing 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
8AM Noon
Noon 4PM
4PM 8PM
8PM Midnight

Minimum number of consultants

required to be on duty
4
8
10
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

1
2
3
4
5
6
Available
Funds ($1000)

10.5
8.3
10.2
7.2
12.3
9.2
60

14.4
12.6
14.2
10.5
10.1
7.8
70

2.2
9.5
5.6
7.5
8.3
6.9
35

2.4
3.1
4.2
5
6.3
5.1
20

Return
($1000)
32.4
35.8
17.75
14.9
18.2
12.35

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
% zinc
% tin
% lead
Cost ($/lb)

1
60
10
30
22

2
25
15
60
20

3
45
45
10
25

4
20
50
30
24

5
50
40
10
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
City 2
City 3

$600
$320
$500

$700
$300
$480

$400
$350
$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 five quarters is 200,
150, 300, 250, and 400 units, respectively. The manufacturer supplying
the engine has different production capacities estimated at 180, 230, 430,
300, and 300 units for the five quarters. Backordering is not allowed, but
the manufacturer can use overtime to fill the immediate demand, if
necessary. The overtime capacity for each period is half the regular
capacity.
The production costs per unit for the five 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:
I

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:

I

New employee in training: $400.

Trained employee: $700

Idle trained employee: $500

(Idle trained employees are not fired, as per companys policy.)

The company wishes to find 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 define xT ,j as the number of trained operators employed as
instructors, and xId,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 + xT ,J + xId,J = 130

150 + xT ,F + xId,F = 130 + 7xT ,J
200 + xT ,M + xId,M = 130 + 7xT ,J + 7xT ,F
250 = 130 + 7xT ,J + 7xT ,F + 7xT ,M

(January)
(February)
(March)
(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
I

Training costs (instructors and trainees)

Idle trained operators

Thus, the linear programming model is

A Multiperiod Model
Formulation The LP Model

Min z =400 (10xT ,J + 10xT ,F + 10xT ,M ) + 700 (xT ,J + xT ,F + xT ,M )

+ 500 (10xId,J + 10xId,F + 10xId,M )
subject to
xT ,J
7xT ,J
7xT ,J
7xT ,J

+xId,J
xT ,F
7xT ,F
+7xT ,F

All variables are positive or zero.

xId,F
xT ,M
+7xT ,M

xId,M

= 30
= 20
= 70
= 120

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
filled 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)
1
50
2
30
3
20
Daily number of customers

Number of aircrafts
5
8
10

Number of daily trips on route

1
2
3
4
3
2
2
1
4
3
3
2
5
5
4
2
1000
2000
900
1200

Associated costs, including penalties for losing customers because of space unavailability, are:

Aircraft type
1
2
3
Penalty ($) per lost customer

Operating costs ($) per trip on route

1
2
3
4
1000
1100
1200
1500
800
900
1000
1000
600
800
800
900
40
50
45
70

Develop a linear model for determining the optimum allocation of aircrafts to routes.

Optimal Allocation of Aircrafts to Routes

Let xij = number of aircraft of type i allocated to route j, i = 1, 2, 3,
j = 1, 2, 3, 4. Let Sj = 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(3x11
800(4x21 )
600(5x31 )
40S1

+1100(2x12 )
+900(3x12 )
+800(5x32 )
+50S2

+1200(2x13 )
+1000(3x13 )
+800(4x13 )
+45S3

The constraints are given in the following slides.

+1500(x14 )
+1000(2x24 )
+900(2x14 )
+70S4

Optimal Allocation of Aircrafts to Routes

Number of aircrafts available:
4
X

x1j 5,

j=1

4
X
j=1

x2j 8,

4
X

x3j 10

j=1

Daily number of customers:

50(3x11 ) + 30(4x21 ) + 20(5x31 ) S1 = 1000
50(2x12 ) + 30(3x22 ) + 20(5x32 ) S2 = 2000
50(2x13 ) + 30(3x23 ) + 20(4x33 ) S3 = 900
50(x14 ) + 30(2x24 ) + 20(2x34 ) S4 = 1200

Nonnegativity: xij 0, Sj 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
efficiency (1 ton of white sugar produces 0.95 ton of powdered sugar).
The profit 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 x1 = tons of brown sugar produced per week; let x2 = tons of white
sugar produced per week; let x3 = tons of powdered sugar produced per
week; and let x4 = tons of molasses produced per week.
A schematic of the production process is given below:
x1

x1+(1/(0.8)(x2+(x3/0.95)))

x2+(x3/0.95)

x2
x3/0.95

1:0.8

1:0.95
x3

1/(0.8)(x2+(x3/0.95))

0.3
One ton
of syrup

0.1

x4

Blending Models
Solution

The complete LP model is Max z = 150x1 + 200x2 + 230x3 + 35x4

subject to
 x i
1 h
3
x2 +
0.3(4000)
x1 +
0.8
0.95
x4 0.1(4000),
x1 25,
x2 25,
x3 25
x4 0.

Mixing Model
Two alloys are made from four metals M1, M2, M3 and M4 according to
the following specifications

Alloy
A

Specifications
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

Selling price
$200

$300

Mixing Model
The four metals, in turn, are extracted from three ores according to the
following data:

Ore
1
2
3

Max Qty
(tons)
1000
2000
3000

M1
20
10
5

Constituents (%)
M2
M3
10
30
20
30
5
70

M4
30
30
20

Others
10
10
0

Develop a linear programming model for determining the optimum alloy production.

Price/ton
($)
30
40
50

Mixing Model
Solution

Define xij = tons of ore i allotted to alloy k; wk = tons of alloy k

produced.
The objective function is
Max z = 200W1 + 300W2 30(x1A + x1B ) 40(x2A + x2B ) 50(x3A + x3B )
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

Wrenches

Regular
Overtime
Subcontracting
Regular
Overtime
Subcontracting

Chisels

Weekly production
range (units)
0 550
551 800
801
0 620
621 900
901

Formulate the problem as a linear program.

Unit costs ($)

2.00
2.80
3.00
2.10
3.20
4.20

Production Models
Solution

Let Wr , Cr be the number of wrenches and chisels manufactured using

regular time; let Wo , Co be the number of wrenches and chisels
manufactured using overtime; finally, let Ws , Cs be the number of
wrenches and chisels manufactured using subcontracting.
The objective function is Max
z = 2Wr + 2.80Wo + 3Ws + 2.10Cr + 3.20Co + 4.20Cs .
The proportion of chisels to wrenches gives
(Cr + Co + Cs ) 2(Wr + Wo + Ws )
Other constraints are
Wr 550,

Cr 620

Wo 250,

Co 280

Wr + Wo + Ws 1500,
All variables are 0.

Cr + Co + Cs 1200

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

Define the following decision variables:

I

xs , xg and xa tons of strawberry, grapes and apples purchased daily,

respectively.

xA , xB , xC cans of drink A, B, C produced daily. (Each can holds 16

oz.)
xsA , xsB pounds of strawberries used in drink A, B; xgA , xgB , xgC
pounds of grapes used in drink A, B, C ; xaB , xaC pounds of apples
used in drink B, C . (1 lb = 16 oz.)
The objective function is Maximize

z = 1.15xA + 1.25xB + 1.2xC 200xs 100xg 90xa

Blending Model
SolutionConstraints

We have three types of constraints:

I

Raw material.

Transformation from raw material to fruit juice.

Mixing the different fruit juices to prepare the three types of drinks
(proportion rates).

Blending Model
SolutionConstraints

Raw Material
xs 200,

xg 100,

xa 150

Transformation
xsA +xsB = 1500xs ,
xA = xsA + xgA ,

xgA +xgB +xgC = 1200xg ,

xB = xsB + xgB + xaB ,

xaB +xaC = 1000xa

xC = xgC + xaC ,

Proportion rates
xsA = xgA ,

xsB = xgB ,

All variables are positive.

xgB = 0.5xaB ,

3xgC = 2xaC

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 firm 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 flow associated with investing $1 in each investment is given in the
table below:
A
B
C
D
E

0
$1
$0
$1
$1
$0

1
+$0.50
$1
+$1.20
$0
$0

2
+$1
+$0.50
$0
$0
$1

3
$0
+$1
$0
+$1.9
+$1.50

For example, $1 invested in investment B requires $1 cash outflow 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 diversified, 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 flow 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 different 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
K.C.
D.H.
H.B.
S.C.
K.S.
N.K.

Wage Rate
$10.00/hour
$10.10/hour
$9.90/hour
$9.80/hour
$10.80/hour
$11.30/hour

Mon
6
0
4
5
3
0

Tue
0
6
8
5
0
0

Wed
6
0
4
5
3
0

Thurs
0
6
0
0
8
6

Fri
6
0
4
5
0
2

There are six operators (four undergraduate students and two graduate
students). They all have different 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 staff.
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 off-days
staggered throughout the week. For example, if 10 workers starts on
Monday, then a possible allocation of off-days is that 2 salespersons can
take their off-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 off-days be allocated?

Programming Human Resources

Let yij the number starting their working day on day i and having their
two days off on day j, j 6= i. The total number starting on day i
(regardless of when they have their days off) is
xi =

7
X

yij , j 6= i

j=1

The objective function is to minimize the total number of workers:

Min z = x1 + x2 + x3 + x4 + x5 + x6 + x7
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 final products from the refinery include
two types of unleaded gasoline: regular and premium. The refining
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 different production costs. The
company estimates that the net profit 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 profit values for the premium
grade are $10.40 and $12.30.

Blending Model

Design specifications 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 refinery.

Blending Model
Solution

Consider the following picture, which sums up the production process:

R x11

5:1

Cracker

Distillation

Crude

x12

Blender

R x21

x22

Blending Model
SolutionLP Model

The objective is to maximize

z = 7.70x11 + 5.20x21 + 10.40x12 + 12.30x22
subject to
5 (x11 + x12 + x21 + x22 ) 600, 000
x21 + x22 40, 000
x11 + x21 80, 000
x12 + x22 50, 000
xij 0, i, j = 1, 2.

Production Process Models

Winston, Section 3.9

AmeriCo Oil has three different 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 profit (revenue
minus costs). Assume that only 100 hours are available at the catalytic
cracker each week.

Production Process Models

SolutionObjective Function

Define gi = barrels of gasoline i produced weekly, i = 1, 2, 3; ok = barrels

of oil type k, k = 1, 2; xj = hours used in process j, j = 1, 2, 3.
The objective function is maximize
z = 9g1 + 10g2 + 24g3 5x1 4x2 x3 2o1 3o2

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 < 200
o2 < 300
x1 + x2 + x3 < 100
g1 = 2x1
g3 = 2x3
All variables are positive, or zero.

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 differ 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 refinery 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 profits. To
simplify matters, consider that the gasoline cannot be stored, so it must
be sold the day it is produced.
G1
G2
G3

Sales Price/bbl
$70
$60
$50

C1
C2
C3

Purchase Price/bbl
$45
$35
$25

Table: Per Barrel of Crude

C1
C2
C3

Octane Rating
12
6
8

Sulfur Content
0.5%
2.0%
3.0%

Winston, Section 3.8

SolutionDecision Variables

Let xij = the number of barrels of crude i used to produce gasoline j

(i, j = 1, 2, 3).
Thus,
xi1 + xi2 + xi3 ,
i = 1, 2, 3
is the number of barrels of crude i used daily, and
x1j + x2j + x3j ,

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 profit, which is calculated as

total revenues from selling gasoline minus total purchasing costs of
crude oil minus total transformation costs.

Max z =70 (x11 + x21 + x31 ) + 60 (x12 + x22 + x32 )

+ 50 (x13 + x23 + x33 )
45 (x11 + x12 + x13 ) 35 (x21 + x22 + x23 )
25 (x31 + x32 + x33 )
4 (x11 + x12 + x13 + x21 + x22 + x23 + x31 + x32 + x33 )
Thus, the objective is to maximize
z = 21x11 + 11x12 + x13 + 31x21 + 21x22 + 11x23 + 41x31 + 31x32 + 21x33

Winston, Section 3.8

SolutionDemand Constraints

The gasoline j, j = 1, 2, 3, produced daily should equal its demand:

x11 + x21 + x31 = 3000

Demand G1

x12 + x22 + x32 = 2000

Demand G2

x13 + x23 + x33 = 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:

x11 + x12 + x13 5000

Supply C1

x21 + x22 + x23 5000

Supply C2

x31 + x32 + x33 5000

Supply C3

Winston, Section 3.8

SolutionLimited Refinery Capacity

At most 14,000 barrels of gasoline can be produced daily:

x11 + x21 + x31 + x12 + x22 + x32 + x13 + x23 + x33 14, 000

Winston, Section 3.8

SolutionOctane Specifications

G1 must have an average octane rating of at least 10:

(12x11 + 6x21 + 8x31 ) 10 (x11 + x21 + x31 )
G2 must have an average octane rating of at least 8:
(12x12 + 6x22 + 8x32 ) 8 (x12 + x22 + x32 )
G3 must have an average octane rating of at least 62 :
(12x13 + 6x23 + 8x33 ) 6 (x13 + x23 + x33 )

2 This

constraint is redundant

Winston, Section 3.8

SolutionSulfur Specifications

G1 must contain at most 1% of sulfur:

(0.005x11 + 0.02x21 + 0.03x31 ) 0.01 (x11 + x21 + x31 )
G2 must contain at most 2% of sulfur:
(0.005x12 + 0.02x22 + 0.03x32 ) 0.02 (x12 + x22 + x32 )
G3 must contain at most 1% of sulfur:
(0.005x13 + 0.02x23 + 0.03x33 ) 0.01 (x13 + x23 + x33 )

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.