University of Cincinnati

Optimization Models
BANA 7020
Fall 2018
Linear Programming Problems

This is an optional homework assignment to practice linear programming modeling.

You can submit your work for extra credit no later than Thursday September 27 at
the beginning of class.

Please submit a very informal hardcopy report (one report per group, up to 5
teammates in a group)

For each of the following problems provide a mathematical programming

formulation. Clearly indicate the decision variables, objective, and constraints.

1. Kelson Sporting Equipment, Inc., makes two different types of baseball gloves: a regular model
and a catcher’s model. The firm has 900 hours of production time available in its cutting and
sewing department, 300 hours available in its finishing department, and 100 hours available in
its packaging and shipping department. The production time requirements and the profit
contribution per glove are given in the following table:
Production Time (hours)
Cutting Packaging
Model and Sewing Finishing and Shipping Profit/Glove
Regular model 1 1/ 2 1/ 8 $5
Catcher’s model 3/ 2 1/ 3 1/ 4 $8
The company is interested in a production plan that maximizes the total profit contribution.

2. The Sea Wharf Restaurant would like to determine the best way to allocate a monthly advertising
budget of $1000 between newspaper advertising and radio advertising. Management decided
 that at least 25% of the budget must be spent on each type of media, and that the amount of
money spent on local newspaper advertising must be at least twice the amount spent on radio
advertising. A marketing consultant developed an index that measures audience exposure per
dollar of advertising on a scale from 0 to 100, with higher values implying greater audience
exposure. If the value of the index for local newspaper advertising is 50 and the value of the index
for spot radio advertising is 80, how should the restaurant allocate its advertising budget in order
to maximize the value of total audience exposure?

3. Blair & Rosen, Inc. (B&R) is a brokerage firm that specializes in investment portfolios designed
to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has
a maximum of $50,000 to invest. B&R’s investment advisor decides to recommend a portfolio
consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund
has a projected annual return of 12%, while the Blue Chip fund has a projected annual return of
9%. The investment advisor requires that at most $35,000 of the client’s funds should be
invested in the Internet fund. B&R services include a risk rating for each investment alternative.
The Internet fund, which is the more risky of the two investment alternatives, has a risk rating
of 6 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand
dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R’s
risk rating for the portfolio would be 6(10) + 4(10) = 100. Finally, B&R developed a
questionnaire to measure each client’s risk tolerance. Based on the responses, each client is
classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire
results classified the current client as a moderate investor. B&R recommends that a client who
is a moderate investor limit his or her portfolio to a maximum risk rating of 240. Formulate a
linear programming model to find the best investment strategy for this client.

4. Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans,
personal loans, and automobile loans. The annual rates of return for the three types of loans are
7% for home loans, 12% for personal loans, and 9% for automobile loans. The bank’s planning
committee has decided that at least 40% of the new funds must be allocated to home loans. In
addition, the planning committee has specified that the amount allocated to personal loans
cannot exceed 60% of the amount allocated to automobile loans. Formulate a linear
programming model that can be used to determine the amount of funds ASB should allocate to
each type of loan in order to maximize the total annual return for the new funds.
5. Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super
Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as
follows:
Rental Class
Super Saver Deluxe Business

Room Type I $30 $35 —

Type II $20 $30 $40

Type I rooms do not have wireless Internet access and are not available for the Business rental
class.
Round Tree’s management makes a forecast of the demand by rental class for each night in the
future. The demand forecast for a particular night is 130 rentals in the Super Saver class, 60
rentals in the Deluxe class, and 50 rentals in the Business class. Round Tree has 100 Type I rooms
and 120 Type II rooms. Develop a linear programming model to maximize profit by determining
how many reservations to accept for each rental class.

6. Industrial Designs has been awarded a contract to design a label for a new wine produced by
Lake View Winery. The company estimates that 150 hours will be required to complete the
project. The firm’s three graphic designers available for assignment to this project are Lisa, a
senior designer and team leader; David, a senior designer; and Sarah, a junior designer. Because
Lisa has worked on several projects for Lake View Winery, management specified that Lisa must
be assigned at least 40% of the total number of hours assigned to the two senior designers. To
provide label-designing experience for Sarah, Sarah must be assigned at least 15% of the total
project time. However, the number of hours assigned to Sarah must not exceed 25% of the total
number of hours assigned to the two senior designers. Due to other project commitments, Lisa
has a maximum of 50 hours available to work on this project. Hourly wage rates are $30 for Lisa,
$25 for David, and $18 for Sarah.
 Formulate a linear program that can be used to determine the number of hours each graphic
designer should be assigned to the project in order to minimize total cost.
 Assume that the requirement of assigning Sarah at least 15% of the total project time is
relaxed. Instead the firm would like to get close to 15% and considers a monetary loss of $5
for each percentual deviation below the goal.
7. PhotoTech, Inc., a manufacturer of rechargeable batteries for digital cameras, signed a contract
with a digital photography company to produce three different lithium-ion battery packs for a
new line of digital cameras. The contract calls for the following:
Battery Pack Production Quantity
PT-100 200,000
PT-200 100,000
PT-300 150,000
PhotoTech can manufacture the battery packs at manufacturing plants located in the
Philippines and Mexico. The unit cost of the battery packs differs at the two plants because of
differences in production equipment and wage rates. The unit costs for each battery pack at
each manufacturing plant are as follows:
Plant
Product Philippines Mexico
PT-100 $0.95 $0.98
PT-200 $0.98 $1.06
PT-300 $1.34 $1.15
The PT-100 and PT-200 battery packs are produced using similar production equipment
available at both plants. However, each plant has a limited capacity for the total number of PT-
100 and PT-200 battery packs produced. The combined PT-100 and PT-200 production
capacities are 175,000 units at the Philippines plant and 160,000 units at the Mexico plant. The
PT-300 production capacities are 75,000 units at the Philippines plant and 100,000 units at the
Mexico plant. The cost of shipping from the Philippines plant is $0.18 per unit, and the cost of
shipping from the Mexico plant is $0.10 per unit. Develop a linear program that PhotoTech can
use to determine how many units of each battery pack to produce at each plant in order to
minimize the total production and shipping cost associated with the new contract.

8. The Westchester Chamber of Commerce periodically sponsors public service seminars and
programs. Currently, promotional plans are under way for this year’s program. Advertising
alternatives include television, radio, and newspaper. Audience estimates, costs, and maximum
media usage limitations are as shown:
Constraint Television Radio Newspaper
Audience per advertisement 100,000 18,000 40,000
Cost per advertisement $2000 $300 $600
Maximum media usage 10 20 10
To ensure a balanced use of advertising media, radio advertisements must not exceed 50% of
the total number of advertisements authorized. In addition, television should account for at
least 10% of the total number of advertisements authorized. The promotional budget is limited
to $18,200.
a. how many commercial messages should be run on each medium to maximize total
audience contact?
b. Instead of maximizing the total audience, the chamber of commerce is interested in
spending all the given budget while ensuring a balanced amount of advertising in each
medium.

9. A revolutionary nutritionist is devising a new diet based on only 3 basic foods. The amount of

protein, sugar, and vitamins provided by each food and the cost per serving is displayed below.

Food Cost per serving Protein (g) Sugar (g) Vitamins (g)
Chocolate bar 2 2 1 2
Cookies 1 1 3 4
Ice cream 3 1 2 6

The daily requirement for protein, sugar, and vitamins is 100g, 50g, and 25g. A balanced diet

should satisfy:

 The daily requirement for protein, sugar, and vitamins.

 The number of servings of chocolate bars should be at least twice the number of servings
of cookies and ice cream combined
 The amount of money spent on ice cream should be less than or equal to the amount of
money spent on cookies
The goal of the nutritionist is to create a minimal-cost diet.

1. Formulate the problem as a linear program by following these steps:

a. Precisely define decision variables for the model
 b. State the objective function
c. State the constraint(s) that ensure that the diet satisfies the daily requirement
for protein, sugar, and vitamins
d. State the constraint(s) that ensure that the number of servings of chocolate bars
should be at least twice the number of servings of cookies and ice cream
combined
e. (5) State the constraint(s) that ensure that the amount of money spent on ice
cream should be less than or equal to the amount of money spent on cookies

Consider that now the goal is to balance the amount of servings of chocolate bars, cookies, and ice

cream in the diet.

2. Formulate a new model to achieve this new goal (please only define the new
objective, variables, and/or constraints needed and assume that the new model
already includes all the constraints defined in the previous question).

Consider the following situation. There is a shortage of chocolate bars so they are now priced at
2 dollars per serving for the first 50 servings and priced at 5 dollars per serving for any additional
serving that a buyer gets. (Example: if you get 10 servings the cost is 20=2x10 dollars, if you get
60 servings the cost is 150=2x50+5x10 dollars).

3. Formulate a new model to create a minimal-cost diet that accounts for the special
pricing described above (please only define the new objective, variables, and/or
constraints needed and assume that the new model already includes all the
constraints defined in question 1).
10. The Board of Education is planning the assignment of new students to schools for the next
year. The schools belonging to the district have reported the number of new students they
can receive (spots available). Also, student applications are complete, where each student
reported his/her preference for each school, ranging from 1 (most preferred) to 5 (least
preferred). In addition to satisfy, if possible, the student preference, the Board wants to
guarantee the shortest possible commute time for the students. For this reason, the Board
has decided that no student can be assigned to a school which is more than 11 miles from
his/her residence. In case a student cannot be assigned to the available schools, the Board
has established partnerships with other schools to guarantee his/her enrollment. However,
given their high cost, these partnerships should be used as a last resort. What is the optimal
assignment of students to schools so that the overall student satisfaction is the best possible?
An example of the available information is shown in the tables below (for 8 students and 5
schools).
a. Provide a general formulation for the problem (assume there are n students and m
schools).
b. The previous model focuses on the overall student satisfaction. However, some students
could be assigned to their least-preferred schools. For instance, consider two students, A
and B, that are assigned to schools with preferences 1 and 5, respectively. In this case,
the overall satisfaction is 6, with student A assigned to his/her most-preferred school but
with student B assigned to his/her least-preferred school. Suppose that in an alternative
assignment, student A and B are both assigned to schools with preference equal to 3. In
this case, the overall satisfaction is the same (=6) but the maximum dissatisfaction is
reduced (before it was 5, now is 3). Propose an alternative model to minimize the
maximum dissatisfaction.

School Spots available

1 15

2 10

3 5

4 7

5 5

Table 1: Spots available

 Table 2: Students preferences

Table 3: Students distance to schools