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Integer Programming

Eastborne Realty has $2 million available to purchase new rental properties, including townhouses for $282,000 each (of which 5 are available) or apartment buildings for $400,000 each. Their property manager can devote up to 140 hours per month to the properties, with each townhouse requiring 4 hours and each apartment building 40 hours. They want to maximize annual cash flow, estimated at $10,000 per townhouse and $15,000 per apartment building. This can be modeled as an integer linear program to determine the optimal number of townhouses and apartment buildings to purchase.

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Abhay Limbu
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243 views

Integer Programming

Eastborne Realty has $2 million available to purchase new rental properties, including townhouses for $282,000 each (of which 5 are available) or apartment buildings for $400,000 each. Their property manager can devote up to 140 hours per month to the properties, with each townhouse requiring 4 hours and each apartment building 40 hours. They want to maximize annual cash flow, estimated at $10,000 per townhouse and $15,000 per apartment building. This can be modeled as an integer linear program to determine the optimal number of townhouses and apartment buildings to purchase.

Uploaded by

Abhay Limbu
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Integer Programming

APPLICATIONS: Capital Budgeting Site Selection (Case 4) Designing Production and Distribution Network Scheduling Activities Fleet Assignment

INTEGER PROGRAMMING
EASTBORNE REALTY HAS $2,000,000 AVAILABLE FOR THE PURCHASE OF NEW RENTAL PROPERTY. AFTER AN INITIAL SCREENING EASTBORNE HAS REDUCED THE INVESTMENT ALTERNATIVES TO TOWNHOUSES AND APARTMENT BUILDINGS. EACH TOWNHOUSE CAN BE PURCHASED FOR $282,000, AND FIVE ARE AVAILABLE. EACH APARTMENT BUILDING CAN BE PURCHASED FOR $400,000, AND THE DEVELOPER WILL CONSTRUCT AS MANY BUILDINGS AS EASTBORNE WANTS TO PURCHASE. EASTBORNES PROPERTY MANAGER CAN DEVOTE UP TO 140 HOURS PER MONTH TO THESE NEW PROPERTIES; EACH TOWNHOUSE IS EXPECTED TO REQUIRE 4 HOURS PER MONTH, AND EACH APARTMENT BUILDING IS EXPECTED TO REQUIRE 40 HOURS PER MONTH. THE ANNUAL CASH FLOW, AFTER DEDUCTING MORTGAGE PAYMENTS AND OPERATING EXPENSES, IS ESTIMATED TO BE $10,000 PER TOWNHOUSE AND $15,000 PER APARTMENT BUILDING. EASTBORNES OWNER WOULD LIKE TO DETERMINE THE NUMBER OF TOWNHOUSES AND THE NUMBER OF APARTMENT BUILDINGS TO PURCHASE TO MAXIMIZE ANNUAL CASH FLOW.

THE MODEL FOR THE EASTBORNE REALTY PROBLEM IS THE FOLLOWING ALL-INTEGER LINEAR PROGRAM. Max s.t. 282T + 400A 2000 4T + 40A T 140 5 10T + 15A

T, A 0 and integers

GRAPHICAL SOLUTION OF THE EASTBORNE REALTY INTEGER PROBLEM

NUMBER OF APARTMENT BUILDINGS

6 5 4 3
MANAGERS TIME CONSTRAINT

T=2.479 A=3.252 T=2 A=3

NOTE: DOTS SHOW THE LOCATION OF FEASIBLE INTEGER SOLUTIONS AVAILABLE FUNDS CONSTRAINT

2
OB JE CT IV EF UN CT IO

TOWNHOUSE AVAILABILITY CONSTRAINT

N=

73. 574

GRAPHICAL SOLUTION OF THE EASTBORNE REALTY INTEGER PROBLEM

NUMBER OF APARTMENT BUILDINGS

6 5 4 3
MANAGERS TIME CONSTRAINT NOTE: DOTS SHOW THE LOCATION OF FEASIBLE INTEGER SOLUTIONS AVAILABLE FUNDS CONSTRAINT OPTIMAL INTEGER SOLUTION T = 4, A = 2

2
OB JE CT IV EF UN CT IO

TOWNHOUSE AVAILABILITY CONSTRAINT

N=

70

BRANCH AND BOUND ALGORITHM (DANKINS BRANCHING METHOD)


CONSIDER THE PROBLEM MAX.

X 0 = 3X1 + 4X 2

S.T.

7 X1 + 16X 2 52 3X1 2X 2 9

X 1 , X 2 0 AND INTEGERS

THE COMPLETE TREE IS


N(1)

X 1 = 4, X 2 =

3 2

X0 = 18
X2 2

X2 1
N(2)

X1 3
N(8)

11 X1 = , X 2 = 1 X 0 = 15 3 X1 4
N(9)
NO FEASIBLE SOLUTION

N(3)

X1 =

20 116 , X2 = 2 X0 = 7 7
X1 3
NO N(5) FEASIBLE SOLUTION

X 1 = 3, X 2 = 1 X 0 = 13

N(4)

X1 2 19 31 X 1 = 2, X 2 = X0 = 8 2 X2 3

X2 2
N(6)

X1 = 2, X 2 = 2 L B = X 0 = 1 4
N(7)

4 X1 = , X 2 = 3 X 0 7

96 7

N(7) & N(8) ARE FATHOMED NODES OPTIMAL SOLUTION IS N(6)

Integer Programming

Travelling Salesman Problem

2 35 20 1 10 10 5 20 4 THE COST MATRIX OF THE PROBLEM IS 20 15 30 3

TABLE - 1
TO FROM 1 2 3 4 5 1 20 10 10 2 20 30 35 3 30 15 20 4 10 15 20 5 10 35 20 20

TABLE - 2
0 0 0 10 15 25 10 5 10 0 0 10 0 15 5 10

65

TABLE - S
0 5 0 0 0 5 0 5 5 15 5 0 5 5 0 0 0 5 10 10 15 5 0 5

80

Integer Programming
The Ice-cold Refrigerator Company is considering investing in several projects that have varying capital requirements over the next 4 years. Faced with limited capital each year, management would like to select the most profitable projects. The estimated net present value for each project, the capital requirements, and the available capital over the 4year period are shown below:

Ex

Integer Programming
P=1 if plant expansion project is accepted; 0 if rejected W=1 if the warehouse expansion project is accepted; 0 if rejected M=1 if the new machinery project is accepted; 0 if rejected R=1 if the new product research project is accepted; 0 if rejected. A 0-1 integer LP model is as follows: Max. 90P+40W+10M+37R s.t. 15P+10W+10M+15R<=40 (Year 1 capital available) 20P+15W +10R<= 35 (Year 2 capital available) 20P+20W +10R<= 40 (Year 3 capital available) 15P+ 5W+ 4M+10R<= 30 (Year 4 capital available) P,W,M, R = 0,1

SENSITIVITY ANALYSIS

MAXIMIZE 40X1 + 60X2 + 70X3 + 160 X4 SUBJECT TO 16 X1 + 35X2 + 45X3 + 85X4 <= 100 Xi = (0,1) SOLUTION: X1=X2=X3=1, X4=0: X0=170 ( X1=1=X4, X2=X3=0): X0= 200.

Integer Programming
Case 4. National Bank Assignment 3. Assigning Students to Schools

Integer Programming
ILP/ BIP/MIP LP Relaxation Fixed Charge Problem Location Either Or Constraint K Out of N Constrains W< P,W=P

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