Modeling with Linear Programming otal of $500, which may be played only once. The exact outeo, cima aol acum a priori Because of this uncertainty, the gamblers strategy . ane avze the minimum return produced by the three outcomes. How should the antler allocate the $500 among the four choices? Solve the model using Solver og RMI (in The gambler’ net return may be positive ero.or negative) Lewis (1996). Monthly bills in a household are received monthly (e-g., utilities and ho, 7. onenea: Cluarterly (eg.-estimated tax payments), semiannually insurance) ge™ annus (eg aubscription renewals and dues). The following table provides the mony, bills for next year. 40 Chapter 2 Aug. Sep. Oct. Nov. Dec, 1000 900 1100 1300 1600 May June July 1500 Month | Jan. Feb. Mar. Apr. 800 1200 400 700 600 To account for these expenses, the family sets aside $1000 per month, which is the averag. of the total divided by 12 months If the money is deposited in a regular savings account, i .d it stays in the account at least 1 month. The bank can earn 4% annual interest, provide \ also offers 3-month and 6-month certificates of deposit that can earn 5.5% and 7% annua interest, respectively. Develop a 12-month investment schedule that will maximize the family’s total return for the year. State any assumptions or requirements needed to reach a feasible solution. Solve the model using Solver of AMPL. 900 4.2 Production Planning and Inventory Control There is a wealth of LP applications to production planning and inventory control. This section presents three examples. The first deals with production scheduling to meet a single. period demand. The second deals with the use of inventory in a multiperiod production system to meet future demand, and the third deals with the use of inventory and worker hiring/firing to “smooth” production over a multiperiod planning horizon. Example 2.4-2 (Single-Period Production Model) In preparation for the winter season, a clothing company is manufacturing parka and goose overcoats, insulated pants, and gloves. All products are manufactured in four different depart. ments: cutting, insulating, sewing, and packaging. The company has received firm orders for its products. The contract stipulates a penalty for undelivered items. Devise an optimal production plan for the company based on the following data: Time per units (hr) Department Parka’ Goose Pa Gloves Capacity (hr) Cutting 30 30 96 15 1000 Insulating 25 35 10 1000 Sewing 45 50 2 1000 Packaging AS AS 05 1000 Demand 800 750 600 500 Unit profit $30 $40 $20 $10 Unit penalty $15 $20 $10 $8 pee A ce eee2.4 Linear Programming Applications 41 Mathematical Model: The variables of the problem are 44, = number of parka jackets x = number of goose jackets X3 = number of pairs of pants X4 = number of pairs of gloves ‘The company is penalized for not meeting demand. The objective then is to maximize the net Profit, defined as Net profit = Total profit — Total penalty The total profit is 30x, + 40x. + 20x; + 10x4. To compute the total penalty, the demand con: straints can be written as 1 + 5, = 800, x2 + 52 = 750, x3 + 33 = 600, x4 + 54 = 500, x, = 0,5, 20,j = 1,2,3,4 The new variable 5; represents the shortage in demand for product j, and the total penalty can be computed as 15s, + 20s, + 10s; + 854. The complete model thus becomes Maximize z = 30x, + 40x, + 20x3 + 10x4 — (155, + 20s, + 10s; + 854) subject to 30x, + 30x) + 25x53 + .15x4 < 1000 25x, + 35x2 + 30x; + .10x4 < 1000 45x, + 50x2 + 40x; + .22x4 = 1000 15x, + .15x, + .10x3 + .05x4 = 1000 800, x2 + 5) = 750, x3 + 53 = 600, x4 + 54 = 500 =0,j = 1,2,3,4 xy+tH= x; = 0, Solution: The optimum solution (obtained using file amplEx2.4-2.txt) is z = $64,625, x; = 800, x2 = 750; x3 = 387.5, x4 = 500, 51 = 52 = 54 = 0,53 = 212.5. The solution satisfies all the demand for both types of jackets and the gloves. A shortage of 213 (rounded up from 212.5) pairs of pants will result in a penalty cost of 213 x $10 = $2130. Example 2.4-3 (Multiple Period Production-Inventory Model) Acme Manufacturing Company has a contract to deliver 100, 250, 190, 140, 220, and 110 home windows over the next 6 months. Production cost (labor, material, and utilities) per window . $48, $52, and $50 over the next 6 months. cturing cost, Acme can produce more win- e extra units for delivery in later months. This varies by period and is estimated to To take advantage of th dows than needed in a giveri mot:316 Chapter 9 integer Linear Programming Hor convenience, a problem is defined as a pure integer Program when o, integerianad ntc8e®: Else, itis a mixed integer program (MIP) Invalving mixta the integer and continuous variables, me ot 9.1.1 Capital Budgeting Decisions about whether or not to undertake a project is usually made under limited. Considerations and preset priorities The next example deals with one of these situations Example 9.1-1_ (Project Selection) on Five projects are being evaluated over a 3-year planning horizon. The following table gives y expected returns for each project and the associated yearly expenditures. the Expenditures ($ millionyyear Project 1 2 3 Returns ($ milion) H 3 i 8 20 2 4 7 10 0 3 3 9 2 20 4 7 4 1 15 5 8 6 10 30 Available funds (§ million) 25 25 25 Which projects should be selected over the 3-year horizon? ‘The problem reduces to a “yes-no” decision for each project. Define the binary variable x, a5 i ae { 1, if project jis selected _ 0, if project j is not selected The ILP model is Maximize z = 20x, + 40x, + 20x3 + 15x4 + 30x subject to Sey + dx, + 3x3 + Tay + 8x5 < 25 X1 + Ixy + 9x, + 4x4 + 6x5 < 25 8x, + 10x, + 2x3 + x4 + 10x5 < 25 Hy X2y X35 X45 X5 = (0,1) The optimum integer solution (obtained by AMPL, Solver, or TORA)! is x == 43 = 4 75 = O,with z = 95 ($ million). The solution excludes project 5 from the product nix. "To use TORA, select Integer Progr screen, and select Automated B&H the targeted variables must be de Parameters dialogue box when yeu adc same as in linear programn integer (or binary) in var x{J}>=0, integer tovar x{J} binary; om Main Meni. After entering the problem data, goto outpt ‘nun solution. Solver use is the same as in LP except that “he integer option (int of bin) is available in the Solver *'s\, AMPL implementation for integer programming she ne variables are declared integers by adding the key word * the targeted variables, For example, the statement ger for all je J.Ifxjis binary, the statements changed ‘option solver cplex; must precede solve; .9.1 Illustrative Applications Remarks. It is interesting to compare the continuous LP sol solution. The LP ‘ optimum, obtained by replacing x, = (0,1) with on pimitsoen ate | yale x, = 5789, ' a2 = 42 = 44" 1 Xs = 7368, and @ = 108.68 ($ million), {he solution is meaningless because ' binary *1 and x5 assume fractional values. We may round the solution to the closest integer, which yields x1 © xs = 1. However, the resulting solution violates the constraints. Moreover, the concept of rounding is meaningless here because 4) Tepresents a““yes-no” § PROBLEM SET 9.1A2 1. Modify and solve the capital budgeti 1 -1 to account for the following additional restrictions, 1 Of Example 91-1 to account for (a) Project 5 must be selected if either Project 1 or project 3 is selected. (b) Projects 2 and 3 are mutually exclusive. 2. Five items are to be loaded in a vessel, The wei for item i 4 tabulated bac e weight w), volume v,, and value r; for Item? Unit weight, 1, (tons) Unit volume, vi (yd*) Unit worth, 7, ($100) : 5 1 4 2 8 8 7 3 3 6 6 4 2 5 5 5 7 4 4 NA) The maximum allowable cargo weight and volume are 112 tons and 109 yd, respectively. Formulate the ILP model, and find the most valuable cargo. *3, Suppose that you have 7 full wine bottles, 7 half-full, and 7 empty. You would like to divide the 21 bottles among three individuals so that each will receive exactly 7. Additionally, each individual must receive the same quantity of wine. Express the y problem as ILP constraints, and find a solution. (Hint: Use a dummy objective function in which all the objective coefficients are zeros.) 4, An eccentric sheikh left a will to distribute a herd of camels among his three children: Tarek receives at least one-half of the herd, Sharif gets at least one third, and Maisa gets at least one-ninth. The remainder goes to charity. The will does not specify the size of the herd except to say that it is an odd number of camels and that the named charity receives exactly one camel. Use ILP to determine how many camels the sheikh left in the estate and how many each child got. 5. The three children of a farm couple are sent to the market to sell 90 apples. Karen, the oldest, carries 50 apples; Bill, the middle one, carries 30; and John, the youngest, carries only 10. The parents have stipulated five rules: (a) The selling price is either $1 for 7 apples or $3 for 1 apple, or a combination of the two prices. (b) Each child may exercise one or both options of the selling price. (c) Each of the three children must return with exactly the same amount of money. (d) Each child’s income must be in whole dollars (no cents allowed). (¢) Ehe amount received by each child must be the largest possible Problems 3 to 6 are adap Pp. 39-182, 1994. Problem puzzles/puzzles1.html. Yahan, El Hombre que Calculaba, Editoriat Limusa, Mexico Cit adapted from puzzles compiled in http://www.chlond.demon.cou