INTEGER

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PROGRAMMING

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 Learning Objectives
• Formulate integer programming (IP) models
• Set up and solve IP models using Excel’s Solver
• Understand the difference between general integer
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and binary integer variables
• Understand use of binary integer variables in
formulating problems involving fixed (or setup) costs

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 Types of Integer Variables

- General integer variables and

- Binary variables

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satisfies all constraints in the model

Binary variables can only take on either of two values: 0

or 1

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 Types of Integer Programming
Problems
1. Pure integer programming
– All decision variables must have integer solutions.
2. Mixed integer programming
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– Some, but not all, decision variables must have integer solutions.
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– Non-integer variables can have fractional optimal values.
3. Pure binary (or Zero - One) integer programming
– All decision variables are of special type known as binary.
– Variables must have solution values of either 0 or 1.
4. Mixed binary integer programming
– Some decision variables are binary, and other decision variables
are either general integer or continuous valued.

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 Models With General Integer
Variables
• A model with general integer variables (IP) has objective function and
constraints identical to LP models.
• No real difference in basic procedure for formulating an IP model and
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• Only additional requirement in IP model is one or more of the decision

variables have to take on integer values in the optimal solution.
• Actual value of this integer variable is limited by the model
constraints. (Values such as 0, 1, 2, 3, etc. are perfectly valid for these
variables as long as these values satisfy all model constraints.)

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 Models With Binary Variables
Binary variables restricted to values of 0 or 1.

• Model explicitly specifies that variables are binary

• Typical examples include decisions such as:

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– Introducing new product (introduce it or not),

– Building new facility (build it or not),

– Selecting team (select a specific individual or not), and

– Investing in projects (invest in a specific project or not)

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 Eastborne reality has $ 2 million available for purchase of new rental
property. After an initial screening, Eastborne 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.
Eastborne’s property manager can devote up to 140 hours per month
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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. Eastborne’s owner
would like to determine the number of townhouses and the number
of apartment buildings to purchase to maximize annual cash flows.

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 Solution to Eastborne Realty Problem

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 Capital Budgeting Problem – The Ice cold refrigerator company is considering investing in
several projects that have varying capital requirement over the next four years. Faced with
limited capital each year, management would like to select the most profitable project. The
estimated net present value for each project, the capital requirements and the available capital
over the four year period are shown in the below table,
Plant Warehouse New New Product Total Capital
Expansion Expansion Machinery Research Available
Present $ 90,000 $ 40,000 $ 10,000 $ 37,000
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Value
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Year 1 $ 15,000 $ 10,000 $ 10,000 $ 15,000 $ 40,000
Capital
Year 2 $ 20,000 $ 15,000 --- $ 10,000 $ 50,000
Capital
Year 3 $ 20,000 $ 20,000 --- $ 10,000 $ 40,000
Capital
Year 4 $ 15,000 $ 5,000 $ 4,000 $ 10,000 $ 35,000
Capital

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 Solution to Capital Budgeting Problem, Binary Integer Problem

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 Mixed Integer Problem – Three machines are available to make 5000 units of the same product,
which are required for the internal use of the company as components for another product. If
the production is to be done by any of these machines a set-up cost is incurred apart from the
cost of making each unit on different machines. The cost data are as given below. Formulate
an IPP for best production strategy.

Machine Set-up Cost (`) Cost per Unit (`) Max Production
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1 8,000 5 4000
2 5,000 4 3000
3 4,000 8 1000
Cost data for three machines

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 Solution to Mixed Integer Problem

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 Fixed Cost Problem – Three raw materials are used to produce three
products: a fuel additive, a solvent base and a carpet cleaning fluid.

F = tons of fuel additive produced

S = tons of solvent base produced
C = tons of carpet cleaning fluid produced.
Fuel Additive Solvent Base Carpet Cleaning Availability
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Profit Contribution per ton $ 40 $ 30 $ 50
Material 1 (tons) 0.4 0.5 0.6 20
Material 2 (tons) 0.2 0.1 5
Material 3 (tons) 0.6 0.3 0.03 21
Set Up Cost $ 200 $ 50 $ 400
Maximum Production (tons) 50 25 40

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 F S C SF SS SC
Profit 40 30 50 -200 -50 -400
Changing Cells 25 20 3.55E-15 1 1 0 Profit 1350

Constraints
Material 1 0.4 0.5 0.6 20 <= 20
Material 2 0.2 0.1 4 <= 5
Material 3
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0.6 0.3 0.3 21 <= 21
Maximum F
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Maximum S 1 -25 -5 <= 0
Maximum C 1 -40 3.55E-15 <= 0

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 Location and Transportation Data

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 Integer Programming Models
• Some business problems can be solved only if variables
have integer values.
– Airline decides on the number of flights to operate in a
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given sector must be an integer or whole number
amount.
– The number of aircraft purchased this year
– The number of machines needed for production
– The number of trips made by a sales person
– The number of police officers assigned to the night
shift.

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