LinearProgrammingApplications

Chapter4
LinearProgrammingApplications
2.

a.

Let

x1=unitsofproduct1produced
x2=unitsofproduct2produced
Max

30x1

15x2

x1
0.30x1

100

Dept.A

0.35x2
0.20x2

36

Dept.B

0.20x1

0.50x2

50

Dept.C

s.t.

x1,x20
Solution:x1=77.89,x2=63.16Profit=3284.21
b.

ThedualpriceforDept.Ais$15.79,forDept.Bitis$47.37,andforDept.Citis$0.00.Therefore
wewouldattempttoscheduleovertimeinDepartmentsAandB.Assumingthecurrentlabor
availableisasunkcost,weshouldbewillingtopayupto$15.79perhourinDepartmentAandup
to$47.37inDepartmentB.

c.

Let

xA=hoursofovertimeinDept.A
xB=hoursofovertimeinDept.B
xC=hoursofovertimeinDept.C

Max

30x1

15x2

18xA

x1
0.30x1

0.35x2

xA

0.20x2

0.20x1

0.50x2

22.5xB

12xC

s.t.

xB

xC

xA
xB
xC
x1,x2,xA,xB,xC0
x1=87.21

100

36

50

10

Chapter4
x2=65.12
Profit=$3341.34
Overtime
Dept.A
Dept.B
Dept.C

10hrs.
3.186hrs
0hours

IncreaseinProfitfromovertime=$3341.343284.21=$57.13
6.

Let

x1=unitsofproduct1
x2=unitsofproduct2
b1=laborhoursDept.A
b2=laborhoursDept.B
Max

25x1

+ 20x2

0b1

6x1
12x1

1b1

0b2

s.t.
8x2
+ 10x2

1b1

1b2

1b2

900

x1,x2,b1,b20
Solution:x1=50,x2=0,b1=300,b2=600Profit:$1,250
8.

Let

x1=thenumberofofficersscheduledtobeginat8:00a.m.
x2=thenumberofofficersscheduledtobeginatnoon
x3=thenumberofofficersscheduledtobeginat4:00p.m.
x4=thenumberofofficersscheduledtobeginat8:00p.m.
x5=thenumberofofficersscheduledtobeginatmidnight
x6=thenumberofofficersscheduledtobeginat4:00a.m.

Theobjectivefunctiontominimizethenumberofofficersrequiredisasfollows:
Min

x1+x2+x3+x4+x5+x6

Theconstraintsrequirethetotalnumberofofficersofdutyeachofthesixfourhourperiodstobeat
leastequaltotheminimumofficerrequirements.Theconstraintsforthesixfourhourperiodsare
asfollows:
TimeofDay
8:00a.m.noon
noonto4:00p.m.

x1
x1

+ x6
+ x2

5
6

LinearProgrammingApplications
4:00p.m.8:00p.m.

x2

8:00p.m.midnight

+ x3
x3

midnight4:00a.m.

10
+ x4
x4

4:00a.m.8:00a.m.

7
+ x5
x5

4
+ x6

x1,x2,x3,x4,x5,x60
Schedule19officersasfollows:
x1=3beginat8:00a.m.
x2=3beginatnoon
x3=7beginat4:00p.m.
x4=0beginat8:00p.m.
x5=4beginatmidnight
x6=2beginat4:00a.m.
11.

Let
Min

xij=unitsofcomponentipurchasedfromsupplierj
12x11

13x1

+ 14x13

+ 10x21

+ 11x22

+ 10x23

2
s.t.
x11

x1

x13

= 1000

2
x21
x11

+ x22

+ x23

+ x21
x1

800

600

1000

+ x22

2
x13

x23

x11,x12,x13,x21,x22,x230
Solution:
1
Component1
Component2

17. a.

Let

FM
FP
SM
SP
TM
TP

600
0

Supplier
2

400
0
0
800
PurchaseCost=$20,400

=numberofframesmanufactured
=numberofframespurchased
=numberofsupportsmanufactured
=numberofsupportspurchased
=numberofstrapsmanufactured
=numberofstrapspurchased

800

Chapter4

Min
s.t.

38FM
3.5FM
2.2FM
3.1FM
FM

+ 51FP

+ 11.5SM
+
+
+

+ 15SP

1.3SM
1.7SM
2.6SM

+ 6.5TM

+ 7.5TP

+ 0.8TM
+ 1.7TM

FP
SM

SP
TM

TP

21,000
25,200
40,800
5,000
10,000
5,000

FM,FP,SM,SP,TM,TP0.
Solution:
Frames
Supports
Straps

Manufacture

Purchase

5000
2692
0

0
7308
5000

b.

TotalCost=$368,076.91

c.

Subtractvaluesofslackvariablesfromminutesavailabletodetermineminutesused.Divideby60
todeterminehoursofproductiontimeused.
Constraint
1
2
3

Cutting:
Milling:
Shaping:

Slack=0350hoursused
(252009623)/60=259.62hours
(4080018300)/60=375hours

d.

Nothing,therearealreadymorehoursavailablethanarebeingused.

e.

Yes.Thecurrentpurchasepriceis$51.00andthereducedcostof3.577indicatesthatfora
purchasepricebelow$47.423thesolutionmayimprove.ResolvingwiththecoefficientofFP=
45showsthat2714framesshouldbepurchased.
Theoptimalsolutionisasfollows:

OPTIMALSOLUTION
ObjectiveFunctionValue=361500.000
VariableValueReducedCosts

FM2285.7140.000
FP2714.2860.000
SM10000.0000.000
SP0.0000.900
TM0.0000.600
TP5000.0000.000

LinearProgrammingApplications

ConstraintSlack/SurplusDualPrices

10.0002.000
23171.4290.000
37714.2860.000
40.00045.000
50.00014.100
60.0007.500
19. a.

Let

x11=amountofmen'smodelinmonth1

x21=amountofwomen'smodelinmonth1

x12=amountofmen'smodelinmonth2

x22=amountofwomen'smodelinmonth2
s11=inventoryofmen'smodelatendofmonth1
s21=inventoryofwomen'smodelatendofmonth1
s12=inventoryofmen'smodelatendofmonth2
s22=inventoryofwomen'smodelatendofmonth
Themodelformulationforpart(a)isgiven.
Min

120x11+90x21+120x12+90x22+2.4s11+1.8s21+2.4s12+1.8s22

s.t.
20 +x11s11 = 150
or

x11s11 = 130

SatisfyDemand

[1]

SatisfyDemand

[2]

s11 +x12s12 = 200

SatisfyDemand

[3]

s21 +x22s22 = 150

SatisfyDemand

[4]

30 +x21s21 = 125
or
x21s21 = 95

s12

25

EndingInventory

[5]

s22

25

EndingInventory

[6]

3.5x11+2.6x21900

LaborSmoothing for

[7]

3.5x11+2.6x211100

Month1

[8]

3.5x11+2.6x213.5x122.6x22100

LaborSmoothing for

[9]

3.5x112.6x21+3.5x12+2.6x22100

Month2

[10]

LaborHours:

Mens=2.0+1.5=3.5
Womens=1.6+1.0=2.6

Chapter4

x11,x12,x21,x22,s11,s12,s21,s220
Theoptimalsolutionistoproduce193ofthemen'smodelinmonth1,162ofthemen'smodelin
month2,95unitsofthewomen'smodelinmonth1,and175ofthewomen'smodelinmonth2.
TotalCost=$67,156
InventorySchedule
63Men's
25Men's

Month1
Month2

0Women's
25Women's

LaborLevels
1000.00hours
922.25hours
1022.25hours

Previousmonth
Month1
Month2
b.

Toaccommodatethisnewpolicytherighthandsidesofconstraints[7]to[10]mustbechangedto
950,1050,50,and50respectively.Therevisedoptimalsolutionisgiven.
x11=201
x21=95
x12=154
x22=175

TotalCost=$67,175

Weproducemoremen'smodelsinthefirstmonthandcarryalargermen'smodelinventory;the
addedcosthoweverisonly$19.Thisseemstobeasmallexpensetohavelessdrasticlaborforce
fluctuations.Thenewlaborlevelsare1000,950,and994.5hourseachmonth.Sincetheadded
costisonly$19,managementmightwanttoexperimentwiththelaborforcesmoothingrestrictions
toenforceevenlessfluctuations.Youmaywanttoexperimentyourselftoseewhathappens.
21.

Decisionvariables:Regular
Model
Bookshelf
Floor

Month1
B1R
F1R

Month2
B2R
F2R

Month1
B1O
F1O

Month2
B2O
F2O

Regular
.7(22)=15.40
1(22)=22

Overtime
.7(33)=23.10
1(33)=33

Decisionvariables:Overtime
Model
Bookshelf
Floor
Laborcostsperunit
Model
Bookshelf
Floor

LinearProgrammingApplications

IB=Month1endinginventoryforbookshelfunits
IF=Month1endinginventoryforfloormodel
Objectivefunction
Min
+
+
+
+

15.40B1R+15.40B2R+22F1R+22F2R
23.10B1O+23.10B2O+33F1O+33F2O
10B1R+10B2R+12F1R+12F2R
10B1O+10B2O+12F1O+12F2O
5IB+5IF

or
Min
25.40B1R+25.40B2R+34F1R+34F2R
+ 33.10B1O+33.10B2O+45F1O+45F2O
+ 5IB+5IF
s.t.
.7B1R+1F1R 2400 Regulartime:month1
.7B2R+1F2R 2400 Regulartime:month2
.7B1O+1F1O 1000 Overtime:month1
.7B2O+1F2O 1000 Overtime:month2
B1R+B1OIB = 2100 Bookshelf:month1
IB+B2R+B2O = 1200 Bookshelf:month2
F1R+F1OIF = 1500 Floor:month1
IF+F2R+F2O = 2600 Floor:month2
OPTIMALSOLUTION
ObjectiveFunctionValue=241130.000
VariableValueReducedCosts

B1R2100.0000.000
B2R1200.0000.000
F1R930.0000.000
F2R1560.0000.000
B1O0.0000.000
B2O0.0000.000
F1O610.0000.000
F2O1000.0000.000
IB0.0001.500
IF40.0000.000
ConstraintSlack/SurplusDualPrices

10.00011.000
20.00016.000
3390.0000.000
40.0005.000
50.00033.100

Chapter4

60.00036.600
70.00045.000
80.00050.000
OBJECTIVECOEFFICIENTRANGES
VariableLowerLimitCurrentValueUpperLimit

B1R23.90025.40025.400
B2RNoLowerLimit25.40025.400
F1R34.00034.00036.143
F2R34.00034.00050.000
B1O33.10033.100NoUpperLimit
B2O33.10033.100NoUpperLimit
F1O40.00045.00045.000
F2ONoLowerLimit45.00045.000
IB3.5005.000NoUpperLimit
IF0.0005.0007.143
RIGHTHANDSIDERANGES
ConstraintLowerLimitCurrentValueUpperLimit

12010.0002400.0003010.000
22010.0002400.0002440.000
3610.0001000.000NoUpperLimit
4610.0001000.0001040.000
51228.5712100.0002657.143
61142.8571200.0001757.143
7890.0001500.0001890.000
82560.0002600.0002990.000
23.

Let

F
M
A
Im
Dm
sm

=
=
=
=
=
=

numberofwindowsmanufacturedinFebruary
numberofwindowsmanufacturedinMarch
numberofwindowsmanufacturedinApril
increaseinproductionlevelnecessaryduringmonthm
decreaseinproductionlevelnecessaryduringmonthm
endinginventoryinmonthm

Min

1I1+1I2+1I3+0.65D1+0.65D2+0.65D3

s.t.
9000+Fs1=15,000

FebruaryDemand

or
(1)

F1s1=6000

(2)

s1+Ms2=16,500

MarchDemand

(3)

s2+As3=20,000

AprilDemand

F15,000=I1D1

ChangeinFebruaryProduction

LinearProgrammingApplications
or
(4)

FI1+D1=15,000
MF=I2D2

ChangeinMarchProduction

or
(5)

MFI2+D2=0
AM=I3D3

ChangeinAprilProduction

or
(6)

AMI3+D3=0

(7)

F14,000

FebruaryProductionCapacity

(8)

M14,000

MarchProductionCapacity

(9)

A18,000

AprilProductionCapacity

(10)

s16,000

FebruaryStorageCapacity

(11)

s26,000

MarchStorageCapacity

(12)

s36,000

AprilStorageCapacity

OptimalSolution:Cost=$6,450

ProductionLevel
IncreaseinProduction
DecreaseinProduction
EndingInventory

February
12,000
0
3,000
6,000

CaseProblem3:TextileMillScheduling
Let X3R=Yardsoffabric3onregularlooms
X4R=Yardsoffabric4onregularlooms
X5R=Yardsoffabric5onregularlooms
X1D=Yardsoffabric1ondobbielooms
X2D=Yardsoffabric2ondobbielooms
X3D=Yardsoffabric3ondobbielooms
X4D=Yardsoffabric4ondobbielooms
X5D=Yardsoffabric5ondobbielooms
Y1=Yardsoffabric1purchased
Y2=Yardsoffabric2purchased
Y3=Yardsoffabric3purchased
Y4=Yardsoffabric4purchased
Y5=Yardsoffabric5purchased

March
14,000
2,000
0
3,500

April
16,500
2,500
0
0

Chapter4
ProfitContributionperYard

Fabric

1
2
3
4
5

Manufactured
0.33
0.31
0.61
0.73
0.20

Purchased
0.19
0.16
0.50
0.54
0.00

1
2
3
4
5

Regular

0.1912
0.1912
0.2398

Dobbie
0.21598
0.21598
0.1912
0.1912
0.2398

ProductionTimesinHoursperYard

Fabric

ModelmayuseaMaxProfitorMinCostobjectivefunction.
Max

0.61X3R+0.73X4R+0.20X5R
+0.33X1D+0.31X2D+0.61X3D+0.73X4D+0.20X5D
+0.19Y1+0.16Y2+0.50Y3+0.54Y4

or
Min

0.49X3R+0.51X4R+0.50X5R
+0.66X1D+0.55X2D+0.49X3D+0.51X4D+0.50X5D
+0.80Y1+0.70Y2+0.60Y3+0.70Y4+0.70Y5

RegularHoursAvailable
30Loomsx30daysx24hours/day=21600
DobbieHoursAvailable
8Loomsx30daysx24hours/day=5760
Constraints:
RegularLooms:
0.192X3R+0.1912X4R+0.2398X5R21600
DobbieLooms:
0.21598X1D+0.21598X2D+0.1912X3D+0.1912X4D+0.2398X5D5760
DemandConstraints
X1D+Y1
X2D+Y2
X3R+X3D+Y3
X4R+X4D+Y4
X5R+X5D+Y5

=16500
=22000
=62000
=7500
=62000

LinearProgrammingApplications

OPTIMALSOLUTION
ObjectiveFunctionValue=62531.91797
VariableValueReducedCosts

X3R27711.292970.00000
X4R7500.000000.00000
X5R62000.000000.00000
X1D4669.136720.00000
X2D22000.000000.00000
X3D0.000000.01394
X4D0.000000.01394
X5D0.000000.01748
Y111830.863280.00000
Y20.000000.01000
Y334288.707030.00000
Y40.000000.08000
Y50.000000.06204
ConstraintSlack/SurplusDualPrices

10.000000.57531
20.000000.64821
30.000000.19000
40.000000.17000
50.000000.50000
60.000000.62000
70.000000.06204
OBJECTIVECOEFFICIENTRANGES
VariableLowerLimitCurrentValueUpperLimit

X3R0.500000.610000.62394
X4R0.716060.73000NoUpperLimit
X5R0.182520.20000NoUpperLimit
X1D0.314260.330000.34000
X2D0.300000.31000NoUpperLimit
X3DNoLowerLimit0.610000.62394
X4DNoLowerLimit0.730000.74394
X5DNoLowerLimit0.200000.21748
Y10.180000.190000.20574
Y2NoLowerLimit0.160000.17000
Y30.486060.500000.61000
Y4NoLowerLimit0.540000.62000
Y5NoLowerLimit0.000000.06204
RIGHTHANDSIDERANGES
ConstraintLowerLimitCurrentValueUpperLimit

116301.6005921600.0000028156.00000
24751.559575760.000008315.23047

Chapter4

34669.1367216500.00000NoUpperLimit
410169.1367222000.0000026669.13672
527711.2929762000.00000NoUpperLimit
60.000007500.0000035211.29297
734660.5468862000.0000084095.07813
Production/PurchaseSchedule(Yards)
Regular
Looms

Fabric

1
2
3
4
5

Dobbie
Looms
4669
22000

Purchased
11831

27711
7500
62000

34289

ProjectedProfit:$62,531.92
Valueof9thDobbieLoom
DualPrice(Constraint2)=0.64821perhourdobbie
MonthlyValueof1DobbieLoom
(30days)(24hours/day)($0.64821)=$466.71
Note:ThischangeiswithintheRightHandSideRangesforConstraint2.
DiscussionofObjectiveCoefficientRanges
Forexample,fabriconeonthedobbieloomsharesrangesof0.31426to0.34fortheprofitmaximization
modelor0.64426to0.67forthecostminimizationmodel.
Noteherethatsincedemandforthefabricsisfixed,boththeprofitmaximizationandcostminimization
modelswillprovidethesameoptimalsolution.However,theinterpretationoftherangesfortheobjective
functioncoefficientsdifferforthetwomodels.Intheprofitmaximizationcase,thecoefficientsareprofit
contributions.Thus,therangeinformationindicateshowpriceperunitandcostperunitmayvary
simultaneously.Thatis,aslongasthenetchangesinpriceperunitandcostperunitkeeptheprofit
contributionswithintheranges,thesolutionwillremainoptimal.Inthecostminimizationmodel,the
coefficientsarecostsperunit.Thus,therangeinformationindicatesthatassumingpriceperunitremains
fixedhowmuchthecostperunitmayvaryandstillmaintainthesameoptimalsolution.

CaseProblem4:WorkforceScheduling
1.

Let tij = numberoftemporaryemployeeshiredunderoptioni(i=1,2,3)inmonthj(j=1for

January,j=2forFebruaryandsoon)
Thefollowingtabledepictsthedecisionvariablesusedinthiscaseproblem.
Jan.

Feb.

Mar.

Apr.

May

June

LinearProgrammingApplications
Option1
Option2
Option3

t11
t21
t31

t12
t22
t32

t13
t23
t33

t14
t24
t34

t15
t25

t16

Costs:Contractcostplustrainingcost
Option
1
2
3

ContractCost
$2000
$4800
$7500

TrainingCost
$875
$875
$875

TotalCost
$2875
$5675
$8375

Min. 2875(t11+t12+t13+t14+t15+t16)
+5675(t21+t22+t23+t24+t25)
+8375(t31+t32+t33+t34)
Oneconstraintisrequiredforeachofthesixmonths.

Constraint1:Need10additionalemployeesinJanuary
t11 = numberoftemporaryemployeeshiredunderOption1(onemonthcontract)inJanuary
t21 = numberoftemporaryemployeeshiredunderOption2(twomonthcontract)inJanuary
t31 = numberoftemporaryemployeeshiredunderOption3(threemonthcontract)inJanuary
t11+t21+t31=10
Constraint2:Need23additionalemployeesinFebruary
t12,t22andt32arethenumberoftemporaryemployeeshiredunderOptions1,2and3inFebruary.
But,temporaryemployeeshiredunderOption2orOption3inJanuarywillalsobeavailabletosatisfy
Februaryneeds.
t21+t31+t12+t22+t32=23
Note:Thefollowingtableshowsthedecisionvariablesusedinthisconstraint
Jan.
Option1
Option2
Option3

t21
t31

Feb.
t12
t22
t32

Mar.

Apr.

May

June

Constraint3:Need19additionalemployeesinMarch

Option1
Option2
Option3

Jan.

Feb.

t31

t22
t32

t31+t22+t32+t13+t23+t33=19

Mar.
t13
t23
t33

Apr.

May

June

Chapter4
Constraint4:Need26additionalemployeesinMay
Jan.
Option1
Option2
Option3

Feb.

Mar.

t32

t23
t33

Apr.
t14
t24
t34

May

June

t32+t23+t33+t14+t24+t34=26
Constraint5:Need20additionalemployeesinMay
Jan.

Feb.

Option1
Option2
Option3

Mar.

Apr.

t33

t24
t34

May
t15
t25

June

t33+t24+t34+t15+t25=20
Constraint6:Need14additionalemployeesinJune
Jan.

Feb.

Mar.

Option1
Option2
Option3

Apr.

May

June
t16

t25
t34

t34+t25+t16=14
OptimalSolution:TotalCost=$313,525

Option1
Option2
Option3

Jan.
0
3
7

Feb.
1
0
12

Mar.
0
0
0

Apr.
0
0
14

May
6
0

June
0

2.
Option
1
2
3
3.

NumberHired
7
3
33
Total:

ContractCost
$14,000
$14,400
$247,500
$275,900

TrainingCost
$6,125
$2,625
$28,875
$37,625

TotalCost
$20,125
$17,025
$276,375
$313,525

Hiring10fulltimeemployeesatthebeginningofJanuarywillreducethenumberoftemporaryemployees
neededeachmonthby10.Usingthesamelinearprogrammingmodelwiththerighthandsidesof0,13,9,
16,10and4,providesthefollowingschedulefortemporaryemployees:

Option1
Option2
Option3

Jan.
0
0
0

Feb.
4
0
9

Mar.
0
0
0

Apr.
0
3
4

May
3
0

June
0

LinearProgrammingApplications

Option
1
2
3
Total:

NumberHired
7
3
13
23

ContractCost
$14,000
$14,400
$97,500

TrainingCost
$6,125
$2,625
$11,375

TotalCost
$20,125
$17,025
$108,875
$146,025

Fulltimeemployeescost:
Trainingcost:10($875)=$8,750
Salary:10(6)(168)($16.50)=$166,320
TotalCost=$146,025+$8750+$166,320=$321,095
Hiring10fulltimeemployeesis$321,095$313,525=$7,570moreexpensivethanusingtemporary
employees.Donothirethe10fulltimeemployees.DavisshouldcontinuetocontractwithWorkForceto
obtaintemporaryemployees.

4.

Withthelowertrainingcosts,thecostsperemployeeforeachoptionareasfollows:
Option
1
2
3

Cost
$2000
$4800
$7500

TrainingCost
$700
$700
$700

TotalCost
$2700
$5500
$8200

ResolvingtheoriginallinearprogrammingmodelwiththeabovecostsindicatesthatDavisshouldhireall
temporaryemployeesonaonemonthcontractspecificallytomeeteachmonth'semployeeneeds.Thus,the
monthlytemporaryhireschedulewouldbeasfollows:January10;February23;March19;April26;
May20;andJune14.Thetotalcostofthisstrategyis$302,400.Notethatiftrainingcostswereany
lower,thiswouldstillbetheoptimalhiringstrategyforDavis.

Case Problem 5: Cinergy Coal Allocation

A linear programming model can be used to determine how much coal to buy from
each of the mining companies and where to ship it. Let
xij = tons of coal purchased from supplier i and used by generating unit j
The objective function minimizes the total cost to buy and burn coal. The objective
function coefficients, cij , are the cost to buy coal at mine i, ship it to generating unit j,
and burn it at generating unit j. Thus, the objective function is cij xij . In computing
the objective function coefficients three inputs must be added: the cost of the coal,
the transportation cost to the generating unit, and the cost of processing the coal at
the generating unit.
There are two types of constraints: supply constraints and demand constraints. The
supply constraints limit the amount of coal that can be bought under the various
contracts. For the fixed-tonnage contracts, the constraints are equalities. For the
variable-tonnage contracts, any amount of coal up to a specified maximum may be

Chapter4
purchased. Let Li represent the amount that must be purchased under fixed-tonnage
contract i and Si represent the maximum amount that can be purchased under
variable-tonnage contract i. Then the supply constraints can be written as follows:

Li

for all fixed-tonnage contracts

Si

for all variable-tonnage contracts

ij

ij

The demand constraints specify the number of mWh of electricity that must be
generated by each generating unit. Let aij = mWh hours of electricity generated by a
ton of coal purchased from supplier i and used by generating unit j, and Dj = mWh of
electricity demand at generating unit j. The demand constraints can then be written
as follows:

a x

ij ij

Dj

for all generating units

Note: Because of the large number of calculations that must be made to compute the
objective function and constraint coefficients, we developed an Excel spreadsheet
model for this problem. Copies of the data and model worksheets are included after
the discussion of the solution to parts (a) through (f).

1.

The number of tons of coal that should be purchased from each of the mining
companies and where it should be shipped is shown below:
Miami Fort Miami Fort
#5
#7
RAG

Beckjord

East Bend Zimmer

61,538

288,462

Peabody

217,105

11,278

71,617

American

275,000

Consol

33,878

166,122

Cyprus
Addingto
n

200,000

Waterloo

98,673

The total cost to purchase, deliver, and process the coal is $53,407,243.
2.

The cost of the coal in cents per million BTUs for each generating unit is as follows:
Miami Fort
#5
111.84

3.

Miami Fort
#7
136.97

Beckjor
d
127.24

East
Bend
103.85

Zimme
r
114.51

The average number of BTUs per pound of coal received at each generating unit is
shown
below:
Miami Fort

Miami Fort

Beckjor

East

Zimme

LinearProgrammingApplications
#5
13,300

#7
12,069

d
12,354

Bend
13,000

r
12,468

4.

The sensitivity report shows that the shadow price per ton of coal purchased from
American Coal Sales is -$13 per ton and the allowable increase is 88,492 tons. This
means that every additional ton of coal that Cinergy can purchase at the current price
of $22 per ton will decrease cost by $13. So even paying $30 per ton, Cinergy will
decrease cost by $5 per ton. Thus, they should buy the additional 80,000 tons; doing
so will save them $5(80,000) = $400,000.

5.

If the energy content of the Cyprus coal turns out to be 13,000 BTUs per ton the
procurement plan changes as shown below:
Miami Fort Miami Fort
#5
#7
Beckjord East Bend
RAG

61,538

288,462

Peabody

36,654

191,729

71,617

American

275,000

Consol

33,878

166,122

Cyprus

85,769

200,000

Addington
Waterloo
6.

Zimmer

The shadow prices for the demand constraints are as follows:

Miami Fort
#5
21

Miami Fort
#7
20

Beckjor
d
20

East
Bend
18

Zimme
r
19

The East Bend unit is the least cost producer at the margin ($18 per mWh), and the
allowable increase is 160,000 mWh. Thus, Cinergy should sell the 50,000 mWh over
the grid. The additional electricity should be produced at the East Bend generating
unit. Cinergys profit will be $12 per mWh.
The Excel data and model worksheets used to solve the Cinergy coal allocation
problem are as follows:

Chapter4