0 – 1 Integer Programming

1) Starbucks wants to setup two outlets in a one section of a metropolis. There are five
potential locations available. Starbucks has a budget of $ 20,000 per month for these two
outlets. Also it estimates that 6 workers can be hired and trained as baristas to work in
these 2 outlets. The company plans to lease 2 trucks to transport daily material
requirements to the 2 outlets. It can cover a maximum of 550 kms. a day if it is to complete
two runs back and forth to the outlets. The characteristics of the 5 outlets are given below:

Location A B C D E
Expected Footfall monthly 3000 2500 4000 3500 3700
Distance from warehouse 35 30 25 35 32
Rent per month 8000 8000 12000 10000 9500

In order to maintain standards, Starbucks requires that at least 1 barista is needed to serve
per 30 footfalls, per day in the coffee shop.

Solution:

X1 = location A, X2 = location B, X3 = location C, X4 = location D, X5 = location E

Objective function: Max (Footfalls) = 3000 X1 + 2500 X2 + 4000 X3 + 3500 X4 + 3700 X5

Subject to the following constraints:

1) X1, X2, X3, X4, X5 are binary variables;

2) X1 + X2 + X3 + X4 + X5 = 2;
3) 35*4*X1 + 30*4*X2 + 25*4*X3 + 35*4*X4 + 32*4*X5 <= 275;
4) 8000 X1 + 8000 X2 + 12000 X3 + 10000 X4 + 9500 X5 <= 20000;
5) 3 X1 + 3 X2 + 4 X3 + 4 X4 + 4 X5 <= 7

The solution is as follows:

Starbucks.xlsx

2)

INVENTORY

Fixed period ordering

A five star sea food restaurant has to order fish from its vendor on a daily basis, as its
customers always prefer fresh fish in their meals. Every day the vendor charges Rs. 500, over
and above the cost of fish, to deliver the fresh fish early morning to the kitchen. The cost of
storing the fish from morning till dinner time is Rs. 1400 in refrigeration expenses. Fish can
be used for a maximum of 48 hours after delivery. If the acceptability of a stockout is 5%,
find the quantity to be ordered based on the quantity in stock shown below for each type of
fish.