Operations Research

Lecture 2

Overview

Non negatively Constraint

""space of infeasible solution

... .
:
Constraint

2
3

Objective Z

Parallel

Constraint 2

Max
"" Constraint

.

Space of
infeasible
solutions

Space of feasible
solutions

Example:
A bank is in the process of devising a loan policy that involves a max of 12 million $, the
following table indicates pertinent data about available types of loan:

Good standing loans
0.9
0.93
0.97
0.95
0.98
1

Bad dept ration
0.1
0.07
0.03
0.05
0.02

/
Interest rate
0.14
0.13
0.12
0.125
0.1

Type of loan
Personal
Car
Home
Farm
Commercial

Ahmed Mohamed

Operations Research

Lecture 2

Bad dept are uncovering able and produce no interest revenue. Compition with other
financial institutions requires that bank allocate at least 40% funds to farm and
commercial loan, to assist the housing industry in the region. Home loans must equal at
least 50% of the personal, car, and home loans. The bank also has a stated policy of not
allowing the overall ratio of bad dept on all loans to exceed 4%. Maximize net return.

Solution
. 12
Decision Variable
x1: personal loan (in millions)
x2: car loan
x3: home loan
x4: farm loan
x5: commercial loan
Objective
Net return = total interest bad interest
Total interest = 0.14(0.9 x1) + 0.13(0.93 x2) + 0.12(0.97 x3) + 0.125(0.95 x4) + 0.1(0.98 x5
Bad interest = 0.1 x1 + 0.07 x2 + 0.03 x3 + 0.05 x4 + 0.02 x5
:

=
$1000 Personal .....
100 0.1
100 (0.14)900 100 0.14(900)
.
Max: z = 0.026 x1 + 0.0509 x2 + 0.864 x3 + 0.687 x4 + 0.078 x5
.

Ahmed Mohamed

Operations Research

Lecture 2

Sub to:
x1 + x2 + x3 + x4 + x5 12
x4 + x5 0.4(x1 + x2 + x3 + x4 + x5)
x3 0.5(x1 + x2 + x3)
0.1 x1 + 0.07 x2 + 0.03 x3 + 0.05 x4 + 0.02 x5 0.04(x1 + x2 +x3 + x4 +x5)
x1, x2, x3, x4, x5 0 non negatively condition

.... ....
Mathematical modeling
===================================================

Example:
A plastic manufacturer has 1200 boxes of transparent wrap in stock at one factory and another
1000 boxes at its second factory. In manufacturer has order for this product from three different
retailers in quantities of 1000, 700, and 500 boxes respectively. The unit shipping costs (incents
per box) from the factories to the retailers are as follows:
Factory 1
Factory 2
Demand

Retailer 1
14(in incents)
13(in incents)
1000

Retailer 2
13(in incents)
13(in incents)
700

Retailer 3
11(in incents)
12(in incents)
500

supply
1200
1000

Determine the minimum cost shipping schedule for satisfying all demands from current
inventory?

Solution
Transporting problem
1000 1200 ....
. .. . 500 700 1000
Decision variable
x11: Number of units shipped from factory 1 to retailer 1

Ahmed Mohamed

Operations Research

Lecture 2

x12: Number of units shipped from factory 1 to retailer 2

x13: Number of units shipped from factory 1 to retailer 3
and so on .

Objective

Min Z: 14 x11 + 13 x12 + 11 x13 + 13 x21 + 13 x22 + 12 x23

Sub to:
supply

Demand

x11 + x12 + x13 1200

.....

x21 + x22 + x23 1000

.....

x11 + x21 1000

....

x12 + x22 700

....

x13 + x23 500

....

all variables non negative

.
Total supply = 1200 + 1000 = 2200
Total demand = 500 + 700 + 1000 = 2200
Balanced problem =
Total supply = total demand

Balanced Transporting :
Not balanced <

Example:
A legal firm has accepted five new cases each of which can be handled by any one of its five
junior partners. Due to difference in experience and expertise. However, the junior partners
would send varying amounts of time on the cases. A senior partner has estimated the time
required in hours as shown below:

Ahmed Mohamed

Operations Research

Lecture 2

Case 1
Case 2
Case 3
Case 4
Case 5
Lower 1
145
122
130
95
115
Lower 2
80
63
85
48
78
Lower 3
121
107
93
69
95
Lower 4
118
83
116
80
105
Lower 5
97
75
120
80
111
Determine an optimal assignment of cases to lower such that each junior partner receives a
different case and the total hours expended the firm is minimized?

Solution
Assignment problem
...... evaluate

Decision variable
i from 1 to 5
xjj

designate the number of times lower will be assigned to case(j)

j from 1 to 5

xij either 0 or 1

Objective
Min Z: 145 x11 + 122 x12 + 130 x13 + 95 x14 + 115 x15 + 80 x21 + 63 ......................................
We may wite it
Sub to:

case 1: x11 + x21 + x31 + x41 + x51 = 1

case 2: x12 + x22 + x32 + x42 + x52 = 1
case 3:
case 4:..

1=1

2=1

3=1

case 5:..

Ahmed Mohamed

Operations Research

Lecture 2
1 =1

2 =1

lower 1: x11 + x12 + x13 + x14 + x15 = 1

lower 1: x21 + x22 + x23 + x24 + x25 = 1

lower 3:.. and so on

Has no feasible solution

2consraints

2constaints Max

Space of Feasible solution

Has unbounded solution

has no solution Have many solution

Ahmed Mohamed