Startup Cost ($m)

Marginal Revenue ($m

Capacity Used
Max Order

1
3
2
20%
3
0

y1

2
2
3
40%
2
2
y2

0
x1

y3
1

x2
0

3
0
0.8
20%
5
5
1
x3

Profit
1 <=

4.8
1

Customer
Capacity Used
Max Order
No of Planes
No of Planes
1
2
3
4
5

1
20%
3
3

-1
2
4

2
40%
2
0
PROFIT
1
5

3
20%
5
2

1
3
5
6
7

Capacity
<=

Profit

Decision Variables
0
0
0
0
1

1
<=
1

0
<=
1

apacity
1
7

on Variables
0
1
0
0
0
1
<=
1

Submitted By

ADITYA R MO
PGP3
Sect

Assignment 4
Q.3.a. Fly-Right Airplane Company
Customer
Startup Cost ($m)
Marginal Net Revenue ($m)
Capacity Used
Max Order

Limit
<=

1
3
2
20%

2
2
3
40%

3
0
0.8
20%

3
0

2
2

5
5

Whether to
accept offer?
How many
planes?

y1
0
x1
0

Capacity
1
Profit (in million $)

y2
1
x2
2

y3
1
x3
1

<=

1
4.8

Solution: A maximum profit of $4.8 million can be attained by manufacturing 2 planes for Customer 2 and 1 plane for Customer 3
Q.3.b. Fly-Right Airplane Company Revisited
Customer
Capacity Used
Max Order
No of Planes
No of Planes
1
2
3
4
5

1
20%
3
3
-1
2
4

2
40%
2
0
PROFIT
1
5

3
20%
5
2
1
3
5
6
7

Capacity
<=

Profit

Decision Variables
0
0
0
0
0
1
1
0
0
0
1
0
1
<=
<=
<=
1
1
1

Solution: A maximum profit of $7 million can be attained by manufacturing 3 planes for Customer 1 and 2 planes for Customer 3

YA R MOHAN
PGP32311
Section G

tomer 3

tomer 3