ADM2302 A, B, C, D and E Assignment # 3

Assignment # 3
Transportation Problem, Integer and Binary Programming, and Goal Programming

ADM2302 students are reminded that submitted assignments must be typed (i.e. can NOT be hand written),
neat, readable, and well-organized. Assignment marks will be adjusted for sloppiness, poor grammar, spelling,
for technical errors as well as if you submit a PDF file.

The assignment is to be submitted electronically as a single Word Document file via Brightspace by Sunday
November 17th prior to 23:59. Front page of the Word document has to include title of the assignment, course
code and section, student name and student number. Second page is the individual statement of integrity that
must be signed.

Note: Each student must provide an individual original submission of completed Assignment #3. Please also
note: Assignment #3 copies that are submitted jointly (i.e., by more than one author) will not be graded.

E-mail questions related to the assignment should be sent to the Teaching Assistant or posted on the
Brightspace course website “Discussion page” (viewed by all).

Section A: Afshin Kamyabniya (akamy007@uottawa.ca)

Section B: Parisa Keshavarz (pkesh064@uottawa.ca)
Section C: Makbule Kandakoglu (mkand098@uottawa.ca)
Section D: Ghazaleh Hassanzadeh Kamalabadi (ghass052@uottawa.ca)
Section E: Niki Khorasanizadeh (mkhor084@uottawa.ca)

Problem 1: This problem is a combination of binary integer programming and transportation problem (26 points)

The Hardgrave Machine Company produces computer components at its plants in Kingston and Prince George. These
plants have not been able to keep up with demand for orders at Hardgrave’s two warehouses in Hamilton and Regina. The
firm has therefore decided to build ONE new plant to expand its productive capacity. The two sites being considered are
Sudbury, Ontario and Abbotsford, B.C. Both cities are attractive in terms of labour supply, municipal services, and ease
of factory financing.

The tables below present the production costs and capacities for each of the two existing plants; demand at each of the
two warehouses; and estimated production costs for the new proposed plants.

Warehouse Monthly Demand

(Units)
Hamilton 22,000
Regina 24,000
Total 46,000

Production Monthly Production Cost

Plant Supply per Unit ($)
Kingston 13,000 $50
Prince George 21,000 $52
Total 34,000

Supply needed from new plant = 46,000 – 34,000 = 12,000 units per month

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ADM2302 A, B, C, D and E Assignment # 3

New Plant Estimated Production Cost

per Unit at Proposed Plants
Sudbury $53
Abbotsford $49

Transportation costs from each plant to each warehouse is summarized in the following table:

To: Hamilton Regina

From:
Kingston $30 $40
Prince George $45 $66
Sudbury $38 $27
Abbotsford $30 $50

Hardgrave estimates that the monthly fixed cost of operating the proposed facility in Sudbury would be $400,000. The
Abbotsford plant would be somewhat cheaper due to the cheaper cost of living at the location. Hardgrave therefore
estimates the monthly fixed cost of operating the proposed facility in Abbotsford would be $325,000. Note that the fixed
costs at existing plants (i.e. plants in Kingston and Prince George) need not be considered since they will be incurred
regardless of which plant Hardgrave decides to open.

a. Formulate algebraically the above problem to help Hardgrave decide which of the new locations, Sudbury OR
Abbotsford, will yield to the lowest production and transportation cost in combination with the existing plants
and warehouses. Define the decision variables, objective function, and constraints. (17 points)

b. Formulate this same problem on a spreadsheet and SOLVE using Excel solver (Provide the corresponding “Excel
Spreadsheet” and the “Answer Report”). (6 points)

c. Describe clearly and completely the optimal solution to this problem using a managerial statement. (3 points)

Problem 2 (24 points)

The brokerage firm Michel Awski Ltd. is proposing investment guidelines for its middle-income
investors. Currently, they are considering investments in several areas. Only whole units (integer) of
an investment can be purchased.

Investment type Cost per Expected annual

unit ($) return per unit ($)
large cap common stock 1200 60
small cap common stock 3100 186
preferred stock 7000 385
government bonds 4500 292
industrial bonds 6000 312
hi-tech mutual funds 3800 220
energy mutual funds 2800 154

Mr. and Mrs. Kaushon would like to invest $25,000. In addition to maximizing expected annual return,
several additional restrictions on the investment portfolio have been agreed upon, with to deal with
diversity of portfolio and risk considerations. These restrictions are:

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ADM2302 A, B, C, D and E Assignment # 3

 at most one of the two common stock investments types should be made;
 either both or neither of large cap common stock and preferred stock should appear in the
portfolio;
 hi-tech mutual funds will not be in the portfolio unless preferred stock is also in the portfolio;
 energy mutual funds will not be in the portfolio unless both government bonds and industrial
bonds are in the portfolio.

a. Formulate the Integer/Binary Linear Programming model in algebraic form. Define the decision
variables, objective function, and constraints. (16 points)

b. Formulate this same problem on a spreadsheet and SOLVE using Excel solver (Provide the
corresponding “Excel Spreadsheet” and the “Answer Report”). (5 points)

c. Describe clearly and completely the optimal solution to this problem using a managerial statement.
(3 points)

Problem 3: Goal Programming (35 points)

A rural clinic hires its staff from nearby cities and towns on a part-time basis. The clinic attempts to have a
general practitioner (GP), a nurse, and an internist on duty during at least a portion of each week. The clinic has
a weekly budget of $1,200. A GP charges the clinic $40 per hour, a nurse charges $20 per hour, and an internist
$150 per hour. The clinic has established the following goals, in order of Priority (ranking goals/preemptive
goals):

1. A nurse should be available at least 30 hours per week.

2. The weekly budget of $1,200 should not be exceeded.

3. A GP or an internist should be available at least 20 hours per week.

4. An internist should be available at least 6 hours per week.

a. Formulate a goal programming model to determine the number of hours to hire each staff member to
satisfy the various goals. Define the decision variables, objective function, and constraints. (18 points)

b. Formulate this same problem on a spreadsheet and SOLVE using Excel solver (Provide the
corresponding “Excel Spreadsheet” and the “Answer Report”). (12 points)

c. Describe clearly and completely the solution to this problem using a managerial statement.
(5 points)

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