Integer Programming

Management Science

Eunji Kim
eunjikim@cau.ac.kr

College of Business Administration, CAU

What kinds of problems can be solved? 2

§ Lots of problems!
Production quantity
Production Order quantity
Scheduling
Product
Design
Logistics
Component mix ratio
Shipment volume
Transportation

Marketing
Investment
Advertisement Strategy
Portfolio management
Human
Resource

Team building
Up to now… 3

§ We formulated LP models for solving business problems.

§ We solved LP models by using the following methods:

• Graphical method
• Simplex method: by hands or MS Excel Solver

§ We conducted sensitivity analysis for obtaining insights without solving

additional LP models.

§ You have to get familiar with the things above!

• Because it’s the basic of this course…
• We will continue to repeat the process!
Manufacturing Problem
Revisited 4
Shirts manufacturing company 5

§ A clothing manufacturing company that specializes in producing

commemorative shirts
Solution 6
Marketing Problem 7

§ WANT: Determine the types and amount of advertising to invest in order to

maximize exposure
• TV commercial, radio commercial, and newspaper AD
• Budget limit $100,000
Marketing Problem 8
Today 9

§ Integer Programming (IP) Models

§ Graphical Solution of IP Problems

§ Computer Solution of IP Problems With Excel Solver

Integer Programming ?
§ Integer Programming (IP)
• A mathematical optimization in which some or all of the variables are restricted to
be integers.

§ Types of IP Models

Total Integer Model: All decision variables required to have

0-1 Integer Model:
Mixed Integer Model:
integer solution values.
All decision variables required to have
integer values of zero or one.
Some of the decision variables (but not all)
required to have integer values.
Total Integer Model 11
Example
§ Machine shop obtaining new presses and lathes.
• Marginal profitability: each press $100/day; each lathe $150/day.
• Resource constraints: $40,000 budget, 200 sq. ft. floor space.
• Machine purchase prices and space requirements:

Required
Machine Floor Space (ft.2) Purchase Price

Press 15 $8,000

Lathe 30 4,000

§ The optimal number of new presses and laths for maximizing profit?
LP model

Linear Programming Model:

Maximize Z = $100x1 + $150x2

subject to:
$8,000x1 + 4,000x2 £ $40,000
15x1 + 30x2 £ 200 ft2

x1 = number of presses
x2 = number of lathes
A Total Integer Model

Integer Programming Model:

Maximize Z = $100x1 + $150x2

subject to:
$8,000x1 + 4,000x2 £ $40,000
15x1 + 30x2 £ 200 ft2
x1, x2 ³ 0 and integer
x1 = number of presses
x2 = number of lathes
Graphical Solution of Machine Shop Model
§ Feasible solution space with integer solution points

Maximize Z = $100x1 + $150x2

subject to:
8,000x1 + 4,000x2 £ $40,000
15x1 + 30x2 £ 200 ft2
x1, x2 ³ 0 and integer

Optimal Solution (point B):

Z = $1,055.56
x1 = 2.22 presses
x2 = 5.55 lathes
Integer Programming Graphical Solution

■ Rounding non-integer solution values up to the nearest integer value can

result in an infeasible solution.

■ A feasible solution is ensured by rounding down non-integer

solution values but may result in a less than optimal (sub-optimal) solution.
Computer Solution of IP Problems

Objective function

Slack, =G6-E6

Decision variables—
B10:B11 =C6*B10+D6*B11
Computer Solution of IP Problems

Integer variables
Computer Solution of IP Problems

Click on “int”
Computer Solution of IP Problems

Integer Solution
0-1 Integer Model 21
A 0 - 1 Integer Model (1 of 2)
§ Recreation facilities selection to maximize daily usage by residents.
• Resource constraints: $120,000 budget; 12 acres of land.
• Selection constraint: either swimming pool or tennis center (not both).

Expected Usage Land Requirement

Recreation
(people/day) Cost ($) (acres)
Facility
Swimming pool 300 35,000 4
Tennis Center 90 10,000 2
Athletic field 400 25,000 7
Gymnasium 150 90,000 3
A 0 - 1 Integer Model (2 of 2)

Integer Programming Model:

Maximize Z = 300x1 + 90x2 + 400x3 + 150x4
subject to:
$35,000x1 + 10,000x2 + 25,000x3 + 90,000x4 £ $120,000
4x1 + 2x2 + 7x3 + 3x4 £ 12 acres
x1 + x2 £ 1 facility
x1, x2, x3, x4 = 0 or 1
x1 = construction of a swimming pool
x2 = construction of a tennis center
x3 = construction of an athletic field
x4 = construction of a gymnasium
Computer Solution of IP Problems

=C7*C12+D7*C13+
Decision variables—
E7*C14+F7*C15
C12:C15
Solution:
X1=1 swimming pool
X2=0 tennis center
X3=1 athletic field
X4=0 gymnasium
Z=700 people per day usage
Computer Solution of IP Problems

Restricts variables, C12:C15,

to integer and 0-1 values
Computer Solution of IP Problems

Click on “bin” for 0-1.

Mixed Integer Model 27
A Mixed Integer Model (1 of 2)
§ $250,000 available for investments providing greatest return after one year.

§ Data:
• Condominium cost $50,000/unit; $9,000 profit if sold after one year.
• Land cost $12,000/ acre; $1,500 profit if sold after one year.
• Municipal bond cost $8,000/bond; $1,000 profit if sold after one year.
• Only 4 condominiums, 15 acres of land, and 20 municipal bonds available.
A Mixed Integer Model (2 of 2)

Integer Programming Model:

Maximize Z = $9,000x1 + 1,500x2 + 1,000x3
subject to:
50,000x1 + 12,000x2 + 8,000x3 £ $250,000
x1 £ 4 condominiums
x2 £ 15 acres
x3 £ 20 bonds
x2 ³ 0
x1, x3 ³ 0 and integer
x1 = condominiums purchased
x2 = acres of land purchased
x3 = bonds purchased
Computer Solution of IP Problems

Available to invest

=C4*B8+D4*B9+E4*B10
Computer Solution of IP Problems

Integer requirement for Constraints for acres,

condos (x1) and bonds (x3) condos, and bonds
Exercise
Case Study 1 (Tennessee Pterodactyls) 33

(data can be found in excel file)

Case Study 2 (New Offices at AMS) 34

(data can be found in excel file)

Case Study 2 (New Offices at AMS, cont’d) 35

(data can be found in excel file)

QnA