OTM – 615 Assignment # 1

Operations Research Due Date: Saturday, November 14, 2020

QUESTION # 1 (20 points): A customer requires during the next four months, respectively, 50, 65,
100, and 70 units of a commodity (no backlogging is allowed). Production costs are $5, $8, $4, and $7
per unit during these months. The storage cost from one month to the next is $2 per unit (assessed on
ending inventory). It is estimated that each unit on hand at the end of month 4 could be sold for $6.
Formulate an LP that will minimize the net cost incurred in meeting the demands of the next four
months. Note that amount of inventory at the end of time period t is unknown but it can be estimated
once the production units at time t is known.

QUESTION # 2 (20 points): Madrid is facing an urban planning issue in which many illegal houses
are constructed on encroached land. Local council has come to agreement with occupants of these
houses in which it will pay them compensation and they will vacate these houses. After these houses
are vacated, they will be abolished and replaced with modern development which will also help in
increasing tax revenue. The city council is evaluating whether it should go ahead with this project and
thus wants to know the maximum amount of tax revenue they can generate from this project. This
project involves two phases. First demolition of illegal construction to provide land for new
development and second phase include the new development itself. The following data provides the
description of this project.

1. A total of 300 illegal houses will be demolished. Each house occupies a 0.25-acre lot. The cost
of demolishing is $ 2,000.
2. Lot size of new single, double, triple and quadruple family homes are 0.18, 0.28, 0.4 and 0.5
acre respectively. Street, open space and utility easements account for 15% of available acreage.
3. In the new development the triple and quadruple units account for at least 25% od the total.
Single units must be at least 20% of all units and double units at least 10%.
4. The tax levied per unit for single, double, triple, and quadruple family homes is $ 1,000,
$ 1,900, $ 2,700 and $ 3,400 respectively.
5. The construction cost per unit for single, double, triple, and quadruple family homes is $ 50,000,
$ 70,000, $ 130,000 and $ 160,000 respectively. Maximum financing available from the bank
for this project is $ 15 million.

Construct a mathematical model which maximize tax revenue ? Under what condition should city
government go ahead with this project.

QUESTION # 3 (20 points): Margalla Farms uses a mixture of corn and soybean as feed for its farm
to fulfil protein and fiber dietary requirements. The mixture should conform to following composition.
Lb per lb of feedstuff
Feedstuff
Protein Fiber Cost ($/lb)
Corn 0.09 0.02 0.30
Soybean mean 0.60 0.06 0.90

Furthermore, cost of each feed is also tabulated above. The dietary requirements of the feed are at least
30% protein and at most 5% fiber. Margalla Farms wants to determine the daily minimum-cost feed
mix. Model this problem as a mathematical model and solve it graphically.
QUESTION # 4 (20 points): Solve the following linear program graphically and comment on the
solution. If the equality constraint is converted into less than equals to constraint, how will feasible
region and optimal solution change. Similarly, if equality constraint is changed into greater than equals
to constraint. How will feasible region and optimal solution change.

Minimize 𝑍 = 5𝑥1 + 𝑥2
Subject to
3𝑥1 + 4𝑥2 = 24
𝑥1 ≤ 6
𝑥1 + 3𝑥2 ≤ 12
12
𝑥1 − 𝑥2 ≤
5
𝑥1 , 𝑥2 ≥ 0

QUESTION # 5 (20 points): Consider the following linear program:

(a) Graph the feasible region of the LP.

(b) Are any of the above constraints redundant? If so, indicate which one(s).
(c) Solve the LP using graphical method
(d) Is there more then one optimal solution? If so, give two different solutions. If not, explain using
the graphical method, why not
(e) Suppose we add the constraint 2𝑥1 + 𝑥2 ≥ 𝛼. For which values of 𝛼
▪ is the constraint redundant
▪ the optimal solution found above is no longer optimal
▪ the problem becomes infeasible
(f) Replace the objective function 𝑥1 + 2𝑥2 with the objective function 𝑥1 + 𝛽𝑥2 and compute the
values of 𝛽 for which point (2.5, 1.5) is optimal