Linear Optimization

Integer Linear Programming

Dr. A. Ramesh
Department of Management Studies
IIT Roorkee
Types of IP

• All integer LP
• LP Relaxation
• Mixed Integer LP
Problem -1: All Integer Problem
Graphical and Computer Solutions for an All-integer Linear Program
• Eastborne Realty has $2 million available for the purchase of new rental property.

• After all initial screening, Eastborne reduced the investment alternatives to townhouses and apartment buildings.

• Each townhouse can be purchased for $282,000, and five are available.

• Each apartment building can be purchased for $400,000, and the developer will construct as many buildings as Eastborne

wants to purchase.

• Eastborne's property manager can devote up to 140 hours per month to these new properties; each townhouse is expected

to require 4 hours per month, and each apartment building is expected to require 40 hours per month.

• The annual cash flow, after deducting mortgage payments and operating expenses, is estimated to be $1 0,000 per

townhouse and $15,000 per apartment building.

• Eastborne's owner would like to determine the number of townhouse and the number of apartment buildings to purchase to

maximize annual cash flow,

LPP Formulation

T = Number of town houses

A = number of apartment buidings
The objetive function for cash flow ($1000) is
Max Z = 10 T+ 15 A
ST
282T+400A  2000 Funds Available
4T+40A  140 Manager's time (hours)
T  5 Townhouse available
T, A  0 and integer
Solver Solution
T A
4 2
10 15

Resources
Utilised
282 400 1928less than 2000
4 40 96less than 140
1 0 4less than 5

Obje 70
0-1 Integer Programming –Problem 2
 0-1 Integer Programming

• The Ice-Cold Refrigerator Company is considering investing in several

projects that having varying capital requirement over the next four
years.
• Faced with limited capital each year, the management would like to
select the most profitable projects.
• The estimated NPV for each project, the capital requirement and the
available capital over the four-year period are shown in the table
 Project NPV, Capital Requirements, and available
capital for the ice-cold refrigerator company

Plant warehouse new New Product

Expansion Expansion Machinery Research

Total Capital
Present Value 90000 40000 10000 37000 Available

Year 1 Capital
Requirement 15000 10000 10000 15000 40000

Year 2 Capital
Requirement 20000 15000 10000 50000

Year 3 Capital
Requirement 20000 20000 10000 40000

Year 4 Capital
Requirement 15000 5000 4000 100000 35000
 Four 0-1 decision variables

• P = 1 if the plant expansion project is accepted, 0 if rejected

• W = 1 if the warehouse expansion project is accepted, 0 if rejected
• M = 1 if the new machinery project is accepted, 0 if rejected
• R = 1 if the new product research is accepted, 0 if rejected
 Capital Budgeting Problem (‘000)

Max Z = 90P + 40W + 10M + 37R

subjected to
15P + 10W + 10M + 15R  40 (Year 1 Capital available)
20P + 15W + 10R  50 (Year 2 Capital available)
20P + 20W + 10R  40 (Year 3 Capital available)
15P + 5W + 4M + 10R  40 (Year 4 Capital available)
P,W,M,R=0,1
 Output 0-1 IP Problem

Decision Variable P W M R
1 1 1 0
Co-efficient 90 40 10 37

Plant warehouse new New Product Resources

Column1 Expansion Expansion Machinery Research Column2 Utilised
Total Capital
Present Value 90000 40000 10000 37000 Available
Year 1 Capital less than
Requirement 15 10 10 15 40000 35 equal to 40
Year 2 Capital less than
Requirement 20 15 10 50000 35 equal to 50
Year 3 Capital less than
Requirement 20 20 10 40000 40 equal to 40
Year 4 Capital less than
Requirement 15 5 4 10 35000 24 equal to 35

Obj fn 140
Fixed Cost and IP- Problem 3
 Fixed Cost and IP
• Three raw materials are used to produce three products: a fuel additive, a solvent base and a
carpet cleaning fluid.
• Decision variables
F = tons of fuel additive produced
S = tons of solvent base produced
C = tons of carpet cleaning fluid produced
• The profit contributions are $40 per ton for the fuel additive, $30 per ton for the solvent base,
and $50 per ton for the carpet cleaning fluid.
• Each ton of fuel additive is a blend of 0.4 tons of material 1 and 0.6 tons of material 3.
• Each ton of solvent base requires 0.5 tons of material 1, 0.2 tons of material 2, and 0.3 tons of
material 3.
• Each of carpet cleaning fluid is a blend of 0.6 tons of material 1, 0.1 ton s of material 2 and
0.3 tons of material 3.
• RMC has 20 tons of material 1, 5 tons of material 2, and 21 tons material 3 and is interested in
determining the optimal production quantities for upcoming planning period.
 LPP Model

Max Z = 40F + 30S + 50C

st
0.4F + 0.5S + 0.6C  20 Material 1
0.2S + 0.1C  5 Material 2
0.6F+ 0.3S+ 0.3C  21 Material 3
F,S,C  0
Solution

DV F S C
Value 27.5 0 15
Co-eff 40 30 50

0.4 0.5 0.6 20 less than 20

0.2 0.1 1.5 less than 5

0.6 0.3 0.3 21 less than 21

OBJ 1850
Set up cost and Max. Production Quantity-
Problem 4

Product Set Up cost Max. Prodcution

Fuel additive 200 50
Solvent base 50 25

Carpet cleaning fluid 400 40

 Decision variables for Fixed Cost

• SF = 1 if the fuel additive is produced , 0 if not

• SS = 1 if the solvent base is produced , 0 if not
• SC = 1 if the carpet cleaning fluid is produced , 0 if not

Total Set Up Cost = 200SF + 50SS + 400SC

Objective Function after introducing Fixed
Costs

Max Z = 40F+30S+50C- (200SF + 50SS + 400SC)

Production Capacity Constraints

F  50SF
S  25SS
C  40SC
LPP

Max Z = 40F+30S+50C- 200SF -50SS - 400SC

subjected to
0.4F + 0.5S + 0.6C  20 Material 1
0.2S + 0.1C  5 Material 2
0.6F+ 0.3S+ 0.3C  21 Material 3
F - 50SF  0 Max. Capacity for F
S -25SS  0 Max. Capacity for S
C - 40SC  0 Max. Capacity for C
Solution

DV F S C SF SS SC
Value 25 20 0 1 1 0
Co-eff 40 30 50 -200 -50 -400

Resourc
es
F S C Utilised RHS
0.4 0.5 0.6 0 0 0 20 less than 20
0.2 0.1 0 0 0 4 less than 5
0.6 0.3 0.3 0 0 0 21 less than 21
1 0 0 -50 0 0 -25 less than 0
0 1 0 0 -25 0 -5 less than 0
0 0 1 0 0 -40 0 less than 0

Obj 1350
Distribution System Design – Problem 5
 Distribution System Design – Problem 5

• The Martin-Beck Company operates a plant in St. Louis with an

annual capacity of 30,000 units. Product is shipped to regional
distribution centres located in Boston, Atlanta and Houston. Because
of an anticipated increase in demand, Martin-Bech plan to increase
capacity by constructing a new plant in one or more of the following
cities; Detroit, Toledo, Denver and Kansas City
Proposed Plant

Annual
Proposed Plant Fixed Cost( $) Annual Capacity
Detroit 1,75,000 10,000
Toledo 3,00,000 20,000
Denver 3,75,000 30,000
Kansas City 5,00,000 40,000
 Distribution Centre

Distribution Centre Annual Demand

Boston 30,000

Atlanta 20,000

Houston 20,000
Shipping Cost per unit for the Martin-beck
Distribution System

Plant site Boston Atlanta Houston

Detroit 5 2 3
Toledo 4 3 4
Denver 9 7 5
Kansas City 10 4 2
St Louis 8 4 3
The Network Representation of the Martin-beck Company Distribution Problem

Plants Distribution
Centres
5
10
2
3 30
4
20
3
4
9
7 20
30 5
10
4
40 2
20
8
4
30
3
Distribution Demand
Capacities
Routes
Decision variables for new plants

y1 =1 if a plant is constructed in Detroit, 0 if not

y 2 =1 if a plant is constructed in Toledo, 0 if not
y3 =1 if a plant is constructed in Denver, 0 if not
y 4 =1 if a plant is constructed in Kansas City, 0 if not
 Annual Transportation Cost

x i j = the units shipped in thousand from plant i to distribution j

5x11 +2x12 +3x13
 4x 21 +3x 22 +4x 23
 9x 31 +7x 32 +5x 33
 10x 41 +4x 42 +2x 43
 8x 51 +4x 52 +3x 53
 Annual fixed Cost

the annual fixed cost = 175y1 +300y 2  375y3  500y 4

 Capacity Constraint

x11  x12  x13  10y1

x11  x12  x13  10y1  0 Detroit Capacity
x21  x22  x23  20y 2  0 Toledo Capacity
x11  x12  x13  30y3  0 Denver Capacity
x11  x12  x13  40y 4  0 Kansas City Capacity
x 51 +x 52  x 53  30 St Louis Capacity
 Demand Constraint

x11 +x 21  x 31  x 41  x 51  30 Boston Demand

x12 +x 22  x 32  x 42  x 52  20 Atlanta Demand
x13 +x 23  x 33  x 43  x 53  20 Houston Demand
 Complete Model

Mini Z = 5x11 +2x12 +3x13  4x 21 +3x 22 +4x 23  9x 31 +7x 32 +5x 33

 10x 41 +4x 42 +2x 43  8x 51 +4x 52 +3x 53  175y1 +300y 2  375y3  500y 4
ST
x11  x12  x13  10y1  0 Detroit Capacity
x21  x22  x23  20y 2  0 Toledo Capacity
x31  x32  x33  30y3  0 Denver Capacity
x41  x42  x43  40y 4  0 Kansas City Capacity
x 51 +x 52  x 53  30 St Louis Capacity
x11 +x 21  x 31  x 41  x 51  30 Boston Demand
x12 +x 22  x 32  x 42  x 52  20 Atlanta Demand
x13 +x 23  x 33  x 43  x 53  20 Houston Demand
x ij  0 for all i and j,y1 , y 2 , y3 , y 4  0,1
x11 x12 x13 x21 x22 x23 x31 x32 x33 x41 x42 x43 x51 x52 x53 y1 y2 y3 y4
0 0 0 0 0 0 0 0 0 0 20 20 30 0 0 0 0 0 1
5 2 3 4 3 4 9 7 5 10 4 2 8 4 3 175 300 375 500

resources
x11 x12 x13 x21 x22 x23 x31 x32 x33 x41 x42 x43 x51 x52 x53 y1 y2 y3 y4 Utilised RHS
1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 -10 0 0 0 0≤ 0
0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 -20 0 0 0≤ 0
0 0 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0 -30 0 0≤ 0
0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 0 0 -40 0≤ 0
0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 30≤ 30
1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 0 0 0 0 30= 30
0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 0 0 0 20= 20
0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 0 0 20= 20
obj 860