IE 3108: Deterministic models in decision sciences

Homework 1: LP graphical solution method

Name: ___________________________ ID No. _______________________ Date: ___________________________

1. The I. Kruger Paint and Wallpaper Store is a large retail distributor of the Supertrex brand of vinyl wall coverings.
Kruger will enhance its citywide image in Miami if it can outsell other local stores in total number of rolls of
Supertrex next year. It is able to estimate the demand function as follows: Number of rolls of Supertrex sold = 20 *
Dollars spent on advertising + 6.8 * Dollars spent on in-store displays + 12 * Dollars invested in on-hand wallpaper
inventory - 65,000 * Percentage markup taken above wholesale cost of a roll. The store budgets a total of $17,000
for advertising, in-store displays, and on-hand inventory of Supertrex for next year. It decides it must spend at least
$3,000 on advertising; in addition, at least 5% of the amount invested in on-hand inventory should be devoted to
displays. Markups on Supertrex seen at other local stores range from 20% to 45%. Kruger decides that its markup
had best be in this range as well. Formulate the LP model of this problem.

2. The Kleenglass Corporation makes a dishwasher that has excellent cleaning power. This dishwasher uses less water
than most competitors, and it is extremely quiet. Orders have been received from several retails stores for delivery
at the end of each of the next 3 months, as shown below:

Month Number of units

June 195
July 215
August 205

Due to limited capacity, only 200 of these can be made each month on regular time, and the cost is $300 each.
However, an extra 15 units per month can be produced if overtime is used, but the cost goes up to $325 each. Also,
if there are any dishwashers produced in a month that are not sold in that month, there is a $20 cost to carry this
item to the next month. Formulate the LP model of this problem.

3. The Electrocomp Corporation manufactures two electrical products: air conditioners and large fans. The assembly
process for each is similar in that both require a certain amount of wiring and drilling. Each air conditioner takes 3
hours of wiring and 2 hours of drilling. Each fan must go through 2 hours of wiring and 1 hour of drilling. During the
next production period, 240 hours of wiring time are available and up to 140 hours of drilling time may be used.
Each air conditioner sold yields a profit of $25. Each fan assembled may be sold for a $15 profit. Formulate the LP
model of this problem and determine the optimal solution.

4. The Kalo Fertilizer Company makes a fertilizer using two chemicals that provide nitrogen, phosphate, and potassium.
A pound of ingredient 1 contributes 10 ounces of nitrogen and 6 ounces of phosphate, while a pound of ingredient 2
contributes 2 ounces of nitrogen, 6 ounces of phosphate, and 1 ounce of potassium. Ingredient 1 costs $3 per
pound, and ingredient 2 costs $5 per pound. The company wants to know how many pounds of each chemical
ingredient to put into a bag of fertilizer to meet the minimum requirements of 20 ounces of nitrogen, 36 ounces of
phosphate, and 2 ounces of potassium while minimizing cost. Formulate the LP model of this problem and
determine the optimal solution.
Notes: 3.

 Nos. 1 and 2: Develop the LP model only. Maximize profit Z = 25X1 + 15X2
 Nos. 3 and 4: Develop the LP model and solve Subject to:
graphically.
3X1 + 2X2  240 (wiring)
2X1 + 1X2  140 (drilling)
Answers: X1, X2  0
1. Optimal solution: 40 air conditioners and 60 fans, profit
Maximize number of rolls of Supertrex sold = $1,900.

= 20X1 + 6.8X2 + 12X3 – 65,000X4

Where X1 = dollars spent on advertising 4.
X2 = dollars spent on store displays Minimize Z = 3x1 + 5x2 (cost, $)
X3 = dollars in inventory subject to
X4 = percent markup 10x1 + 2x2 ≥ 20 (nitrogen, oz)
6x1 + 6x2 ≥ 36 (phosphate, oz)
Subject to
x2 ≥ 2 (potassium, oz)
X1 + X2 + X3  $17,000 x1,x2 ≥ 0
X1  $3,000
X2  0.05X3 (or X2 – 0.05X3  0) Optimal solution:
X1=4; X2=2; Z=22
X 4  0.20

X 4  0.45
X1, X2, X3, X4  0

2.
Minimize cost: 300RT1 + 300RT2 + 300RT3 + 325OT1 +
325OT2 + 325OT3 + 20E1 + 20E2 + 20E3
subject to
RT1 < 200
RT2 < 200
RT3 < 200
OT1 < 15
OT2 < 15
OT3 < 15
E1 + RT1 + OT1 = 195
E2 + E1 + RT2 + OT2 = 215
E3 + E2 + RT3 + OT3 = 205
{All variables} ≥0