PROJECT REPORT

QAM-III INTEGER PROGRAMMING

WMP 2014

Indian Institute of Management, Lucknow Noida Campus

GROUP 4 (SECTION B) Anand Ahlawat (WMP 7076) Anand Sagar (WMP 7077) Anish Popli (WMP 7078) Anurag Gautam Asheesh Verma Anshul Sethi

Sl. No.
1.

CONTENTS CHAPTER 1:INTRODUCTION

PAGE NO. 3

2.

CHAPTER 2:APPLICATION OF BIP

3.

CHAPTER 3-PROBLEM SOLUTION

INTRODUCTION

optimization or feasibility program in which some or all of the variables are restricted to be integers. In many settings the term refers to integer linear programming, which is also known as mixed integer programming when some but not all the variables are
An integer programming problem is a mathematical restricted to be integers. Integer programming expresses the optimization of a linear function subject to a set of linear constraints over integer variables. The statements presented in Linear programming: a production planning example are all linear programming models. However, linear programs with very large numbers of variables and constraints can be solved efficiently. Unfortunately, this is no longer true when the variables are required to take integer values. Integer programming is the class of problems that can be expressed as the optimization of a linear function subject to a set of linear constraints over integer variables. It is in fact NP-hard. More important, perhaps, is the fact that the integer programs that can be solved to provable optimality in reasonable time are much smaller in size than their linear programming counterparts. There are exceptions, of course, and this documentation describes several important classes of integer programs that can be solved efficiently, but users of OPL should be warned that discrete problems are in general much harder to solve than linear programs. Consider the manufacture of television sets. A linear programming model might give a production plan of 205.7 sets per week. In such a model, most people would have no trouble stating that production should be 205 sets per week (or even ``roughly 200 sets per week''). On the other hand, suppose we were buying warehouses to store finished goods, where a warehouse comes in a set size. Then a model that suggests we purchase 0.7 warehouse at some location and 0.6 somewhere else would be of little value. Warehouses come in integer quantities, and we would like our model to reflect that fact. This integrality restriction may seem rather innocuous, but in reality it has far reaching effects. On one hand, modeling with integer variables has turned out to be useful far beyond restrictions to integral production quantities. With integer variables, one can model logical requirements, fixed costs, sequencing and scheduling requirements, and many other problem aspects. LINGO can easily change a linear programming problem into an integer program. The downside of all this power, however, is that problems with as few as 40 variables can be beyond the abilities of even the most sophisticated computers. While these small problems are somewhat artificial, most real problems with more than 100 or so variables are not possible to solve unless they show specific exploitable structure. Despite the possibility (or even likelihood) of enormous computing times, there are methods that can be applied to solving integer programs. The LINDO solver in LINGO is based on a method called branch and bound but there are others. The purpose of this chapter is to show some interesting integer programming applications and to describe some of these solution techniques as well as possible pitfalls. First we introduce some terminology. An integer programming problem in which all variables are required to be integer is called a pure integer programming problem. If some variables are restricted to be integer and some are not then the problem is a mixed integer programming problem. The case where the integer variables are restricted to be 0 or 1 comes up surprising often. Such problems are called pure (mixed) 0-1 programming problems or pure (mixed) binary integer programming problems

Assumptions of Integer Programming:

Proportionality The contribution of each activity to the value of the objective Z is proportional to the
level of activity

Additivity Ever function in an Integer programming model is the sum of Individual contributions of
respective activities

Certainty The value assigned to each parameter of a Integer programming model is assumed to be a
known constant

Integer values The variables must have integer values

Types of Integer programming problems:

If some of the decision variables are required to have integer values then model is referred to as mixed

integer programming
When all decision variables are required to have integer values then model is pure

integer

programming
When all decision variables have binary form (zero or one) then model is BIP

Model

* Pure and Mixed integer programming problems can be solved through Cutting plane method and Branch and Bound Method

Why Integer Programming? Allows to depict discontinuous decision variables Acquisition of machines, hired labor or animals Allows modeling of fixed costs, logical conditions, and discrete levels of resources

Applications of BIP
Investment Analysis

Should the company make a capital fixed investment? Example : Turkish Petroleum Refineries Corporation used BIP to analyze capital investments to expand refinery capital and conserve energy. Grantham, Mayo, Van Otterloo and Company used Mixed BIP to construct portfolios. The binary variable is used to represent whether a particular stock should be included in portfolio or not. Site Selection

Should a certain site be selected for the location of a certain new facility? Example : AT&T used BIP model to help dozens of their customers select the sites for telemarketing services.

Designing a production and distribution network

Should a certain plane remain open? Should a certain site be selected for a new plant? Should a certain distribution center remain open? Should a certain site be selected for a new distribution center?

Example: Digital Equipment Corporation used this model in restructuring its entire supply chain. Dispatching Shipments

Should a certain route be selected for one of the trucks? Example :Sears, Roebuck and Company achieved annual savings of $42million by using vehicle scheduling system based on BIP. Scheduling Interrelated activities

Should a certain activity begin in a certain time period? Example : China used a mixed BIP model to guide decisions on which projects to approve and when to undertake them to minimize the total discounted cost.

Scheduling Asset Divestitures

Should a certain asset be sold in particular time period? Example: Homart development Company applied BIP in scheduling divestiture of shopping malls and office buildings and added $40million of profit from the plan. Airline Application

Fleet assignment problem Should a certain type of airplane be assigned to certain flight leg? Example: Delta Airlines have used huge IP model to solve their fleet assignment problem each time a change is needed. Crew scheduling problem

Should a certain sequence of flight legs be assigned a crew? Example: American Airlines achieved annual savings of over $20 million by using BIP model to solve its crew scheduling problem. PROBLEM STATEMENT: There is tailor who makes Shirts, Shorts and Pants for children. The sales price is Rs. 175, Rs. 150 and Rs. 200 respectively. The variable cost per piece is Rs. 80, Rs. 70 and Rs. 90 respectively. Also there is a fixed cost incurred for making these. It is Rs. 1200, Rs. 1100 and Rs. 1000 respectively. We need to maximize the profit for the tailor. Solution:
Cloth Company Shirt Sale Price (Rs / Piece) Var Cost (Rs / Piece) Fixed Cost Constraint Labor (Rs / Piece) Cloth (meters / Piece) Lease Equipment Qty Produced <= 175 80 1200 Shorts 150 70 1100 Usage Per Unit 40 0.8 0 0 <= <= Pants 200 90 1000 Total 2000.00 48.00 Avl Capacity 2000 60

45 2.4 0 0

50 1.2 1 40

<= <=

Revenue Var Cost Fixed

8000.00 3600.00 1000.00

Produce Only if Lease Big #

0 100

100

Cost Profit

3400.00

Result: