Professional Documents
Culture Documents
8 - LP Applications W Computer Analysis
8 - LP Applications W Computer Analysis
LP Modeling Applications
with Computer Analyses in
Excel and QM for Windows
To accompany
Quantitative Analysis for Management, Tenth Edition,
by Render, Stair, and Hanna © 2008 Prentice-Hall, Inc.
Power Point slides created by Jeff Heyl © 2009 Prentice-Hall, Inc.
Learning Objectives
After completing this chapter, students will be able to:
8.1 Introduction
8.2 Marketing Applications
8.3 Manufacturing Applications
8.4 Employee Scheduling Applications
8.5 Financial Applications
8.6 Transportation Applications
8.7 Transshipment Applications
8.8 Ingredient Blending Applications
Program 8.1A
Program 8.1B
subject to
X1 + X2 + X3 + X4 + X5 + X6 ≥ 2,300 (total households)
X1 + X4 ≥ 1,000 (households 30 or younger)
X2 + X5 ≥ 600 (households 31-50)
X1 + X2 + X3 ≥ 0.15(X1 + X2+ X3 + X4 + X5 + X6) (border states)
X3 ≤ 0.20(X3 + X6) (limit on age group 51+ who can live in
border state)
X1, X2, X3, X4, X5, X6 ≥ 0
Program 8.2
MATERIAL
SELLING MONTHLY REQUIRED
VARIETY OF PRICE PER CONTRACT MONTHLY PER TIE MATERIAL
TIE TIE ($) MINIMUM DEMAND (YARDS) REQUIREMENTS
All silk 6.70 6,000 7,000 0.125 100% silk
Table 8.1
Objective function
Maximize profit = $4.08X1 + $3.07X2 + $3.56X3 + $4.00X4
Subject to 0.125X1 ≤ 800 (yds of silk)
0.08X2 + 0.05X3 + 0.03X4 ≤ 3,000 (yds of polyester)
0.05X3 + 0.07X4 ≤ 1,600 (yds of cotton)
X1 ≥ 6,000 (contract min for silk)
X1 ≤ 7,000 (contract min)
X2 ≥ 10,000 (contract min for all polyester)
X2 ≤ 14,000 (contract max)
X3 ≥ 13,000 (contract mini for blend 1)
X3 ≤ 16,000 (contract max)
X4 ≥ 6,000 (contract mini for blend 2)
X4 ≤ 8,500 (contract max)
© 2009 Prentice-Hall, Inc. 8 – 23
X,X,X,X ≥ 0
Manufacturing Applications
Excel formulation for Fifth Avenue LP problem
Program 8.3A
Program 8.3B
© 2009 Prentice-Hall, Inc. 8 – 25
Manufacturing Applications
Production Scheduling
Setting a low-cost production schedule over a
period of weeks or months is a difficult and
important management task
Important factors include labor capacity,
inventory and storage costs, space limitations,
product demand, and labor relations
When more than one product is produced, the
scheduling process can be quite complex
The problem resembles the product mix model
for each time period in the future
Inventory Inventory
Current Sales to
at the end at the end
of this = of last + month’s – Drexel this
production month
month month
IA4 = 450
IB4 = 300
© 2009 Prentice-Hall, Inc. 8 – 33
Manufacturing Applications
We also need constraints for warehouse space
Assignment Problems
Involve determining the most efficient way to
assign resources to tasks
Objective may be to minimize travel times or
maximize assignment effectiveness
Assignment problems are unique because they
have a coefficient of 0 or 1 associated with
each variable in the LP constraints and the
right-hand side of each constraint is always
equal to 1
Effectiveness ratings
CLIENT’S CASE
CORPORATE
LAWYER DIVORCE MERGER EMBEZZLEMENT EXHIBITIONISM
Adams 6 2 8 5
Brooks 9 3 5 8
Carter 4 8 3 4
Darwin 6 7 6 4
The LP formulation is
Program 8.4
© 2009 Prentice-Hall, Inc. 8 – 41
Employee Scheduling Applications
Labor Planning
Addresses staffing needs over a particular
time
Especially useful when there is some flexibility
in assigning workers that require overlapping
or interchangeable talents
We let
F = full-time tellers
P1 = part-timers starting at 9 am (leaving at 1 pm)
P2 = part-timers starting at 10 am (leaving at 2 pm)
P3 = part-timers starting at 11 am (leaving at 3 pm)
P4 = part-timers starting at noon (leaving at 4 pm)
P5 = part-timers starting at 1 pm (leaving at 5 pm)
Portfolio Selection
Bank, investment funds, and insurance
companies often have to select specific
investments from a variety of alternatives
The manager’s overall objective is generally to
maximize the potential return on the
investment given a set of legal, policy, or risk
restraints
Maximize
dollars of
interest = 0.07X1 + 0.11X2 + 0.19X3 + 0.15X4
earned
subject to X1 ≤ 1,000,000
X2 ≤ 2,500,000
X3 ≤ 1,500,000
X4 ≤ 1,800,000
X3 + X4 ≥ 0.55(X1 + X2 + X3 + X4)
X1 ≥ 0.15(X1 + X2 + X3 + X4)
X1 + X2 + X3 + X4 ≤ 5,000,000
X1, X2, X3, X4 ≥ 0
© 2009 Prentice-Hall, Inc. 8 – 53
Financial Applications
The optimal solution to the ICT is to make the
following investments
X1 = $750,000
X2 = $950,000
X3 = $1,500,000
X4 = $1,800,000
The total interest earned with this plan is $712,000
New Orleans $2 $3 $5
Omaha $3 $1 $4
Minimize
total
shipping = 2X11 + 3X12 + 5X13 + 3X21 + 1X22 + 4X23
costs
Program 8.5A
© 2009 Prentice-Hall, Inc. 8 – 60
Transportation Applications
Solution from Excel’s Solver
Program 8.5A
© 2009 Prentice-Hall, Inc. 8 – 61
Transportation Applications
Top Speed Bicycle solution
TO
FROM NEW YORK CHICAGO LOS ANGELES
Program 8.6A
© 2009 Prentice-Hall, Inc. 8 – 66
Transportation Applications
Solver solution for Goodman Shipping
Program 8.6B
Toronto Chicago
Philadelphia
Detroit Buffalo
St Louis
Figure 8.1
TO
NEW YORK
FROM CHICAGO BUFFALO CITY PHILADELPHIA ST LOUIS SUPPLY
Toronto $4 $7 — — — 800
Detroit $5 $7 — — — 700
Chicago — — $6 $4 $5 —
Buffalo — — $2 $3 $4 —
subject to
T1 + T2 ≤ 800 (supply at Toronto)
D1 + D2 ≤ 700 (supply at Detroit)
C1 + B1 = 450 (demand at New York)
C2 + B2 = 350 (demand at Philadelphia)
C3 + B3 = 300 (demand at St Louis)
T1 + D1 = C1 + C2 + C3 (shipping through Chicago)
T2 + D2 = B1 + B2 + B3 (shipping through Buffalo)
T1, T2, D1, D2, C1, C2, C3, B1, B2, B3 ≥ 0 (nonnegativity)
Program 8.7
Diet Problems
One of the earliest LP applications
Used to determine the most economical diet
for hospital patients
Also known as the feed mix problem
We let
XA = pounds of grain A in one 2-ounce serving of cereal
XB = pounds of grain B in one 2-ounce serving of cereal
XC = pounds of grain C in one 2-ounce serving of cereal
Table 8.5
subject to
22XA + 28XB + 21XC ≥ 3 (protein units)
16XA + 14XB + 25XC ≥ 2 (riboflavin units)
8XA + 7XB + 9XC ≥ 1 (phosphorous units)
5XA + 0XB + 6XC ≥ 0.425 (magnesium units)
XA + XB + XC = 0.125 (total mix)
XA, XB, XC ≥ 0
Program 8.8
So
0.35X1 + 0.60X3 ≥ 0.45X1 + 0.45X3
or
– 0.10X1 + 0.15X3 ≥ 0 (ingredient A in regular constraint)
Program 8.9