IE 3340 – Operations Research

Lecture 3: Formulation of Linear Programming Problems

Ch.2 Modeling with Linear Programming

Eduardo Perez, Ph.D.

Ingram School of Engineering
Texas State University
601 University Dr., San Marcos, TX 78666
[email protected]
http://uweb.txstate.edu/~e_p86

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Learning Objectives
 Learn how to formulate linear programming models of real-life
situations

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Today’s Agenda
 Guidelines for Model Formulation
 Diet Problem
 Production Planning and Inventory Control
 Multi-period Production Planning and Inventory Control
 Manpower Planning
 Bus Scheduling Model
 Post Office
 Urban Development Planning
 Project Selection
 Blending and Refining

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Guidelines for Model Formulation

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Formulation is like a Chess Game
 I can teach you the rules, review “standard moves”, and discuss
examples.
 But every game (problem) is different and requires thought.
 Apply what you know: does this new problem fit a “standard
structure”?
 Build a library of experience with a variety of problem types.

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The Formulation Process
 decision variables
Identify ___________________: what must be decided?
 objective of the problem (e.g., max profit or
Identify & formulate the __________
min cost)
 constraints what resources are in limited supply?
Identify __________:
 related in constraints &
Identify how decision variables must be ________
formulate constraints
 Constraints must define the feasible values of all decision variables

 objective and
Make dimensional analyses to make sure that the _________
constraint are consistent
each ___________
 Formulation is an iterative process
 Propose a reasonable definition of variables and begin model formulation
 If you cannot incorporate all issues, you will have learned how to redefine
variables to do so

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Diet Problem

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A Diet Problem
 Many LP models arise from situations in which a decision maker
wants to minimize the cost of meeting certain requirements

Example: Bob wants to plan a nutritious diet, but he is on a limited

budget, so he wants to spend as little money as possible. His
nutritional requirements are as follows:

1. 2000 kcal
2. 55 g protein
3. 800 mg calcium

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A Diet Problem
Nutritional values

 Bob is considering the following foods:

Food Serving Size Energy (kcal) Protein (g) Calcium (mg) Price per serving
Oatmeal 28 g 110 4 2 $0.30
Chicken 100 g 205 32 12 $2.40
Eggs 2 large 160 13 54 $1.30
Whole milk 237 cc 160 8 285 $0.90
Cherry pie 170 g 420 4 22 $0.20
Pork and beans 260 g 260 14 80 $1.90

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A Diet Problem
Question to be answered
How many servings of each type of food?
Indices
i = type of food
Decision Variables
xi = number of servings food type i
 We can represent the number of servings of each type
of food in the diet by the variables:

x1 servings of oatmeal x4 servings of milk

x2 servings of chicken x5 servings of cherry pie
x3 servings of eggs x6 servings of pork and beans

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A Diet Problem
Objective Function

Food Serving Size Energy (kcal) Protein (g) Calcium (mg) Price per serving
Oatmeal 28 g 110 4 2 $0.30
Chicken 100 g 205 32 12 $2.40
Eggs 2 large 160 13 54 $1.30
Whole milk 237 cc 160 8 285 $0.90
Cherry pie 170 g 420 4 22 $2.00
Pork and beans 260 g 260 14 80 $1.90

Minimize Cost

0.3x1 + 2.40x2 + 1.30x3 + 0.90x4 + 2.0x5 + 1.9x6

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A Diet Problem
Constraints

Food Serving Size Energy (kcal) Protein (g) Calcium (mg) Price per serving
Oatmeal 28 g 110 4 2 $0.30 x1
Chicken 100 g 205 32 12 $2.40 x2
Eggs 2 large 160 13 54 $1.30 x3
Whole milk 237 cc 160 8 285 $0.90 x4
Cherry pie 170 g 420 4 22 $2.00 x5
Pork and beans 260 g 260 14 80 $1.90 x6

1. 2000 kcal
Nutritional requirements
2. 55 g protein
3. 800 mg calcium

KCAL constraint:
110x1 + 205x2 + 160x3 + 160x4 + 420x5 + 260x6  2000

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A Diet Problem
LP Formulation
Minimize Cost
0.3x1 + 2.40x2 + 1.30x3 + 0.90x4 + 2.0x5 + 1.9x6
subject to: Nutritional requirements

110x1 + 205x2 + 160x3 + 160x4 + 420x5 + 260x6  2000

4x1 + 32x2 + 13x3 + 8x4 + 4x5 + 14x6  55
2x1 + 12x2 + 54x3 + 285x4 + 22x5 + 80x6  800
Bounds
x1 , x2 , x3 , x4 , x5 , x6  0

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Production Planning and Inventory Control

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Single Period Production Model
Example:
 In preparation for the winter season, a clothing company is manufacturing
parka and goose overcoats, insulated pants, and gloves.
 All products are manufactured in four different departments: cutting, insulating,
sewing, and packaging.
 The company has received firm orders for its products.
 The contract stipulates a penalty for undelivered items.
Devise an optimal production plan for the company based on the following data:

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Single Period Production Model
Question to be answered
How many units of each type of product to produce?
Indices
i = type of product
Decision Variables
xi = number of units of product type i

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 Single Period Production Model
Objective
Function

Maximize the net profit, defined as: Total profit - Total penalty
The total profit: 30x1 + 40x2 + 20x3 + 10x4
The total penalty requires the use of a new variables s representing the shortage in
demand for product j
The total penalty: 15s1 + 20s2 + 10s3 + 8s4
The objective function:
Max z = 30x1 + 40x2 + 20x3 + 10x4 – (15s1 + 20s2 + 10s3 + 8s4 )

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Single Period Production Model
Constraints

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Single Period Production Model
LP Formulation
Maximize Profit

subject to:

Bounds

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Multiperiod Production Planning and
Inventory Control

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Multiperiod Production Planning and Inventory Control
Example:
 Acme Manufacturing Company has a contract to deliver 100, 250, 190, 140,
220, and 110 home windows over the next 6 months.
 Production cost (labor, material, and utilities) per window varies by period and
is estimated to be $50, $45, $55, $48, $52, and $50 over the next 6 months.
 To take advantage of the fluctuations in manufacturing cost, Acme can
produce more windows than needed in a given month and hold the extra units
for delivery in later months.
 This will incur a storage cost at the rate of $8 per window per month, assessed
on end-of-month inventory.
Develop a linear program to determine the optimum production schedule.

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Multiperiod Production Planning and Inventory Control
Question to be answered
How many units to produce per month?
How many units left in inventory per month?
Indices
i = month of the year
Decision Variables

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Multiperiod Production Planning and Inventory Control

Variables
 The variables of the problem include the monthly production
amount and the end-of-month inventory. For i = 1, 2, …, 6

 The relationship between these variables and the monthly

demand over the 6-month horizon is represented schematically
in the Figure. The system starts empty

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Multiperiod Production Planning and Inventory Control

Objective Function

Minimize the total cost of production and end-of-month inventory:

Total production cost: 50x1 + 45x2 + 55x3 + 48x4 + 52x5 + 50x6

Total inventory (storage) cost: 8 (I1 + I2 + I3 + I4 + I5 + I6)

The objective function:

Min z = 50x1 + 45x2 + 55x3 + 48x4 + 52x5 + 50x6 + 8 ( I1 + I2 + I3 + I4 + I5 + I6)

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Multiperiod Production Planning and Inventory Control

Constraints

 The constraints of the problem can be determined directly from the figure
using the following balance equation:
Beginning inventory + Production amount - Ending inventory = Demand

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Multiperiod Production Planning and Inventory Control

LP Formulation
Minimize Cost

subject to:

Bounds

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Manpower Planning

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Bus Scheduling Problem
Example:
 Progress City is studying the feasibility of introducing a mass-transit bus
system to reduce in-city driving. The study seeks the minimum number of
buses that can handle the transportation needs.
 The minimum number of buses needed fluctuated with time of the day
 The required number of buses could be approximated by constant values over
successive 4-hour intervals.

 To carry out the required daily maintenance, each bus can operate 8
successive hours a day only
Develop a linear program to determine the optimum number of buses in operation.

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Bus Scheduling Problem
Question to be answered

How many buses are needed per shift?

Indices
i = shift number

Decision Variables
xi = number of buses needed in shift i

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Bus Scheduling Problem
Variables
 The variables of the model are the number of buses needed in
each shift

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Bus Scheduling Problem
Objective Function

Minimize the total number of buses in operation:

The objective function: Min z = x1 + x2 + x3 + x4 + x5 + x6

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Bus Scheduling Problem

Constraints
 Because of the overlapping of the shifts, the number of buses for the
successive 4-hour periods can be computed as

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Bus Scheduling Problem
LP Formulation
Minimize Number of buses

subject to:

Bounds

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Post Office Problem
Problem:
 A post office requires different numbers of full-time employees on different
days of the week.

 Union rules state that each fulltime employee must five consecutive days and
then two days off.
 The post office wants to meet its daily requirements using only full-time
employees.
Formulate an LP that the post office can use to minimize the number of full time
employees who must be hired.

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Post Office Problem
Question to be answered

How many employees begin to work on each day ?

Indices
i = day of the week

Decision Variables
xi = number of employees beginning work on day i

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Post Office Problem
Objective Function

Minimize the total number of employees:

Number of full time employees = # of employees who start to work on Monday + #
of employees who start to work on Tuesday + … + # of employees who start to
work on Sunday

The objective function: Min z = x1 + x2 + x3 + x4 + x5 + x6 + x7

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Post Office Problem
Constraints

 The post office must ensure that enough employees are working every day
 Who is working on Monday?
 Everybody except the employees who begin to work on Tuesday or on
Wednesday
 They get, respectively, Sunday and Monday, and Monday and Tuesday off
 To ensure that at least 17 employees are working on Monday we require
that the constraint

x1 + x4 + x5 + x6 + x7 ≥ 17

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Post Office Problem
Constraints

 Adding similar constraints for the other six days of the week:

x1 + x4 + x5 + x6 + x7 ≥ 17 (Monday constraint)
x1 + x2 + x5 + x6 + x7 ≥ 13 (Tuesday constraint)
x1 + x2 + x3 + x6 + x7 ≥ 15 (Wednesday constraint)
x1 + x2 + x3 + x4 + x7 ≥ 19 (Thursday constraint)
x1 + x2 + x3 + x4 + x5 ≥ 14 (Friday constraint)
x2 + x3 + x4 + x5 + x6 ≥ 16 (Saturday constraint)
x3 + x4 + x5 + x6 + x7 ≥ 11 (Sunday constraint)

x1, x2, x3, x4, x5, x6, x7, ≥ 0

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Post Office Problem
LP Formulation
Minimize Total number of employees
Min z = x1 + x2 + x3 + x4 + x5 + x6 + x7
subject to:
x1 + x4 + x5 + x6 + x7 ≥ 17 (Monday constraint)
x1 + x2 + x5 + x6 + x7 ≥ 13 (Tuesday constraint)
x1 + x2 + x3 + x6 + x7 ≥ 15 (Wednesday constraint)
x1 + x2 + x3 + x4 + x7 ≥ 19 (Thursday constraint)
x1 + x2 + x3 + x4 + x5 ≥ 14 (Friday constraint)
x2 + x3 + x4 + x5 + x6 ≥ 16 (Saturday constraint)
x3 + x4 + x5 + x6 + x7 ≥ 11 (Sunday constraint)
Bounds
x1, x2, x3, x4, x5, x6, x7, ≥ 0

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Urban Development Planning

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Urban Renewal Model
Problem:
 The city of Erstville is faced with a severe budget shortage.
 The city council votes to improve the tax base by condemning an
inner-city housing area and replacing it with a modern development.
 The project involves two phases:
1. Demolishing substandard houses to provide land for the new

development and
2. Building the new development.

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Urban Renewal Model
The following is a summary of the situation:
1. As many as 300 substandard houses can be demolished. Each house
occupies a .25-acre lot. The cost of demolishing a condemned house is $2000.
2. Lot sizes for new single-, double-, triple-, and quadruple-family homes (units)
are .18, .28, .4, and .5 acre, respectively. Streets, 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% of 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 units is $1000,
$1900, $2700, and $3400, 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.
6. Financing through a local bank is limited to $15 million.

How many units of each type should be constructed to maximize tax collection?

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Urban Renewal Model
Question to be answered
How many units of each type should be constructed/demolish to
maximize tax collection?

Indices
i = type of home

Decision Variables

xi = number of units of type of home i

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Urban Renewal Model
Variables
 The variables of the model are:
 the number of units to be constructed of each type of housing,
 the number houses must be demolished to make room for the new
development.

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Urban Renewal Model
Objective Function

Maximize total tax collection from all four types of homes

The objective function: Max z = 1000 x1 + 1900 x2 + 2700 x3 + 3400 x4

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Urban Renewal Model
Constraints
 The first constraint of the problem deals with land availability

 The acreage needed for new homes =

 To determine the available acreage, each demolished home occupies a .25-
acre lot, thus netting .25x5 acres.
 Allowing for 15% open space, streets, and easements, the net acreage
available is .85 (.25x5 ) = .2125 x5 The resulting constraint is :

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Urban Renewal Model
Constraints
 The number of demolished homes cannot exceed 300, which translates to

 The constraints limiting the number of units of each home type

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Urban Renewal Model
Constraints
 Keep the demolition/construction cost within the allowable budget

 Expressing all the costs in thousands of dollars, we get

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Urban Renewal Model
LP Formulation
Maximize Total tax collection

subject to:

Bounds

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Project Selection

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Project Selection Problem
Problem: Star Oil Company is considering five different investment opportunities.
 The cash out-flows and net present values (in millions) are given in the Table.

 Star Oil has $40million available for investment now (time 0); it estimates that
one year from now (time1) $20 million will be available for investment.
 Star Oil may purchase any fraction of each investment. In this case, the cash
outflows and NPV are adjusted accordingly.
 For example, if Star Oil purchases one-fifth of investment 3, then a cash outflow of (1/5)(5) =$1
million would be required at time 1. The one-fifth share of investment 3 would yield an NPV
of $3.2million.
 Star Oil wants to maximize the NPV that can be obtained by investing
Formulate an LP that will help achieve this goal. Assume that any funds leftover at
time 0 cannot be used at time 1.

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Project Selection Problem
Question to be answered
What fraction of each investment to purchase?

Indices
i = type of investment

Decision Variables

xi = fraction of investment i to purchase by Star Oil

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Project Selection Problem
Objective Function

Maximize the NPV earned from investments:

The objective function: Max z = 13x1 + 16x2 + 16x3 + 14x4 + 39x5

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Project Selection Problem
Constraints

Star Oil’s constraints may be expressed as follows:

 Constraint 1 Star cannot invest more than $40 million at time 0.
 Constraint 2 Star cannot invest more than $20 million at time 1.
 Constraint 3 Star cannot purchase more than 100% of investment

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Project Selection Problem
Constraints

 Constraint 1 Star cannot invest more than $40 million at time 0.

 Constraint 2 Star cannot invest more than $20 million at time 1.

 Constraint 3 Star cannot purchase more than 100% of investment

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Project Selection Problem
LP Formulation
Maximize the NPV earned from investments

subject to:

Bounds

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Blending and Refining

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Blending and Refining
Problem:
 Shale Oil has a capacity of 1,500,000 bbl of crude oil per day.
 The final products from the refinery include three types of unleaded
gasoline with different octane numbers (ON):
1. regular with ON = 87,
2. premium with ON = 89,and
3. super with ON = 92
 The refining process encompasses three stages:
1. A distillation tower that produces feedstock (ON=82) at the rate of .2 bbl
per bbl of crude oil,
2. A cracker unit that produces gasoline stock (ON=98) by using a portion of
the feedstock produced from the distillation tower at the rate of .5 bbl per
bbl of feedstock, and
3. A blender unit that blends the gasoline stock from the cracker unit and the
feedstock from the distillation tower.

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Blending and Refining
Problem:
 The company estimates the net profit per barrel of the three types of
gasoline to be $6.70, $7.20, and $8.10, respectively.
 The input capacity of the cracker unit is 200,000 barrels of feedstock a
day.
 The demand limits for regular, premium, and super gasoline are
50,000, 30,000, and 40,000 barrels, respectively, per day.

Develop a model for determining the optimum production schedule for the
refinery.

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Blending and Refining
Question to be answered
How many barrels/day to produce certain type of final product?

Indices
i = bbl/day of input stream i
j = blend of final product j

Decision Variables

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Blending and Refining
Variables
 The variables can be defined in terms of two input streams to
the blender (feedstock and cracker gasoline) and the three final
products.

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Blending and Refining
Objective Function

Maximize total profit

The objective function:

Max z = 6.70 (x11 + x21) + 7.20 (x12 + x22) + 8.10 (x13 + x23)

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Blending and Refining
Constraints

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Blending and Refining
Constraints

 Daily crude oil supply does not exceed 1,500,000 bbl/day

 Cracker unit input capacity does not exceed 200,000 bbl/day

 Daily demand for regular does not exceed 50,000 bbl

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Blending and Refining
Constraints

 Daily demand for premium does not exceed 30,000:

 Daily demand for super does not exceed 40,000 bbl::

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Blending and Refining
Constraints
 The octane number of a gasoline product is the weighted average of the
octane numbers of the input streams used in the blending process and can
be computed as:

 Octane number (ON) for premium is at least 87:

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Blending and Refining
Constraints
 Octane number (ON) for premium is at least 89:

 Octane number (ON) for premium is at least 92:

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Blending and Refining
LP Formulation
Maximize Revenue

subject to:

Bounds

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Questions?
 Guidelines for Model Formulation
 Diet Problem
 Production Planning and Inventory Control
 Multi-period Production Planning and Inventory Control
 Manpower Planning
 Bus Scheduling Model
 Post Office
 Urban Development Planning
 Project Selection
 Blending and Refining

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