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The document describes 6 linear programming problems: 1) Maximizing total profit from producing 4 products on 3 machines with different manufacturing times and costs. 2) Minimizing the number of full-time employees needed at a post office with varying daily requirements over a week. 3) Determining the optimal purchasing schedule to meet quarterly demand for an item with changing prices and storage costs. 4) Maximizing net revenue for an oil refinery by allocating crude oil to gasoline and heating oil production using 3 processes. 5) Maximizing expected return from investing in 4 bonds subject to worst-case return, average duration, and concentration constraints. 6) Determining the optimal allocation of $10,

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Yasemin Yücebilgen
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83 views3 pages

PS 1

The document describes 6 linear programming problems: 1) Maximizing total profit from producing 4 products on 3 machines with different manufacturing times and costs. 2) Minimizing the number of full-time employees needed at a post office with varying daily requirements over a week. 3) Determining the optimal purchasing schedule to meet quarterly demand for an item with changing prices and storage costs. 4) Maximizing net revenue for an oil refinery by allocating crude oil to gasoline and heating oil production using 3 processes. 5) Maximizing expected return from investing in 4 bonds subject to worst-case return, average duration, and concentration constraints. 6) Determining the optimal allocation of $10,

Uploaded by

Yasemin Yücebilgen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Tınaz

Ekim – Betül Ahat


10.02.2020
IE 202 PS 1
1- Four products are processed sequentially on three machines. The following table gives
the pertinent data of the problem. Formulate the problem as a linear programming model to
maximize the total profit.

Manufacturing time (hr) per unit


Cost per Product Capacity
Machine Product 2 Product 3 Product 4
hr($) 1 (hr)
1 10 2 3 4 2 500
2 5 3 2 1 2 380
3 4 7 3 2 1 450
Unit selling
75 70 55 45
price($)


2- A post office requires different number of full-time employees on different days of the
week. The number of full-time employees required on each day is 17, 13, 15, 19, 14, 16, 11 from
Monday to Sunday, respectively. Union rules state that each full-time employee must work five
consecutive days and then receive two days off. For example, an employee who works Monday
to Friday must be off on Saturday and Sunday. 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.


3- The demand for an item over the next four quarters is 300, 400, 450 and 250 units,
respectively. The price per unit starts at $ 20 in the first quarter and increases by $ 2 each
quarter thereafter. The supplier can provide no more than 400 units in any one quarter.
Although we can take advantage of lower prices in early quarters, a storage cost of $ 3.5 is
incurred per unit per quarter. In addition, the maximum number of units that can be held over
from one quarter to the next cannot exceed 100. Develop the model to find the optimum
schedule for purchasing the item to meet the demand.


4- A manager of an oil refinery has 8 million barrels of crude oil A and 5 million barrels of
crude oil B allocated for production during the coming month. These resources can be used to
make either gasoline, which sells for $38 per barrel, or home heating oil, which sells for $33 per
barrel. There are three production processes with the following characteristics:
Process 1 Process 2 Process 3
Input crude A 3 1 5
Input crude B 5 1 3
Output gasoline 4 1 3
Output heating oil 3 1 4
Cost $51 $11 $40

All quantities are in barrels. For example, with the first process, 3 barrels of crude A and 5
barrels of crude B are used to produce 4 barrels of gasoline and 3 barrels of heating oil. The
costs in the table refer to variable and allocated overhead costs, and there are no separate cost
items for the cost of the crudes. Formulate a linear programming problem that would help the
manager maximize net revenue over the next month.

5- Solodrex is considering investing in four bonds where $1M is available for investment.
The expected annual return, the worst-case annual return on each bond, and the “duration” of
each bond are given below. The duration of a bond is a measure of the bond’s sensitivity to
interest rates.
Bond Expected Return (%) Worst-Case Return (%) Duration
1 13 6 3
2 8 8 4
3 12 10 7
4 14 9 9

Solodrex wants to maximize the expected return from its bond investments, subject to the
following conditions:
- The worst-case return of the bond portfolio must be at least 8%.
- The average duration of the portfolio must be at most 6.
- At most 40% of the total amount invested can be invested in a single bond.

Formulate an LP that will enable Solodrex to maximize the expected return on its investments.

6- Investor Doe has $10,000 to invest in four projects. The following table gives the cash
flow for the four investments.
Cash flow at the start of
Project Year 1 Year 2 Year 3 Year 4 Year 5
1 -1.00 0.50 0.30 1.80 1.20
2 -1.00 0.60 0.20 1.50 1.30
3 0.00 -1.00 0.80 1.90 0.80
4 -1.00 0.40 0.60 1.80 0.95

Doe has also additional option of investing in a bank account that earns 6.5% annually. All funds
accumulated from one year can be reinvested in succeeding years. Formulate the problem as a
linear program to determine the optimal allocation of funds to investment opportunities.

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