Department of Industrial & Systems Engineering

International University-VNU HCM

PROJECT
Deterministics Models in
Operations Research

Group 47:
1 Lâm Ngọc Hân IELSIU18036
.
2 Nguyễn Việt Hoàng IEIEIU18166
.
3 Nguyễn Trần Thanh Nhi IEIEIU18066
.
4 Trần Thiên Kim IELSIU18061
.

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 Contents
I. Introduction……………………………………………………………3
1) Problem Introduction………………………………………...............3
2) Problem statement……………………………………………………3
3) Objectives of the project…………………………………………......4
4) Limitation…………………………………………………………….4

II. Mathematical model.…..………………………………………………5

1) Mathematical model………………………………………………….5
2) Lingo model………………………………………………………….9

III. Sensitivity analysis…………………………………………………....10

1) Solution Report Analysis……………………………………………10
2) Range Report Analysis …..…………………………………………13

IV. Application……………………………………………………………14

V. Conclusion…………………………………………………………….18

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I/ Introduction
1) Problem Introduction
Katherine Rally decide upon next month’s production plan for the fall line and it
need to be accuracy because the items produced next month will appear in stores
during September. The quantity of each clothing item given the plant’s production
capacity, limited resources, and demand forecasts. The lists of materials
requirements for each pattern, and the lists of demand forecasts for each pattern
determined by customer surveys at fashion shows. The prices for each clothing
item by taking into account the quality and cost of material, the cost of labor and
machining, the demand for the item, and the prestige of the TrendLines brand
name.
2) Problem statement
She paid her team of six designers a total of $860,000 for their work and the cost
of hiring runway models, hair stylists, and makeup artists, sewing and fitting
clothes, building the set, choreographing and rehearsing the show, and renting the
conference hall, each of the three fashion shows cost her an additional $2,700,000.
The fall professional fashions include:

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Katherine has ordered 45,000 yards of wool, 28,000 yards of acetate, 9,000 yards
of cashmere, 18,000 yards of silk, 30,000 yards of rayon, 20,000 yards of velvet,
and 30,000 yards of cotton for production.

Material Price per yard

Wool $9.00
Acetate $1.50
Cashmere $60.00
Silk $13.00 $13.00
Rayon $2.25
Velvet $12.00
Cotton $2.50

The production of one silk blouse or one cotton sweater: 2 yards of silk and cotton,
respectively, are needed. From these 2 yards, 1.5 yards are used for the silk blouse
or the cotton sweater and 0.5 yard is left as scrap material. whenever a silk blouse
is produced, a silk camisole is also produced. Likewise, whenever a cotton sweater
is produced, a cotton miniskirt is also produced, it is possible to produce a silk

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camisole without producing a silk blouse and a cotton miniskirt without producing
a cotton sweater.
The velvet pants and velvet shirts has forecasted that it can sell only 5,500 pairs of
velvet pants and 6,000 velvet shirts. TrendLines does not want to produce more
than the forecasted demand but they can be produced less than the forecasted
demand. The cashmere sweater also has limited demand and it can sell at most
4,000 cashmere sweaters. The silk blouses and camisoles have limited demand and
it can sell at most 12,000 silk blouses and 15,000 silk camisoles. The demand for
wool slacks is 7,000 pairs of slacks, and the demand for wool blazers is 5,000
blazers. Katherine wants to meet at least 60 percent of the demand for these two
items. Although the demand for tailored skirts could not be estimated, Katherine
feels she should make at least 2,800 of them.

3) Objectives of the project

In this project we use the linear programming formulation in Operation Research
in order to maximize profit given the production, resource, and demand
constraints.
We apply modern method to solve complex problem and our team will solve the
problem by using Lingo. An application of Excel that helps find optimal solution
for the production plan for the fall line.

4) Limitation
While approaching the project, our group did have several restraints, which are:
 SAMPLE SIZE: the number of data analysis is small, which leads to the fact
that there are difficulties identifying relationships from the sample. This, as
well means that the use of this model may change when it comes to a
smaller/larger size sample. These possible changes are results of the fact that
linear programming models normally require a larger sample size to ensure

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 generalized results. Therefore, it is highly recommended to carefully review
our model before applied.

 LONGITUDINAL EFFECTS: during the researching period, our group did

spend lots of efforts examine and study the given problem, however, the
amount of time is not available for us to fully dig deeper into as well as to
figure out every details related to this model, therefore, becomes a
disadvantage for us.

 APPROACHING METHOD: when our group first tried to solve the

problem, we decided to divide the case into different small parts, then had
code written for every single one. This did work smoothly, however, had a
disadvatage, which the code was unnecessarily long. After that, our group
members came up with the idea of merging all parts into a completed and
concise work.

II/ Mathematical model

1) Mathematical model
Firstly, in order to maximize profit of the given production, product and
demand constraints, the unit profit of each clothing item needed to be
calculated:
material ' s price=materials requirement∗price per yard

unit profit =price−labor cost −material ' s price

● For example: the production of Tailored wool slacks needs 3 yards of wool
and 2 yards of acetate for lining so its material ‘s price equals 3 yards of
wool * $9 added with 2 yards of acetate *$1.5
Clothing item Unit profit
Tailored wool slacks 110
Cashmere sweater 210
Silk blouse 60.5

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 Silk camisole 53.5
Tailored skirt 143.25
Wool blazer 155.25
Velvet pants 136
Cotton sweater 66.25
Cotton miniskirt 33.75
Velvet shirt 22
Button-down blouse 26.625
Table 1: unit profit of each item

We have our maximize function, with – 86000 being the money for the
designers and -2700000*3 being the additional cost besides material cost.
¿−86000−3∗2700000+110∗x 1 +210∗x 2 +60.5∗x3 +53.5∗X 4 +143.25∗x 5 +155.25∗x 6 +136∗x 7 +66.25∗x 8 +33.7

In which the unknown demand (x) for each clothing item is given the followed
number based on its position in the problem.
● From the problem, TrendLines stated that they would not want to produce
more than the forecasting demand, so the amount of product for each item
should be produced by less than or equal to the estimated demand.
For example: cashmere sweater can sell at most for 4000 pieces, so its demand
has to be smaller than or equal to 4000 ¿)
Clothing item Demand Equation
cashmere sweater 4000 x 2 ≤ 4000

Silk blouse 12000 x 3 ≤ 12000

Silk camisole 15000 x 4 ≤15000

Tailored skirt 2800 x 5 ≤ 2800

Velvet pants 5500 x 7 ≤ 5500

Velvet shirt 6000 x 10 ≤ 6000

Table 2: demand’s equation for several items

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As for Wool slacks and Wool blazer, the owner wants to assemble at least 60%
of the demand of each items.
- The demand for Wool slacks is 7000 pairs, 60% of it is 4200 so the
maximum production for pairs of slack is 7000 and the minimum amount is
4200.
Equation: x 1 ≤ 7000 ; x 1 ≥ 4200
- The demand for Wool blazer is 5000, 60% of it is 3000 so the maximum
production for blazers is 5000 and the minimum amount is 3000.
Equation: x 6 ≤ 5000 ; x 6 ≥ 3000

● The production is needed to be conducted within given material resource.

Therefore, resource constraints are added to make sure
For instance, Tailored wool slacks need 3 yards of wool and wool blazer
requires 2.5 yards while TrendLines decided to order 45000 yards of wool.
Therefore, in wool’s group, there are two clothing items: Tailored wool slacks
and Wool blazer.

Material Yards ordered Clothing item Quantity Equation

Tailored wool slacks 3 3∗x1 +2.5∗x 6 ≤ 45000
Wool 45000
Wool blazer 2.5
Tailored wool slacks 2 2∗x1 +1.5∗x5 +1.5∗x 6
Tailored skirt 1.5 +2∗x7 ≤ 28000
Acetate for lining 28000
Wool blazer 1.5
Velvet pants 2

Cashmere 9000 Cashmere sweater 1.5 1.5∗x2 ≤ 9000

Silk blouse 1.5 1.5∗x3 +0.5∗x 4 ≤18000

Silk 18000
Silk camisole 0.5
Tailored skirt 2 2∗x5 +1.5∗x 11 ≤ 30000
Rayon 30000
Button-down blouse 1.5
Velvet 20000 Velvet pants 3 3∗x7 +1.5∗x 10 ≤ 20000
Velvet shirt 1.5

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 Cotton sweater 1.5 1.5∗x8 + 0.5∗x 9 ≤30000
Cotton 30000
Cotton miniskirt 0.5
Table 3: material’s equation

● As the problem mentioned, for every 2 yard of silk, 1.5 yard can be used to
produce silk blouse and the 0.5 yards left can be made into a silk camisole,
the same goes for cotton sweater and cotton miniskirt. However, it is
possible to produce silk camisole and cotton miniskirt without producing
silk blouse and cotton sweater at the same time. Thus, the number of
products for silk camisole and cotton miniskirt can be larger than or equal to
silk blouse and cotton sweater.

Equation:
x4 ≥ x3

x9 ≥ x8

2) LINGO solving

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III/ Sensitivity Analysis

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Practical cases deal with changes, uncertainty and unstable data which can affect
the constraints as well as the profit. Therefore, sensitivity analysis is important and
necessary since it shows how one change can affect the outcome and provides an
general vision of the case.

1) Solution Report Analysis

After building the mathematical problem and transferring it to lingo, the solution of
the case was obtained.

(Fig.1)

In the first line, the optimal value of the case is given which is -2,097,067. With
the given information, current available resources and demand forecast, Trendlines
will actually loose $2,097,067. Beside that detail information is also provided,
Lingo need 1 iterations and 0.03 seconds to reach the solution.

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The variables and their optimal values is listed right before reduced cost column.
From Fig.1, it can be seen that the value of 11 clothing item is given. Unlike other
variables, x 7 and x 8 equals 0 which means they are not economically produced. In
another word, the maximum profit happens when X7 and X8 is eliminated. 

Reduced cost illustrates the amount that the objective coefficient of one variable
need to change in order to give that variable a positive value and enter the optimal
solution. With the case, except from x 7 and x 8, all variables already have a positive
value, therefore their reduced cost is zero. x 7 and X8 has reduced cost of 7.667 and
35 which means the coefficient of x 7 need to increase 7.667 units and 35 units for
X8 before they can become economically produced.

(Fig.2)
Slack and surplus column indicates the gap to satisfy the constraint as equality. If
two sides of the constraint are equal, then the slack or surplus value would be zero.
Dual price is the amount that the objective function would increase ( in maximize
problem) or decrease ( in minimize problem) when the constraint is increased by 1
unit. For example, increase 1 unit of the 4th constraint will increase the profit
function by 210. 

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 2) Range Report Analysis

a) Changes in objective coefficient:

From Lingo’s solver, a range report of the problem is provided. In this report,
changes in objective coefficient and right hand side is calculated in order to remain
the basis of the optimal solution.

The first section of range report is objective coefficient ranges.

(Fig.3)
Figure 3 shows the result of coefficient ranges which indicates the amount by
which the coefficient or the net contribution of one item can be changed without
affecting the optimal solution. As can be seen, range report for coefficient consists
of 4 columns namely variable, current coefficient, allowable increase and
allowable decrease.  

Allowable increase and allowable decrease are applied for the current coefficient.
For example, with X3 the current coefficient is $60.5 and the allowable increase is
100 which means X3 has the upper bound of 60.5+100 or $160.5. Similarly, x 3 has
the lower bound of 60.5 - 60.5 or $0. As long as the objective coefficient of x 3 is
within the range of $0 to $160.5, the optimal solution found will be the same.

x 2,  x 4 , x 6, x 9 and x 10 have infinity allowable increase means increase the net
contribution of these items by any positive number would not cause any changes in
their optimal value. This is because in the optimal solution these variables are

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already produced to their limit, therefore increase their net contribution would not
bring any difference to the result. Similarly, x 1, x 7 and x 8 have infinity allowable
decrease in their coefficient that cause no effect in the optimal solution since they
are already produced in their minimum amount.  

x 7 and x 8 are not economically produced and have allowable increase of 7.667 and
35, respectively. Therefore, net contribution of x 7must increase to 143.667 and the
objective coefficient of x 8must increase to 101.25 to become economical to
produce.     
Generally, when the objective coefficient of a variable changes within the range
illustrated in the report, the optimal value will remain the same. Note that, this
characteristic is not applied for dual prices, reduce cost and maximum profit.

b) Changes in the right hand side (RHS):

The second part of the range report is right hand side range:

Fig(4)
Right hand side ranges include 4 columns row, current RHS, allowable increase,
allowable decrease and 19 rows corresponding to 19 constraints in the model. 

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If the right hand side of one constraint is changed within the given range, the
optimal value of dual prices and reduced cost is unchanged. For example, in row 5
the right hand side can decrease up to 5000 to remain the dual price of 0. Or they
can increase an infinite amount without affecting the optimal dual value or reduce
cost.

IV/ Application
There are well-known successful applications of linear programming in:
manufacturing, construction, marketing, healthcare, …

 Firstly, MANUFACTURING:
Using linear programming in manufacturing helps businesses figure out ways to
utilize material, maximize profit and avoid possible loss, under strict constraints
(for example: amount of material, production time, production cost, needed
workers, …), which varies from the condition of each company. Due to that, the
manufacturer can decide on the optimal plan that suits their needs, such as: profit,
production amount, …
Example: Real life application problem (1) (Product Mix Problem) The N.
Dustrious Company produces two products: I and II. The raw material
requirements, space needed for storage, production rates, and selling prices for
these products are given in Table 1.
TABLE 1. Production Data for N. Dustrious Company
Product
  I II
Storage space ( ft 2/unit) 4 5
Raw material (lb/unit) 5 3
Production rate (units/hr) 60 30
Selling price ($/unit) 13 11

The total amount of raw material available per day for both products is 1575 lbs.
The total storage space for all products is 1500 ft 2, and a maximum of 7 hours per
day can be used for production.

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All products manufactured are shipped out of the storage area at the end of the day.
Therefore, the two products must share the total raw material, storage space, and
production time. The company wants to determine how many units of each product
to produce per day to maximize its total income.
Solution
The company has decided to maximize its sale income, which depends on the
number of units of product I and II. Therefore, the decision variables, x 1 and x 2 can
be the number of units of products I and II, respectively, produced per day.
TABLE 1. Production Data for N. Dustrious Company
Product
  I II
Storage space ( ft 2/unit) 4 5
Raw material (lb/unit) 5 3
Production rate (units/hr) 60 30
Selling price ($/unit) 13 11

The object is to maximize the equation: Z = 13 x 1 + 11 x 2

Subject to the constraints on storage space, raw materials, and production time.
Each unit of product I requires 4 ft 2 of storage space and each unit of product II
requires 5 ft 2 Thus a total of 4 x 1 + 5 x 2 ft 2 of storage space is needed each day. This
space must be less than or equal to the available storage space, which is 1500 ft2.
Therefore,
4 x 1 + 5 x 2 ≤ 1500
Similarly, each unit of product I and II requires 5 and 3 lbs, respectively, of raw
material.

Hence a total of 5 x 1 + 3 x 2 lb of raw material is used.

This must be less than or equal to the total amount of raw material available, which
is 1575 lb. Therefore,

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5 x 1 + 3 x 2 ≤ 1575
Product I can be produced at the rate of 60 units per hour. Therefore, it must take I
minute or 1/60 of an hour to produce I unit. Similarly, it requires 1/30 of an hour to
produce 1 unit of product II. Hence a total of x 1/60 + x 2/30 hours is required for the
daily production. This quantity must be less than or equal to the total production
time available each day. Therefore,
x 1/60 + x 2/30 ≤ 7

or x1 + 2x2 ≤ 420
Finally, the company cannot produce a negative quantity of any product, therefore
x 1 and x 1 must each be greater than or equal to zero.

The linear programming model for this example can be summarized as:

The set of all points that satisfy all the constraints of the model is called a
FEASIBLE REGION.

 Secondly, CONSTRUCTION:
On construction sites, linear programming is applied to optimize decision
mechanisms for complex systems. These decisions are concerned with cost or/and
time which are major criteria that must be considered carefully for construction
scheduling with pricing. This also allows construction managers to find optimal
project duration corresponding with minimum project cost, as well as to propose a
new optimum technique especially in fuzzy environment cost and time trade-off
problems. The application in construction gives more solutions and takes
advantage of minimizing construction operations based upon project's important
mentioned rational arithmetic factors to provide skilled labor related to its
requirements.

 Thirdly, MARKETING:

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One application of linear programming in marketing is media selection. LP can be
used to help marketing managers allocate a fixed budget to various advertising
media. The objective is to maximize reach, frequency, and quality of exposure.
Restrictions on the allowable allocation usually arise during consideration of
company policy, contract requirements, and media availability.

 Last but not least, HEALTHCARE:

To present a mathematical modeling technique by means of linear programming as
an efficient tool to solve problems related to optimization in healthcare. Two
applications are approached: formulation of a balanced diet at a minimum cost and
optimal allocation of resources for a set of medical interventions that comply with
cost and medical visit restrictions.
For example:
Results: The balanced diet proposed would comprise 1.4 glasses of skimmed
milk/day and 100 g of salad/day (2/10 of a 500 g portion) at a total minimum cost
of R$ 2.55/day. The optimal solution for the allocation model among the five types
of medical intervention programs maximizing quality-adjusted life year was
established as follows: use of 100% of intervention type 4 and 50% of intervention
type 2, determining a maximum value of 20.5 QALY.
Overall, in a world with increasingly scarce resources and every day more
competitive, linear programming could be used to search optimized solutions for
healthcare problems.

V// Conclusion

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In conclusion, our project can help Katherine Rally have the optimal solution to
maximize the profit from her business, from that she can bring out next month’s
production plan for the fall line (production capacity, limited resources, demand
forecasts). We believe this practical problem is appropriate for similar business and
also the project gives a closer look to the principles and the objectives of Operation
Research, which is using advanced mathematical methods to make better decisions
in terms of business and manufacturing.

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