Practical applications of solver (transportation problems, assignment problems, etc).

Example 1 (Transportation problem)

ABC Inc has 3 warehouses where it stores its finished product. (warehouse D, E and F).
It also has three factories that produce the final product which is then shipped to the warehouses for storage. (factory A, B
The capacity of factory A is 100 units, factory B 300 units and factory C is 300 units.
The warehouse requirements for D is 300 units, E is 200 units and F is 200 units.
This is an example of a balanced transportation problem. (total capacity = total requirement)

Shipping costs (shipping cost is given on per unit basis)

A B C
D 5 4 3
E 8 4 3
F 9 7 5
Supply 100 300 300

Find out how many units need to be shipped from the different locations to different warehouses to minize the total shipp

Shipments
A B C
D 100 200 0
E 0 100 100
F 0 0 200
Column total 100 300 300

Total shipping cost = 3000

What if this was an unbalanced problem?

Meaning that the total supply was not equal to total demand.
If total supply is greater than total demand?
This would not be a problem at all. You'll just have some unused capacity (supply)

If total supply is less than total demand?

Excel will find the cheapest solution while exhausing all the capacity (supply available).
However, this will probably require other objecives to be included (which warehouse demand is more critical than the oth

Example 2 (Assignment Problem)

The following table estimates project repair costs for a fix it shop based on project and employees.

PROJECT
PERSON 1 2 3
Adams $11 $14 $6
Brown $8 $10 $11
Cooper $9 $12 $7

Use Excel Solver, to assign the employees to a project each while minimizing the total cost.

We'll use dummy variables/binary variables (0,1)

PROJECT
PERSON 1 2 3
Adams 0 0 1
Brown 0 1 0
Cooper 1 0 0
Column total 1 1 1

Total cost = 25

Example 3 (Unbalanced Assignment Problem)

We cab reuse the data from example 2. We will have another employee by the name of Davis.
It would take $10 for Davis to complete project 1, 13 to complete project 2 and 8 for project 3.

Find the least cost assignment.

PROJECT
PERSON 1 2 3
Adams $11 $14 $6
Brown $8 $10 $11
Cooper $9 $12 $7
Davis $10 $13 $8

PROJECT
PERSON 1 2 3
Adams 0 0 1
Brown 0 1 0
Cooper 1 0 0
Davis 0 0 0
Column Total 1 1 1

Total Cost = 25

Example 4 (Mixed-Integer Programming Problem)

Bagwell Chemical Company produces two industrial chemicals
Xyline must be produced in 50-pound bags
Hexall is sold by the pound and can be produced in any quantity
Both products are composed of 3 ingredients: A, B, C
Bagwell sells xyline for $85 a bag and hexall for $1.5 per pound.
Amount needed in pounds of each ingredient
Ingredients Xyline (per 50 lb bag) Hexall (per pound of hexall) Amount of ingredient available (
A 30 0.5 2000
B 18 0.4 800
C 2 0.1 200

Find the number of bags of Xyline and number of pounds of Hexall to produce so that profit (revenue is being meant here)

xyline (in bags) hexall (in lbs)

SOLUTION: 44 20

PROFIT (REVENUE IN THIS CASE) 85 1.5 3770

ingredient A 30 0.5 1330

ingredient B 18 0.4 800
ingredient C 2 0.1 90
 ehouses for storage. (factory A, B and C)

Demand
300
200
200

ehouses to minize the total shipping cost.

Row total
300
200
200

mand is more critical than the other…)

Row Total
1
1
1

Row Total
1
1
1
0
Amount of ingredient available (in lbs)

fit (revenue is being meant here) is maximized.

<= 2000
<= 800
<= 200
 EMV(3)=45K
3

EMV(2)=25K Favorable study (0.6)

EMV(1)=25K Conduct a study

1 Unfavorable study (0.4)

Do not conduct a study

EMV(6)= -5K

Do nothing
EMV(9)=10K

9
 PAYOFF
25000

Favorable market (0.9)

EMV(4)=21K

4 Unfavorable market (0.1)

Small shop
-15000
55000

Large shop EMV(5)=45K Favorable market (0.9)

5 Unfavorable market (0.1)

-45000

No shop

-5000

25000

Favorable market (0.12)

EMV(7)=-10.2K

7 Unfavorable market (0.88)

EMV(6)= -5K
Small shop
-15000
55000

Large shop EMV(8)=-33K Favorable market (0.12)

8 Unfavorable market (0.88)

-45000

No shop

-5000
30000
 EMV(10)=10K Favorable market (0.5)

10
Unfavorable market (0.5)
EMV(9)=10K
Small shop
-10000
60000

Large shop EMV(11)=10K Favorable market (0.5)

11
Unfavorable market (0.5)

-40000

No shop

0
Expected Monetary Value
EMV(4) = 25K*0,9 + -15K*0,1 = 21000

EMV(5) = 55K*0,9 + -45K*0,1 = 45000

EMV (7) = 25K*0,12 + -15K*0,88 = -10200

EMV(8) = 55K*0,15 + -45K*0,88 = -33000

EMV(2) = 45K*0,6 + -5K*0,4 = 25000

EMV(10) = 30000*0,5 + -10000*0,5 = 10000

EMV(11) = 60K*0,5 + -40K*0,5 = 10000

ANSWER:
Conduct the study (hire the professor). If it is favorable, construct a large shop.
If the study is unfavorable, do not open a shop.
* If having to choose between node 10 and node 11,
we would choose the one with the smallest standard deviation

We need to find out how risky it is to go for a small shop

vs going for a large shop for node 9

FOR SMALL SHOP 20000

Average = EMV(10) = $10000

Variance for small shop = (((30000-10000)^2)*0,5)+(((-10000-10000)^2)*0,5) =

= 400000000 $^2

Standard deviation = variance ^ (1/2) = 20000 $

FOR LARGE SHOP

Average = EMV(11) = $10000

Variance for large shop = (((60000-10000)^2)*0,5) + (((-40000-10000)^2)*0,5) =

= 2500000000 $^2

Standard deviation = variance ^ (1/2) = 50000 $

THIS MEANS THAT GOING FOR A LARGE SHOP WOULD BE RISKIER.

SO, SINCE BOTH EMVs ARE EQUAL, GO FOR THE ONE THAT IS LESS RISKY.
So, WE WOULD GO FOR A SMALL SHOP.
 EMV(3)=45K
3

EMV(2)=25K Favorable study (0.6)

EMV(1)=25K Conduct a study

1 Unfavorable study (0.4)

Do not conduct a study

EMV(6)= -5K

Do nothing
EMV(9)=10K

9
 25000

Favorable market (0.9)

EMV(4)=21K

4 Unfavorable market (0.1)

Small shop
-15000
55000

Large shop EMV(5)=45K Favorable market (0.9)

5 Unfavorable market (0.1)

-45000

No shop

-5000

25000

Favorable market (0.12)

EMV(7)=-10.2K

7 Unfavorable market (0.88)

EMV(6)= -5K
Small shop
-15000
55000

Large shop EMV(8)=-33K Favorable market (0.12)

8 Unfavorable market (0.88)

-45000

No shop

-5000
25000

EMV(10)=10K Favorable market (0.5)

 EMV(10)=10K Favorable market (0.5)

10
Unfavorable market (0.5)
EMV(9)=10K
Small shop
-15000
55000

Large shop EMV(11)=10K Favorable market (0.5)

11
Unfavorable market (0.5)

-45000

No shop

-5000

0
EMV4= 21000
EMV5= 45000
Shipping costs (shipping cost is given on per unit basis)
A B C Demand
D 5 4 3 300
E 8 4 3 200
F 9 7 5 200
Supply 100 300 300

A B C Row total
D 100 200 0 300
E 0 100 100 200
F 0 0 200 200
Column total 100 300 300

Total shipping cost 3000

PROJECT
PERSON 1 2 3
Adams $11 $14 $6
Brown $8 $10 $11
Cooper $9 $12 $7

PROJECT
PERSON 1 2 3 Row total
Adams 0 0 1 1
Brown 0 1 0 1
Cooper 1 0 0 1
Column total 1 1 1

Total cost 25

Amount needed in pounds of each ingredient

Ingredients Xyline (per 50 lbHexall (per p Amount of ingredient available (in lbs)
A 30 0.5 2000
B 18 0.4 800
C 2 0.1 200

Find the number of bags of Xyline and number of pounds of Hexall to produce so that profit (revenu

xyline (in bags) hexall (in lbs)

SOLUTION: 44 20
PROFIT (REVENUE IN T 85 1.5 3770

ingredient A 30 0.5 1330

ingredient B 18 0.4 800
ingredient C 2 0.1 90
redient available (in lbs)

l to produce so that profit (revenue is being meant here) is maximized.