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Integer Programming Worksheet 4

This document describes three integer programming problems: 1) Determining the minimum cost purchasing strategy for a company buying electronic components from two vendors with different price breaks. 2) Choosing optimal plant locations for a shoe manufacturer to minimize production and distribution costs across five distribution centers. 3) Developing an efficient staff scheduling model for a bank to minimize employee costs while meeting customer service needs across business hours.

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ESHAAN KULSHRESHTHA
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49 views

Integer Programming Worksheet 4

This document describes three integer programming problems: 1) Determining the minimum cost purchasing strategy for a company buying electronic components from two vendors with different price breaks. 2) Choosing optimal plant locations for a shoe manufacturer to minimize production and distribution costs across five distribution centers. 3) Developing an efficient staff scheduling model for a bank to minimize employee costs while meeting customer service needs across business hours.

Uploaded by

ESHAAN KULSHRESHTHA
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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WORKSHEET

Integer Programming

1. Purchasing with Price Breaks.


Universal Technologies Ltd. has identified two qualified vendors with the capability to
supply certain of its electronic components. For the coming year, Universal has estimated
its volume requirements for these components and has obtained price-break schedules
from each vendor. (These are summarized as “all-units” price discounts in the table at the
bottom of the exercise)

Universal’s engineers have also estimated each vendor’s maximum capacity for producing
these components, on the basis of available information about equipment in use and labor
policies in effect. Finally, because of its limited history with vendor A, Universal has
adopted a policy that permits no more than 60 percent of its total unit purchases on these
components to come from vendor A.

(a) What is the minimum total cost for Universal’s purchases?

(b) In the optimal solution to part (a), which purchases are made at discounted prices?

Product Requirement Vendor A Vendor B


Unit price Volume Unit price Volume
required required
1 500 ₹225 0–250 ₹224 0–300
₹220 251–500 ₹214 301–500
2 1000 ₹124 0–600 ₹120 0-1000
₹115 601-1,000 No discount
3 2500 ₹60 0-1,000 ₹54 0-1,500
₹56 1,001-2000 ₹52 1,501-2,500
₹51 2000-2500
Total capacity (Units) 2,800 2,400

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2. Plant Location
The Sparko Shoe Company manufacturers a line of inexpensive shoes in one plant in
Kanpur and distributes to five main distribution centers (Prayagraj, Varanasi, Patna,
Durgapur, and Raipur) from which the shoes are shipped to retail shoe stores.
Distribution costs include freight, handling, and warehousing costs. To meet increased
demand, the company has decided to build at least one new plant with a capacity of
40,000 pairs per week. Surveys have narrowed the choice to three locations: Patna,
Varanasi, and Raipur. As expected, production costs would be low in the Raipur plant,
but distribution costs are relatively high compared to those of the other two locations.
Other data are as follows:

Distribution cost per SKU


To From Demand
Distribution Kanpur Patna Varanasi Raipur (SKU/week)
Centers
Prayagraj ₹42 ₹46 ₹44 ₹48 10,000
Varanasi ₹36 ₹37 ₹30 ₹45 15,000
Patna ₹41 ₹30 ₹37 ₹43 16,000
Durgapur ₹39 ₹42 ₹38 ₹46 19,000
Raipur ₹50 ₹43 ₹45 ₹27 12,000
Capacity 27,000 40,000 40,000 40,000
(pairs/wk.)
Production ₹270 ₹264 ₹269 ₹262
cost/SKU
Fixed ₹7,00,000 ₹4,00,000 ₹6,00,000 ₹7,00,000
cost/wk.

a. Assume that the Kanpur plant has no resale value and must remain open. What are the
plant locations that will minimize total costs, including production, distribution, and fixed
costs? What is the optimal total cost?
b. Assume that the Kanpur plant could be closed at zero net cost. What are the optimal
locations? What is the optimal total cost?

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3. Staff scheduling
The Northshore Bank is working to develop an efficient work schedule for full-time and
part-time tellers. The schedule must provide for efficient operation of the bank including
adequate customer service, employee breaks, and so on. On Fridays the bank is open from
9:00 a.m. to 7:00 p.m. The number of tellers necessary to provide adequate customer
service during each hour of operation is summarized here.

Time Number Time Number of


of tellers tellers
9:00 a.m.–10:00 a.m. 6 2:00 p.m.–3:00 p.m. 6
10:00 a.m.–11:00 a.m. 4 3:00 p.m.–4:00 p.m. 4
11:00 a.m.–Noon 8 4:00 p.m.–5:00 p.m. 7
Noon–1:00 p.m. 10 5:00 p.m.–6:00 p.m. 6
1:00 p.m.–2:00 p.m. 9 6:00 p.m.–7:00 p.m. 6

Each full-time employee starts on the hour and works a 4-hour shift, followed by 1 hour
for lunch and then a 3-hour shift. Part-time employees work one 4-hour shift beginning
on the hour. Considering salary and fringe benefits, full-time employees cost the bank
₹1500 per hour (₹10500 a day), and part-time employees cost the bank ₹800 per hour
(₹3200 per day).

a. Formulate an integer programming model that can be used to develop a schedule that
will satisfy customer service needs at a minimum employee cost.
b. Solve the LP Relaxation of your model in part (a).
c. Solve for the optimal schedule of tellers. Comment on the solution.
d. After reviewing the solution to part (c), the bank manager realized that some additional
requirements must be specified. Specifically, she wants to ensure that one full-time
employee is on duty at all times and that there is a staff of at least five full-time employees.
Revise your model to incorporate these additional requirements and solve for the optimal
solution.

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