Introduction to OR and LP

Part 1
Teuku Naraski Zahari, S.T., M.T.
Some ground rules
• 14 weeks, 1 Lecture/Week.
• Each lecture will last for 60-90 minutes (may be less or more slightly).
• Evaluation:
o Mid Term-1 (UTS-1) 30%
o Mid Term-2 (UTS-2) 30%
o Final Test (UAS) 30%
o Quiz & Assignments 10%
• Activate your video during the lecture.
• Be active during the lecture. Ask questions!
What is Operations Research?
A scientific approach to decision making that seeks to best design and
operate a system, usually under conditions requiring the allocation of scarce
resources. Also called Management Science or Decision Science.

Employs mathematical techniques such as mathematical

modelling, statistical analysis, and mathematical optimization.

The goal is to achieve optimum or near-optimal solutions to complex

decision-making problems, hence it is synonymous with optimization.

The term optimization is interchangeable with programming. Programming is

commonly used in US while Optimization is predominantly in UK.
What problems are addressed?
• Facility location
• Work Scheduling (Rostering)
• Logistics and Transportation
• Inventory management
• Portfolio optimization
• Production Planning
• Public Policy Analysis

And almost every complex problem requires Operations Research

What you will learn during this course
• Mathematical Modelling
• Simplex Algorithm
• Duality and Sensitivity Analysis
• Transportation Problem
• Assignment Problem
• Integer Programming
• Multi-objective Programming
• Network Optimization
 Model?

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What is a model?
Solving a Complex Problem
Simulation
Modelling process modeling

Complex problems Simplified

model/conceptual
model
The effectiveness of our Simulation
solution depends on how
“good” our model is.

Never model a system but

model the problem of the Model
system. improvement/
tuning
Mathematical Models
A mathematical model is a mathematical representation of the actual
situation that may be used to make better decisions or clarify the situation.

Classifications of Mathematical Model:

• Linear or non-linear
• Static or dynamic
• Integer or non-integer
• Deterministic or stochastic
• Discrete or continuous
• Deductive, inductive, or floating
• Strategic or non-strategic
A Modelling Example
Eli Daisy produces the drug Wozac in batches by heating a chemical
mixture in a pressurized container.
Each time a batch is produced, a different amount of Wozac is
produced.
The amount produced is the process yield (measured in pounds).
Daisy is interested in understanding the factors that influence the yield
of Wozac production process.

Describe a model-building process for this situation!

A Modelling Example
Daisy is first interested in determining the factors that influence the
process yield.
o This is a descriptive model since it describes the behavior of the actual yield as a
function of various factors.

Daisy might determine that the following factors influence yield:

o Container volume in liters (V)
o Container pressure in millipascal (P)
o Container temperature in degrees centigrade (T)
o Chemical composition of the processed mixture
A Modelling Example
• Letting A, B, and C be the percentage of the mixture made up of
chemical A, B, and C, then Daisy might find, for example, that:
Yield = 300 + 0.8V + 0.01P + 0.06T + (0.001T*P) - 0.01T2 – 0.001P2 + 11.7A +
9.4B + 16.4C + (19A*B) + (11.4A*C) – (9.6B*C)

• To determine the relationship the yield of the process would have

to measured for many different combinations of the factors.
• Knowledge of this equation would enable Daisy to describe the
yield of the production process once volume, pressure,
temperature, and chemical composition were known.
Linear and Nonlinear Models
• A linear model is one in which decision variables appear linearly in
the objective function and in the constraints of an optimization
model.
• If an optimization model is not linear, then it is a nonlinear model
o In the constraints of Daisy example, the decision variables are always
multiplied by constants and added together. Thus, the constraints pass the
test for a linear model.
o However, in the objective function make the model nonlinear
o The Daisy example is a nonlinear model. In general, nonlinear models are
much harder to solve.
Static and Dynamic Models
• A static model is one in which the decision variables do not involve
sequences of decisions over multiple periods.
o Example: The Daisy example is an example of a static model; the optimal
solution will tell Daisy how to maximize yield at all points in time

• A dynamic model is a model in which the decision variables do

involve sequences of decisions over multiple periods.
o Example: Determine how many sailboats to produce during each of the next
four quarters
Integer and Non-Integer Models
• If one or more of the decision variables must be integer, then we
say that an optimization model is an integer model.
• If all the decision variables are free to assume fractional values,
then an optimization model is a non integer model.
o The Daisy example is a non integer example since volume,
pressure, temperature, and percentage composition are all
decision variables which may assume fractional values.
o Integer models are much harder to solve than non integer
models.
Deterministic and Stochastic Models
• A deterministic model is a model in which for any value of the
decision variables the value of the objective function and whether
or not the constraints are satisfied is known with certainty. If this is
not the case, then we have a stochastic model.
o If we view the Daisy example as a deterministic model, then we
are making the assumption that for given values of V, P, T, A, B,
and C the process yield will always be the same.
o Since this is unlikely, the objective function can be viewed as the
average yield of the process for given decision variable values.
Prescriptive/Optimization Model
• Prescriptive/optimization models “prescribe” behavior for an
organization that will enable it to best meet its goals.
• A prescriptive/optimization model seeks to find values of the
decision variables that optimize (maximize or minimize) an
objective function among the set of all values for the decision
variables that satisfy the given constraints.
• Components of this model include:
o Objective function(s)
o Decision variables
o Constraints
Objective Function
• In many situations, an organization may have more than one
objective.
• For example, in assigning students to the two high schools in
Bloomington, Indiana, the Monroe County School Board stated that
the assignment of students involve the following objectives:
o Equalize the number of students at the two high schools
o Minimize the average distance students travel to school
o Have a diverse student body at both high schools
• Multiple objective decision-making problems will be discussed in
chapter Goal Programming and Non Linear Programming
Objective Function
• The Daisy example seeks to maximize the yield for the production
process.
• In most models, there will be a function we wish to maximize or
minimize. This function is called the model’s objective function.
• To maximize the process yield we need to find the values of V, P, T,
A, B, and C that make the yield equation (below) as large as
possible.

Yield = 300 + 0.8V + 0.01P + 0.06T + (0.001T*P) - 0.01T2 – 0.001P2 + 11.7A +

9.4B + 16.4C + (19A*B) + (11.4A*C) – (9.6B*C)
Decision Variables
• Variables whose values are under our control and influence system
performance are called decision variables.
o In the Daisy example, V, P, T, A, B, and C are decision variables .
• In most situations, only certain values of the decision variables are
possible.
o For example, certain volume, pressure, and temperature conditions might be
unsafe.
o Also, A, B, and C must be nonnegative numbers.
• These restrictions on the decision variable values are called
constraints.
Constraints
• Suppose the Daisy example has the following constraints:
o Volume must be between 1 and 5 liters
o Pressure must be between 200 and 400 millipascal
o Temperature must be between 100 and 200 degrees centigrade
o Mixture must be made up entirely of A, B, and C
o For the drug to perform properly, only half the mixture at most
can be product A.
Constraints
• Mathematically, these constraints can be expressed:

V≤5 A≥0
V≥1 B≥0
P ≤ 400 C≥0
P ≥ 200 A + B + C = 1.0
T ≤ 200 A ≤ 0.5
T ≥ 100
The Complete Optimization Model
• Letting z represent the value of the objection function (the yield),
the entire optimization model may be written as:

Z = 300 + 0.8V + 0.01P + 0.06T + (0.001T*P) - 0.01T2 – 0.001P2 + 11.7A +

9.4B + 16.4C + (19A*B) + (11.4A*C) – (9.6B*C)

Subject to (s.t.) V≤5 T ≤ 200 A≥0

V≥1 T ≥ 100 B≥0
P ≤ 400 A + B + C = 1.0 C≥0
P ≥ 200 A ≤ 0.5
The Complete Optimization Model
• Any specification of the decision variables that satisfies all the
model’s constraints is said to be in the feasible region.
o For example, V = 2, P = 300, T = 150, A = 0.4, B = 0.3 and C = 0.3 is
in the feasible region.
• An optimal solution to an optimization model is any point in the
feasible region that optimizes (in this case maximizes) the objective
function.
o Using LINGO, it can be determined that the optimal solution to its
model is V = 5, P = 200, T = 100, A = 0.294, B = 0, C = 0.706, and z =
209.384.
Exercise 1
The WYNDOR GLASS CO. produces high-quality glass products, including windows
and glass doors. It has three plants. Aluminum frames and hardware are made in
Plant 1, wood frames are made in Plant 2, and Plant 3 produces the glass and
assembles the products. Because of declining earnings, top management has
decided to revamp the company’s product line. Unprofitable products are being
discontinued, releasing production capacity to launch two new products having
large sales potential:
o Product 1: An 8-foot glass door with aluminum framing
o Product 2: A 4 x 6 foot double-hung wood-framed window

Product 1 requires some of the production capacity in Plants 1 and 3, but none in
Plant 2. Product 2 needs only Plants 2 and 3. The marketing division has concluded
that the company could sell as much of either product as could be produced by
these plants.
Exercise 1
• The following table summarizes the data gathered:

• Formulate the linear programming model for WYNDOR GLASS CO!

Exercise 1
What we know?
Objective
• To maximize profit
• Profit: $3,000 for each Product 1 Batch, $5,000 for each Product 2 Batch

Decision variables
• Number of Production Batch for Product 1 to be produced, 𝑞1
• Number of Production Batch for Product 2 to be produced, 𝑞2

Constraints
• Production time at Plant 1
• Production time at Plant 2
• Production time at Plant 3
Exercise 1
Modeling the problem
Objective function:
max 𝑍 = 3.000𝑞1 + 5.000𝑞2

Subject to (the constraint):

• Constraint 1, 𝑞1 ≤4
• Constraint 2, 2𝑞2 ≤ 12
• Constraint 3, 3𝑞1 + 2𝑞2 ≤ 18
• Non negativity, 𝑞1 ≥ 0, 𝑞2 ≥ 0
Exercise 2
The Apex Television Company has to decide on the number of 27- and 20-
inch sets to be produced at one of its factories. Market research indicates
that at most 40 of the 27-inch sets and 10 of the 20-inch sets can be sold per
month. The maximum number of work-hours available is 500 per month. A 27-
inch set requires 20 work-hours and a 20-inch set requires 10 work-hours.
Each 27-inch set sold produces a profit of $120 and each 20-inch set
produces a profit of $80. A wholesaler has agreed to purchase all the
television sets produced if the numbers do not exceed the maxima indicated
by the market research.
Formulate a linear programming model for this problem!
Exercise 3
The Primo Insurance Company is introducing two new product lines: special
risk insurance and mortgages. The expected profit is $5 per unit on special risk
insurance and $2 per unit on mortgages. Management wishes to establish
sales quotas for the new product lines to maximize total expected profit.
The work requirements are as follows:

Formulate a linear programming model for this problem!

Exercise 4 (1/2)
Weenies and Buns is a food processing plant which manufactures hot
dogs and hot dog buns.
They grind their own flour for the hot dog buns at a maximum rate of
200 pounds per week. Each hot dog bun requires 0.1 pound of flour.
Each hot dog requires ¼ pound of pork product. They currently have a
contract with Pigland, Inc., which specifies that a delivery of 800
pounds of pork product is delivered every Monday.
All the other ingredients in the hot dogs and hot dog buns are in
plentiful supply.
Exercise 4 (2/2)
Finally, the labor force at Weenies and Buns consists of 5 employees
working full time (40 hours per week each). Each hot dog requires 3
minutes of labor, and each hot dog bun requires 2 minutes of labor.
Each hot dog yields a profit of $0.20, and each bun yields a profit of
$0.10. Weenies and Buns would like to know how many hot dogs and
how many hot dog buns they should produce each week to achieve
the highest possible profit.
Exercise 5 (1/2)
Giapetto’s Woodcarving, Inc., manufactures two types of wooden
toys: soldiers and trains.
A soldier sells for $27 and uses $10 worth of raw materials. Each soldier
that is manufactured increases Giapetto’s variable labor and
overhead costs by $14.
A train sells for $21 and uses $9 worth of raw materials. Each train built
increases Giapetto’s variable labor and overhead costs by $10.
The manufacture of wooden soldiers and trains requires two types of
skilled labor: carpentry and finishing. A soldier requires 2 hours of
finishing labor and 1 hour of carpentry labor. A train requires 1 hour of
finishing and 1 hour of carpentry labor.
Exercise 5 (2/2)
Each week, Giapetto can obtain all the needed raw material but only
100 finishing hours and 80 carpentry hours. Demand for trains is
unlimited, but at most 40 soldiers are bought each week.
Formulate a mathematical model of Giapetto’s situation that can be
used to maximize Giapetto’s weekly profit!