Chapter 13: Integer Linear Optimization Models Problems

Book Title: Business Analytics

Printed By: Manisah Othman ([email protected])

© 2021 Cengage Learning, Cengage Learning

Chapter 13
Problems

3. Minimizing Scrap. STAR Co. provides paper to smaller companies with

volumes that are not large enough to warrant dealing directly with the paper
mill. STAR receives 100-feet-wide paper rolls from the mill and cuts the rolls
into smaller rolls of widths 12, 15, and 30 feet. The demands for these widths
vary from week to week. The following cutting patterns have been established:

Pattern Trim Loss

Number 12-ft 15-ft 30-ft (ft)

1 0 6 0 10

2 0 0 3 10

3 8 0 0 4

4 2 1 2 1

5 7 1 0 1

Trim loss is the leftover paper from a pattern (e.g., for pattern 4,
feet used results in foot of trim loss).
Orders in hand for the coming week are 5,670 12-foot rolls, 1,680 15-foot
rolls, and 3,350 30-foot rolls. Any of the three types of rolls produced in
excess of the orders in hand will be sold on the open market at the selling
price. No inventory is held.

a. Formulate an integer programming model that will determine how

many 100-foot rolls to cut into each of the five patterns in order to
minimize trim loss.

b. Solve the model formulated in part (a). What is the minimal amount
of trim loss? How many of each pattern should be used and how
many of each type of roll will be sold on the open market?
5. Investment Net Present Value. Spencer Enterprises is attempting to choose
among a series of new investment alternatives. The potential investment
alternatives, the net present value of the future stream of returns, the capital
requirements, and the available capital funds over the next three years are
summarized as follows:

Capital Requirements ($)

Net Present
Alternative Value ($) Year 1 Year 2 Year 3

Limited warehouse 4,000 3,000 1,000 4,000

expansion

Extensive warehouse 6,000 2,500 3,500 3,500

expansion

Test market new product 10,500 6,000 4,000 5,000

Advertising campaign 4,000 2,000 1,500 1,800

Basic research 8,000 5,000 1,000 4,000

Purchase new 3,000 1,000 500 900

equipment

Capital funds available 10,500 7,000 8,750

a. Develop and solve an integer programming model for maximizing the net
present value.

b. Assume that only one of the warehouse expansion projects can be

implemented. Modify your model from part (a).

c. Suppose that if test marketing of the new product is carried out, the
advertising campaign also must be conducted. Modify your formulation
from part (b) to reflect this new situation.
7. Locating Police Substations. Grave City is considering the relocation of
several police substations to obtain better enforcement in high-crime areas.
The locations under consideration together with the areas that can be covered
from these locations are given in the following table:

Potential Locations for

Substations Areas Covered

A 1, 5, 7

B 1, 2, 5, 7

C 1, 3, 5

D 2, 4, 5

E 3, 4, 6

F 4, 5, 6

G 1, 5, 6, 7

a. Formulate an integer programming model that could be used to find the

minimum number of locations necessary to provide coverage to all areas.

b. Solve the problem in part (a).

8. Multi-product Production Planning. Hart Manufacturing makes three

products. Each product requires manufacturing operations in three
departments: A, B, and C. The labor-hour requirements, by department, are
as follows:

Department Product 1 Product 2 Product 3

A 1.50 3.00 2.00

B 2.00 1.00 2.50

C 0.25 0.25 0.25

During the next production period the labor-hours available are 450
in department A, 350 in department B, and 50 in department C.
The profit contributions per unit are $25 for product 1, $28 for
product 2, and $30 for product 3.
a. Formulate a linear programming model for maximizing total profit
contribution.

b. Solve the linear program formulated in part (a). How much of each product
should be produced, and what is the projected total profit contribution?

c.
After evaluating the solution obtained in part (b), one of the production
supervisors noted that production setup costs had not been taken into
account. She noted that setup costs are $400 for product 1, $550 for
product 2, and $600 for product 3. If the solution developed in part (b) is to
be used, what is the total profit contribution after taking into account the
setup costs?
d.
Management realized that the optimal product mix, taking setup costs into
account, might be different from the one recommended in part (b).
Formulate a mixed-integer linear program that takes setup costs provided
in part (c) into account. Management also stated that we should not
consider making more than 175 units of product 1, 150 units of product 2,
e. or 140 units of product 3.

Solve the mixed-integer linear program formulated in part (d). How much of
each product should be produced and what is the projected total profit
contribution? Compare this profit contribution to that obtained in part (c).