Quantitative Methods for Decision Taking

Final collection of exercises

Exercise 1 (1p)

Ken and Larry, Inc., supplies its ice cream parlors with three flavors of ice cream: chocolate,
vanilla, and banana. Due to extremely hot weather and a high demand for its products, the
company has run short of its supply of ingredients: milk, sugar, and cream. Hence, they will
not be able to fill all the orders received from their retail outlets, the ice cream parlors. Due
to these circumstances, the company has decided to choose the amount of each flavor to
produce that will maximize total profit, given the constraints on supply of the basic
ingredients.

The chocolate, vanilla, and banana flavors generate, respectively, $1.00, $0.90, and $0.95
of profit per gallon sold. The company has only 200 gallons of milk, 150 pounds of sugar,
and 60 gallons of cream left in its inventory. The linear programming formulation for this
problem is shown below in algebraic form.

C = gallons of chocolate ice cream produced,

V = gallons of vanilla ice cream produced,
B = gallons of banana ice cream produced.

Maximize Profit = 1.00 C + 0.90 V + 0.95 B,

subject to
Milk: 0.45 C + 0.50 V + 0.40 B ≤ 200 gallons
Sugar: 0.50 C + 0.40 V + 0.40 B ≤ 150 pounds
Cream: 0.10 C + 0.15 V + 0.20 B ≤ 60 gallons
and C ≥ 0, V ≥ 0, B ≥ 0.

This problem was solved using the Excel Solver. The spreadsheet (already solved) and the
sensitivity report are shown in the next page. [Note: The numbers in the sensitivity report for
the milk constraint are missing on purpose, since you will be asked to fill in these numbers in
part (f).]
For each of the following parts, answer the question as specifically and completely as is
possible without solving the problem again on Solver. Note: Each part is independent (i.e.,
any change made to the model in one part does not apply to any other parts).

a) What is the optimal solution and total profit?

b) Suppose the profit per gallon of banana changes to $1.00. Will the optimal solution
change, and what can be said about the effect on total profit?
c) Suppose the profit per gallon of banana changes to $0.92. Will the optimal solution
change, and what can be said about the effect on total profit?
d) Suppose the company discovers that 3 gallons of cream have gone sour and so
must be thrown out. Will the optimal solution change, and what can be said about
the effect on total profit?
e) Suppose the company has the opportunity to buy an additional 15 pounds of sugar
at a total cost of $15. Should they? Explain.
f) Fill in all the sensitivity report information for the milk constraint, given just the optimal
solution for the problem. Explain how you were able to deduce each number.
Exercise 2 (1p)

Decora Accessories manufactures a variety of bathroom accessories, including decorative

towel rods and shower curtain rods. Each of the accessories includes a rod made out of
stainless steel. However, many different lengths are needed: 12”, 18”, 24”, 40”, and 60”. Decora
purchases 60” rods from an outside supplier and then cuts the rods as needed for their
products. Each 60” rod can be used to make a number of smaller rods. For example, a 60”
rod could be used to make a 40” and an 18” rod (with 2” of waste), or 5 12” rods (with no waste).
For the next production period, Decora needs 25 12” rods, 52 18” rods, 45 24” rods, 30 40” rods,
and 12 60” rods. What is the fewest number of 60” rods that can be purchased to meet their
production needs?

a) Formulate an integer programming model in algebraic form for this problem. (Hint:
There are 11 different ways of cutting up a 60” rod to produce 12”, 18”, 24”, 40”, and 60”
rods)

b) Define the meaning of the decision variables you are using.

c) Describe the logic of your formulation (tables, objective function, constraints…)

Exercise 3 (1p)

Solve by Brunch & Bound:

Min (x1 + x2)

Subject to:

3x1-x2  
5x+ 2x  
x1  0, x2  0 and Integer

Exercise 4 (1p)

What is the maximum flow of the following network if a=5?:

Exercise 5 (1p)

Wheat is harvested in the Midwest and stored in grain elevators in three different
cities—Kansas City, Omaha, and Des Moines. These grain elevators supply three
flour mills, located in Chicago, St. Louis, and Cincinnati. Grain is shipped to the
mills in railroad cars, each of which is capable of holding one ton of wheat. Each
grain elevator is able to supply the following number of tons (i.e., railroad cars) of
wheat to the mills on a monthly basis:

Each mill demands the following number of tons of wheat per month.

The cost of transporting one ton of wheat from each grain elevator (source) to
each mill (destination) differs according to the distance and rail system. These
costs are shown in the following table. For example, the cost of shipping one ton
of wheat from the grain elevator at Omaha to the mill at Chicago is $7.

The problem is to determine how many tons of wheat to transport from each grain
elevator to each mill on a monthly basis in order to minimize the total cost of
transportation.
a) Write the linear programming system and solve with software
b) Give an approximate solution using the vogel method and compare and
comment on whether the solution is close

Exercise 6 (1p)

A company manufactures four highly technical products that have to pass through the
following departments: wiring, drilling, assembly and inspection, before they are
commercialized. The time requirement in hours for each unit produced and its
corresponding profit value are summarized in the following table:

Product Wiring Drilling Assembly Inspection Unit profit

XP124 0.5 0.3 0.2 0.5 9
XM895 1.5 1 4 1 12
TR598 1.5 2 1 0.5 15
GM423 1 3 2 0.5 11
The available capacity of each department and the minimum monthly production to fulfill
contracts are the following:

Minimum
Department Capacity (Hours) Product
production level
Wiring 15,000 XP124 150
Drilling 17,000 XM895 100
Assembly 26,000 TR598 300
Inspection 12,000 GM423 400

Determine the number of units to be produced of each product for the coming month.
Solve the problem using computer software.

Exercise 7 (1p)

An industrial company is planning the production of a chemical product for the next 3
months. The monthly demand and the purchasing unit cost of raw material are listed below:

Month 1 2 3
Cost (€ / kg) 5 10 5
Demand (kg) 100 150 200

The demand of a month can be covered with the production of the same month, and also
with the production of past months. The storage costs are of € 10 per kilo stocked at the end
of the month. The stock of finished products at the beginning of the first month is of 10kg.
There are no stocks of raw material. The capacity of the plant is of 200 kilos per month.

1. Define the linear programming model that allows to obtain the production plan that
minimizes the purchasing and storage costs. Solve the model using computer
software and perform sensitivity analysis. Afterwards, answer the following questions.
2. Which are the basic variables of this problem?
3. If the initial stock increases in 20 kg and the demand of the first month increases in
100kg, how will this affect to the optimal solution (how much will the objective
function -that is total cost - increase or decrease)? Explain your answer.
4. If the capacity of the third month is 170 units, how will this affect to the optimal
solution? You are asked to assert how much will the objective function increase or
decrease? Explain your answer.

Exercise 8 (1p)

The director of an educational center must assign the teaching of 5 subjects, A1, A2, A3, A4
and A5 to 4 teachers, P1, P2, P3 and P4 taking into account the assessments of the surveys
made by the students and some restrictions imposed for a new regulation. Based on the
surveys of previous years, there are the following
average evaluations (scale: 0 bad, 5 excellent):

A1 A2 A3 A4 A5
P1 2.7 2.2 3.4 2.8 3.6
P2 2 3.6 3.4 2.8 3.6
P3 3.2 3.8 2.3 1.9 2.6
P4 2.6 2.5 1.8 4.2 3.5

The new regulation says that teacher P3 cannot teach subjects A1 and A2. The subjects
cannot be shared and all of them must be taught. No teacher can be left without subjects.
The P1 teacher should only be assigned one subject.

Solve with the Hungarian method

Exercise 9 (1p)

A company wants to minimize the costs of shipping its product (plastic boxes) from two
factories (F1 and F2) to three customers (C1, C2 and C3), whose minimum demand is 100,
200 and 300 units respectively. Each factory produces exactly 400 units each month. The
next table provides the unit shipping costs, demand and production capacity.

Production
From / To C1 C2 C3
capacity
F1 1 2 3 400
F2 3 2 1 400
Demand 100 200 300

1. Solve this problem using computer software and perform sensitivity analysis.
2. Which are the basic variables of this problem?
3. If the minimum demand of the second customer (C2) decreases in 100 units, how
will this affect to the optimal solution (how much will the objective function increase
or decrease)? Explain your answer.
4. If the minimum demand of the third customer (C3) increases in 100 units, how will
this affect to the optimal solution? You are asked to assert how much will the
objective function increase or decrease? Explain your answer.

Exercise 10 (1p)

The quality control department of a company counts for its four workers (T1, T2, T3, T4) on
four types of manufactured products (A, B, C, D), the average number of defects per product
that appears in the table shown below.

A B C D
T1 4 8 9 3
T2 9 1 6 4
T3 7 3 6 8
T4 6 5 7 -

Where the dash "-" indicates that it is not inspected.

Taking into account that each product is made by a single worker and that all products
must be made.
1. Assign products to workers, if each worker only makes a single product in a way that
minimizes the average total number of defects.
2. The crisis has affected the company, which has decided to fire worker T4 and
manufacture one more product, E, being the average number of defects for it.

E
T1 4
T2 9
T3 7
In the following situations to which table would you apply the Hungarian Method to
find the optimal assignments that minimize the mean total number of defects?
• Each worker must now make at least one product and at most two.
• Each worker must make at least one product and at most two and also workers T1
and T2 must make the same number of manufactured products.