RSM 270 Operations Management

Linear Programming II

RSM 270 / Linear Programming II 1

 Today’s Class (# 11): Linear Programming II
» Solving an LP graphically when there are only 2 variables by identifying the feasible regions and
finding corner points
» Use “Solver” from Excel to solve LP’s with more than 2 variables
» Formulate various practical problems using Linear, Binary Integer, and Mixed-Integer Programs
» Key Concepts: Objective function, decision variables, constraints, feasibility, corner points, optimal
solution, shadow price, sensitivity analysis, binding constraint.

RSM 270 / Linear Programming II 2 2

 Logistics

 Case 2 will be due on April 7th, 11:59pm via Quercus.

 Final exam is Friday April 12th 9am-11am in person (location by last name)
– See “Exam Preparation” tab in Quercus for more information

RSM 270 / Linear Programming II 3

 Example LP Formulation: Flair Furniture Summary

Objective: Maximize Z = 7T + 5C (profit)

Subject to: 3T + 4C < 2400 (carpentry hrs.)

2T + 1C < 1000 (painting hrs.)
C < 450 (max no. of chairs)
T > 100 (min no. of tables)
T> 0, C > 0 (non-negativity)

RSM 270 / Linear Programming II 4

 Example Graphic Solution: Flair Furniture Continued
C

Objective Function Line: 500

Unique Optimal Point
(T = 320, C = 360)
Profit
400
=

7T
+5
C=
300
7T + 5C

$2
7T

7T
,8 0

+5
+5

C=
C=
200

3T

$4
$2

+4

,0 4
,1 0

C=

0
0

2 ,4
100 Feasible

00
Region

RSM 270 / Linear Programming II

0 0 100 200 300 400 500 T 5
 Example Graphic Solution: Flair Furniture Continued
C
Additional Constraint: 500 New optimal point
T = 300, C = 375
Need at least 75 more
chairs than tables 400 Feasible
T = 320
Region
C > T + 75 C = 360
300 No longer
or feasible

200
C – T > 75

100
Left Hand Side (LHS) Right Hand Side (RHS)

RSM 270 / Linear Programming II

0 0 100 200 300 400 500 T 6
 Main Insights and Definitions

 Feasible solution: A point that satisfies all the constraints in the

problem.
 The set of all feasible solutions is called the feasible set or
feasible region. It is always polygonal.
 Corner Point Property: An optimal solution to an LP model must
lie at one or more corner points.
 Optimal point (region): The corner point or region with the best
objective function value
– (i.e., the largest for a maximization problem; the smallest for a
minimization problem)

RSM 270 / Linear Programming II 7

 Main Insights and Definitions

 A constraint is said to be binding or active if it is satisfied with

equality at the optimal solution. That is LHS = RHS.
– Geometrically, an active constraint is one that passes through the
optimal solution.

 A constraint is said to be inactive or nonbinding if it is satisfied

with strict inequality at the optimal solution.
– Geometrically, an inactive constraint is one that does not pass through
the optimal solution.

RSM 270 / Linear Programming II 8

 Special Situations

 Redundant Constraints

 Alternate Optimal Solutions

 Infeasible Solution

 Unbounded Optimal Directions

RSM 270 / Linear Programming II 9

 Example Excel Solution: Flair Furniture Continued

Use Solver from Microsoft Excel

RSM 270 / Linear Programming II 10

 Answer and Sensitivity Reports

RSM 270 / Linear Programming II 11

 Flair Furniture Continued: Answer Report
Objective Cell (Max)
Cell Name Original Value Final Value
$D$6 Profit Total Profit = 0 4040

Variable Cells
Cell Name Original Value Final Value Integer
$B$5 Number of units Tables 0 320 Contin
$C$5 Number of units Chairs 0 360 Contin

Slack value for each constraint is the

difference between the LHS and RHS.
Constraints
Cell Name Cell Value Formula Status Slack
$D$11 Minimum chairs LHS 320 $D$11>=$F$11 Not Binding 220
$D$8 Carpentary hours LHS 2400 $D$8<=$F$8 Binding 0
$D$9 Painting hours LHS 1000 $D$9<=$F$9 Binding 0
$D$10 Maximum chairs LHS 360 $D$10<=$F$10 Not Binding 90
RSM 270 / Linear Programming II 12
 Shadow Prices

 Each constraint has an associated shadow price.

 The shadow price is the change in the optimal objective value
per unit increase in the right-hand side of the constraint, given
that all other data remain the same.

 Shadow prices worthy of consideration are the ones whose slack

variables are zero at optimality. That is,
– the constraint is binding because RHS – LHS = 0

RSM 270 / Linear Programming II 13

 Flair Furniture Continued: Sensitivity Report

Range Information
Shadow Price Information
Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$5 Number of Units Tables 320 0 7 3 3.25
$C$5 Number of Units Chairs 360 0 5 4.333333333 1.5

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$11 Minimum tables 320 0 100 220 1E+30
$D$8 Carpentry hours 2400 0.6 2400 225 900
$D$9 Painting hours 1000 2.6 1000 600 150
$D$10 Maximum chairs 360 0 450 1E+30 90
RSM 270 / Linear Programming II 14
 Flair Furniture Continued: Sensitivity Analysis Questions
 Flair Furniture is offered 100 more painting hours at a cost of $250. Should it take the
deal?
– Yes. The objective is maximization and 100 * 2.6 (profit) > 250 (cost)

 Flair Furniture is offered 100 more carpentry hours at a cost of $250. Should it take
the deal?
– No. The objective is maximization and 100 * 0.6 (profit) < 250 (cost).

 What would be the impact of decreasing the minimum number of tables in 50 units?
– No impact on the optimal solution

 What would be the impact of increasing the maximum number of chairs in 50 units?
– No impact on the optimal solution
RSM 270 / Linear Programming II 15
 General Principles on Shadow Prices

 The unit of the shadow price is the unit of the objective function divided by the
unit of the constraint:
D (optimal objective function value)
Shadow Price =
D (RHS value)

 In terms of Microeconomic Theory, the Shadow Price of a given constraint is the

Marginal Value of the resource whose units are expressed in the constraint.
 Shadow prices values are valid in a range. Outside of that range, it is necessary to
resolve the LP.
 The shadow price for any non-binding constraint will be zero because LHS ≠
RHS.
RSM 270 / Linear Programming II 16
 We Can Extend this to More Variables!

17
RSM 270 / Linear Programming II 17
 Marketing: Media Selection Problem (MSP)

 Kitchener Electronics has four methods of advertising:

» TV spots
» Newspaper ads
» And, two types of radio advertisements:
 Prime time

 Afternoon

– Budget: $8,000 per week for advertising from all four methods
– Maximum budget for radio: $1800
– Minimum radio spots (Prime time plus Afternoon): 5

Decision: How many ads of each type?

Objective: Maximize audience exposure
RSM 270 / Linear Programming II 18
 MSP Data

Advertising Options
Radio Radio
TV Spot Newspaper (prime time) (afternoon)
Audience
Reached 5,000 8,500 2,400 2,800
(per ad)
Cost
$800 $925 $290 $380
(per ad)
Max Ads
12 5 25 20
(per week)

RSM 270 / Linear Programming II 19

 Step 2: Solution Technique

Use Solver from Microsoft Excel

RSM 270 / Linear Programming II 20

 Step 3: Answer Report

RSM 270 / Linear Programming II 21

 Step 3: Sensitivity Report
Reduced Cost Information Range Information

[1,800 - 350, 1,800 + 1575]

RSM 270 / Linear Programming II

Shadow Price Information 22
 Reduced Cost

 Each decision variable is associated with a reduced cost.

 The reduced cost of a decision variable indicates how much the objective
function coefficient corresponding to that decision variable must be improved
before the decision variable takes a non-zero value in the optimal solution.
 If the optimal value of a decision variable is none zero, then the reduced cost is
zero.
 Suppose the optimal value of a decision variable is zero, and its reduced cost is
also zero. In that case, at least one other corner point is also an optimal
solution, in which this decision variable is positive.

RSM 270 / Linear Programming II 23

 Sensitivity Analysis Question 1

 How would the audience exposure change if the maximum number of

Newspaper ads was increased by one (from 5 to 6)?
– The change is 2,718.5 (see the shadow price in the sensitivity report)

RSM 270 / Linear Programming II 24

 Sensitivity Analysis Question 2

 Would you rather have an $320 added in your overall budget, or have the
same budget but increase the expense limit on radio ads per week by
$1,000 to $2,800?
– For a $320 increase in total budget, and a shadow price of budget constraint as 6.25, the change in
audience exposure is 320 * (6.25) = 2,000 additional exposures.

– Or, we can increase the expense limit to $2,800 from $1,800, meaning there is an increase of
$1,000. Since the shadow price for this constraint is 2.0258, the change in audience is 1,000*2.0258
= 2,025.8 additional exposures.

– Because 2,025.8 > 2,000, we should choose the option to increase the expense limit on radio
ads per week by $1,000 to $2,800 instead of increasing the overall budget by $320.

RSM 270 / Linear Programming II 25

 Sensitivity Analysis Question 3

 Currently, the model does not include any afternoon Radio ads in the
optimal solution. What is the minimum size of the audience for afternoon
Radio ads so that the model would begin to include those ads in the optimal
solution?
§ Objective coefficient of Radio (Afternoon) minus its Reduced Cost =
2800 – (– 344.8276) = 3,144.8276.
§ This new value indicates that for the current set of constraints and variables, the amount of
audience exposure from Radio (Afternoon) must be increased to 3,144.8276 (instead of its current
value of 2,800) so that the model MAY assign a positive final value to this media.

RSM 270 / Linear Programming II 26

 Reduced Cost: Minimization Problem
Min 10 X1 + 6 X2 + 14 X3 + 9 X4
Subject to 1 X1 + 1 X3 = 100
1 X2 + 1 X4 = 150
4 X1 + 3 X2 < 600
6 X1 + 8 X2 < 1080
X1, X2, X3, X4 > 0

Final Reduced Objective Allowable Allowable

Cell Name Value Cost Coefficient Increase Decrease
$B$3 Product 1 100 0 10 1.75 1E+30
$C$3 Product 2 60 0 6 3 2.333333
$D$3 Product 3 0 1.75 14 1E+30 1.75
$E$3 Product 4 90 0 9 2.333333 3
• The objective function value of this solution is = (100 ∗ 10 + 60 ∗ 6 + 90 ∗ 9) = 2170

RSM 270 / Linear Programming II 27

 Reduced Cost: Minimization Problem 14 – (+1.75) = 12.25

Min 10 X1 + 6 X2 + 12.25 X3 + 9 X4
Subject to 1 X1 + 1 X3 = 100
1 X2 + 1 X4 = 150
4 X1 + 3 X2 < 600
6 X1 + 8 X2 < 1080
X1, X2, X3, X4 > 0
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$3 Product 1 100 0 10 0 1E+30
$C$3 Product 2 60 0 6 3 0
$D$3 Product 3 0 0 12.25 1E+30 0
$E$3 Product 4 90 0 9 0 3

This problem has multiple optimal solutions. The alternative optimal solution is
• 𝑥! = 0, 𝑥" = 135, 𝑥# = 100, 𝑥$ = 15
• Objective function value of this solution is = (135 ∗ 6 + 100 ∗ 12.25 + 15 ∗ 9) = 2170

RSM 270 / Linear Programming II 28

 Summary: Linear Programming
1) Shadow price:
§ It is associated with a constraint.
§ It captures the changes in the objective function value given the
changes in the RHS of constraints.
§ The shadow price of a binding constraint is non-zero and the shadow
price of a non-binding constraint is zero. That is, if the slack variable
of a constraint is non-zero, its shadow price is zero.
§ The shadow price of a constraint can be positive or negative and it
must be interpreted based on the nature of the objective function.
§ Shadow prices are valid within a range. If the range is violated, the LP
problem must be re-solved.

RSM 270 / Linear Programming II 29

 Summary: Linear Programming
2) Reduced cost:
§ It is associated with a variable.
§ It shows how much the objective function coefficient of a variable
must be improved before a variable can take a non-zero final value
in the optimal solution.
§ The reduced cost can take a positive or negative value.
§ Maximization problems with positive objective coefficients have negative
reduced costs, which shows the amount of profit deficit for a variable,
§ Minimization problems with positive objective coefficients have positive
reduced costs, which shows the amount of cost surplus for a variable.
§ To find the improved coefficient for a variable, use the following
formula:
§ Coefficient value of the variable (with zero final value) minus its reduced cost.
RSM 270 / Linear Programming II 30
 1. Investment Portfolio
The Twin City Trust (TCT) invests in short-term Trade Credits (TC), Corporate Bonds
(CB), Government Bonds (GB), and Construction Loans (CL).
To encourage a diversified portfolio, the board of directors has placed limits on the
amount that can be committed to any one type of investment.
Ø TCT has $5 million available for immediate investment and wishes to do two
things:
Ø (i) Maximize the interest earned on the investments made over the next six
months, and
Ø (ii) Satisfy the diversification requirements as set by the board of directors.
The specifics of the investment possibilities are as follows:
INVESTMENT INTEREST EARNED (%) MAXIMUM INVESTMENT ($MM)
Trade Credit (TC) 12 1.0
Corporate Bonds (CB) 11 2.5
Government Bonds (GB) 9 1.5
Construction Loans (CL) 15 1.8

RSM 270 / Linear Programming II 31

 Additional constraints
The specifics of the investment possibilities are as follows:

INVESTMENT INTEREST EARNED (%) MAXIMUM INVESTMENT ($MM)

Trade Credit (TC) 12 1.0
Corporate Bonds (CB) 11 2.5
Government Bonds (GB) 9 1.5
Construction loans (CL) 15 1.8

In addition, the board specifies that

 at least 55% of the funds invested must be in corporate (CB) and government bonds
(GB),
 at least half of the funds invested in bonds be government bonds (GB), and that
 no less than 15% be invested in trade credit (TC).

RSM 270 / Linear Programming II 32

 Investment Portfolio – cont’d
 Our decision variables are:
TC: Trade Credit investment in dollars
CB: Corporate Bonds investment in dollars
GB: Government Bonds investment in dollars
CL: Construction Loans investment in dollars

 We wish to Maximize Return

z = 0.12TC + 0.11CB + 0.09GB + 0.15CL

RSM 270 / Linear Programming II 33

 Investment Portfolio - constraints
 We have 5 maximum investment constraints
TC ≤ 1,000,000 – Trade Credit

CB ≤ 2,500,000 – Corporate Bonds

GB ≤ 1,500,000 – Government Bonds

CL ≤ 1,800,000 – Construction Loans

TC + CB + GB + CL ≤ 5,000,000
» Total invested must be less than or equal to $5,000,000

RSM 270 / Linear Programming II 34

 Investment Portfolio – constraints cont’d
 A minimum of 55% must be invested in bonds
CB + GB ≥ 0.55(TC + CB + GB + CL)
» Corporate and Government Bonds (CB + GB) is at least 55% of the total (TC + CB + GB + CL)

CB + GB ≥ 0.55TC + 0.55CB + 0.55GB + 0.55CL

–0.55TC + 0.45CB + 0.45GB – 0.55CL ≥ 0
» Moving variables to the LHS

RSM 270 / Linear Programming II 35

 Investment Portfolio – constraints cont’d

 A minimum of 15% must be invested in Trade Credit

TC ≥ 0.15(TC + CB + GB + CL)
» Trade credit (TC) is at least 15% of the total (TC + CB + GB + CL)

TC ≥ 0.15TC + 0.15CB + 0.15GB + 0.15CL

0.85TC – 0.15CB – 0.15GB – 0.15CL ≥ 0
» Moving variables to the LHS

RSM 270 / Linear Programming II 36

 Investment Portfolio – constraints cont’d

 At least half of the bonds must be government bonds

GB ≥ 0.50(CB + GB)
» Government Bonds (GB) is at least 50% of the bonds (CB + GB)

GB ≥ 0.50CB + 0.50GB
–0.5CB + 0.50GB ≥ 0
» Moving variables to the LHS

RSM 270 / Linear Programming II 37

 Investment Portfolio Formulation
Max z = 0.12TC + 0.11CB + 0.09GB + 0.15CL
Subject to:
TC ≤ 1,000,000
CB ≤ 2,500,000
GB ≤ 1,500,000
CL ≤ 1,800,000
TC + CB + GB + CL ≤ 5,000,000
–0.55TC + 0.45CB + 0.45GB – 0.55CL ≥ 0
0.85TC – 0.15CB – 0.15GB – 0.15CL ≥ 0
–0.5CB + 0.50GB ≥ 0
TC, CB, GB, CL ≥ 0
RSM 270 / Linear Programming II 38
 Network Models

 A network model is one that can be represented by a set of nodes, a set

of arcs, and functions (e.g. costs, supplies, demands, etc.) associated
with the arcs and/or nodes.
 Transportation, assignment, and transshipment problems are all
examples of network problems.
 Also:
– Shortest route, minimal spanning tree, maximal flow problems
– Project Management (PERT/CPM)

RSM 270 / Linear Programming II 39

 2. BBC Transportation
 Building Brick Company (BBC) has orders for 80 tons of bricks at
three suburban locations as follows: Northwood – 25 tons,
Westwood – 45 tons, and Eastwood – 10 tons.
 BBC has two plants, each of which can produce 50 tons per week
 How should end-of-week shipments be made to fill the above
orders given the following delivery cost/ton?:

Northwood Eastwood Westwood

Plant 1 24 30 40
Plant 2 30 40 42
Unit transportation cost from each plant to each suburban location
RSM 270 / Linear Programming II 40
 BBC Example

 Network Representation
1 d1 – Northwood
24
s1 1 30
40
2 d2 - Eastwood
30 40
ss22 2
42
3 d3 - Westwood

Supply Demand
(Plants) (Markets)

RSM 270 / Linear Programming II 41

 Transportation Problem
 Formulated in terms of amounts shipped from origins to destinations, 𝑥!"
$ &
𝑀𝑖𝑛 $ $ 𝑐!% 𝑥!%
!"# %"#
&
The sum of shipments from each supply source i to different markets
j must not exceed the maximum capacity in supply source i. 𝑠. 𝑡. $ 𝑥!% ≤ 𝑠! 𝑖 = 1,2, … , 𝑚 𝑆𝑢𝑝𝑝𝑙𝑦
%"#
$
The sum of shipments from various supply sources to a specific $ 𝑥!% = 𝑑% 𝑗 = 1,2, … , 𝑛 𝐷𝑒𝑚𝑎𝑛𝑑
market j must equal demand in market j.
!"#
𝑥!% ≥ 0 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑖 𝑎𝑛𝑑 𝑗

RSM 270 / Linear Programming II 42

 LP Formulation: Transportation
Decision Variables
xij = amount shipped from Plant i to customer j where
i = 1 (Plant #1), 2 (Plant #2)
j = 1 (Northwood), 2 (Eastwood), 3 (Westwood)

Objective Function
Minimize Overall Shipping Costs:
Min 24x11 + 30x12 + 40x13 + 30x21 + 40x22 + 42x23

RSM 270 / Linear Programming II 43

 LP Formulation: Transportation
Constraints

Plant #1 x11 + x12 + x13 ≤ 50

Plant #2 x21 + x22 + x23 ≤ 50
Northwood: x11 + x21 = 25
Eastwood: x12 + x22 = 45
Westwood: x13 + x23 = 10

Non-negativity of variables: xij ≥ 0, for all i and j.

RSM 270 / Linear Programming II 44

 Excel Formulation (Standard)

x 11 x 12 x 13 x 21 x 22 x 23

DecVar 0 0 0 0 0 0
Constraint
ObFnCoef 24 30 40 30 40 42 0 Amount

Plant 1 1 1 1 0 ≤ 50
Plant 2 1 1 1 0 ≤ 50
Northwood 1 1 0 = 25
Eastwood 1 1 0 = 45
Westwood 1 1 0 = 10

RSM 270 / Linear Programming II 45

 Excel Solution
x 11 x 12 x 13 x 21 x 22 x 23

DecVar 5 45 0 20 0 10
Constraint Constraint
ObFnCoef 24 30 40 30 40 42 2490 Amount Slack

Plant 1 1 1 1 50 ≤ 50 0
Plant 2 1 1 1 30 ≤ 50 20
Northwood 1 1 25 = 25
Eastwood 1 1 45 = 45
Westwood 1 1 10 = 10

 Plant 1 is fully utilized, shipping 45 tons to Eastwood and 5 tons to Northwood.

Plant 2 supplies the remaining 20 tons required by Northwood and the 10 tons
for Westwood and has 20 tons of spare capacity.
 Total delivery cost is $2,490
RSM 270 / Linear Programming II 46
 Excel Formulation (Alternate)

Costs Northwood Eastwood Westwood

Plant 1 24 30 40
Plant 2 30 40 42

Volumes Northwood Eastwood Westwood Shipped Capacity

Plant 1 0 0 0 0 50
Plant 2 0 0 0 0 50
Received 0 0 0 0
Demand 25 45 10 Cost

RSM 270 / Linear Programming II 47

 Excel Solution

Costs Northwood Eastwood Westwood

Plant 1 24 30 40
Plant 2 30 40 42

Volumes Northwood Eastwood Westwood Shipped Capacity

Plant 1 5 45 0 50 50
Plant 2 20 0 10 30 50
Received 25 45 10 2490
Demand 25 45 10 Cost

RSM 270 / Linear Programming II 48

 Excel Sensitivity Analysis
Adjustable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$6 Plant 1 Northwood 5 0 24 4 4
$C$6 Plant 1 Eastwood 45 0 30 4 1E+30
$D$6 Plant 1 Westwood 0 4 40 1E+30 4
$B$7 Plant 2 Northwood 20 0 30 4 4
$C$7 Plant 2 Eastwood 0 4 40 1E+30 4
$D$7 Plant 2 Westwood 10 0 42 4 1E+30

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$6 Plant 1 Shipped 50 -6 50 20 5
$E$7 Plant 2 Shipped 30 0 50 1E+30 20
$B$8 Received Northwood 25 30 25 20 20
$C$8 Received Eastwood 45 36 45 5 20
$D$8 Received Westwood 10 42 10 20 10

RSM 270 / Linear Programming II 49

 Shadow Price Interpretation

 If we had another 20 units of capacity at Plant 1, each unit would

improve the solution (reduce cost) by $6.

 Each additional unit of demand at Northwood, Eastwood and Westwood

will cost us $30, $36 and $42, respectively, within their allowable
increases.

RSM 270 / Linear Programming II 50

 3. Mixed Integer Program (MIP): Facility Location (Not on Exam)
 Marshall Manufacturing is trying to determine which of its five
plants to operate. The Fixed Operating Costs (FOC) associated with
each plant and the plant capacities are:

Annual
Plant Capacity
FOC
Plant 1 2,100,000 12,000
Plant 2 850,000 18,000
Plant 3 1,800,000 14,000
Plant 4 1,100,000 10,000
Plant 5 900,000 16,000

RSM 270 / Linear Programming II 51

 Mixed Integer Program (Not on Exam)
 The cost of shipping from each potential manufacturing plant to
each warehouse and the demand at each warehouse are:
Warehouse
Plant
A B C D
Plant 1 56 21 32 65
Plant 2 18 46 7 35
Plant 3 12 71 41 52
Plant 4 30 24 61 28
Plant 5 45 50 26 31
Demand 6,000 14,000 8,000 10,000

RSM 270 / Linear Programming II 52

 Formulation: Mixed Integer Problem (Not on Exam)
Decision Variables:
𝑦! ∈ 0,1 = 1 if plant i is open i = 1,2,3,4,5
= 0 if plant i is not open
𝑥!" ≥ 0: amount to ship from plant i to warehouse j; j = A,B,C,D

Objective Function:
Minimize z = 2,100,000y1 + 850,000y2 + 1,800,000y3 + 1,100,000y4 + 900,000y5
+ 56x1A + 21x1B + 32x1C + 65x1D
+ 18x2A + 46x2B + 7x2C + 35x2D
+ 12x3A + 71x3B + 41x3C + 52x3D
+ 30x4A + 24x4B + 61x4C + 28x4D
+ 45x5A + 50x5B + 26x5C + 31x5D
RSM 270 / Linear Programming II 53
 Formulation (cont’d.) (Not on exam)
Constraints:
Supply: x1A + x1B + x1C + x1D ≤ 12,000y1
x2A + x2B + x2C + x2D ≤ 18,000y2
x3A + x3B + x3C + x3D ≤ 14,000y3
x4A + x4B + x4C + x4D ≤ 10,000y4
x5A + x5B + x5C + x5D ≤ 16,000y5
Which become:
x1A + x1B + x1C + x1D - 12,000y1 ≤ 0
x2A + x2B + x2C + x2D - 18,000y2 ≤ 0
x3A + x3B + x3C + x3D - 14,000y3 ≤ 0
x4A + x4B + x4C + x4D - 10,000y4 ≤ 0
x5A + x5B + x5C + x5D - 16,000y5 ≤ 0
RSM 270 / Linear Programming II 54
 Formulation (cont’d.) (Not on exam)
Constraints:
Demand: x1A + x2A + x3A + x4A + x5A = 6000
x1B + x2B + x3B + x4B + x5B = 14,000
x1C + x2C + x3C + x4C + x5C = 8000
x1D + x2D + x3D+ x4D + x5D = 10,000

𝑥!" ≥ 0 and 𝑦! ∈ {0, 1}

RSM 270 / Linear Programming II 55

 Mixed Integer Problem – Excel (Not on exam)

Input Values

RSM 270 / Linear Programming II 56

 Mixed Integer Problem – Excel (Not on exam)

Decision
Variables

RSM 270 / Linear Programming II 57

 Mixed Integer Problem – Excel (Not on exam)

Constraint
LHSs

RSM 270 / Linear Programming II 58

 Mixed Integer Problem – Excel (Not on exam)

Capacity exists only if

the plant is operated

Cost Variables

RSM 270 / Linear Programming II 59

 Readings & More…

 For a better grasp of the key concepts, the following readings are
only recommended:
– Appendix A of Jacobs and Chase.

 For next class, please:

– Check Quercus for marks.

RSM 270 / Linear Programming II 60