Linear Programming

Petroleum Blending
We have two types of crudes that can be blended to form
premium and regular type of petrol. This can be done by two
processes. The output depends on the number of times each
process is run.
The requirements and outputs for each of the two processes for
each run are given below:
Requirement/Run Output/Run
Process
Crude A Crude B Premium Regular
I 1 3 5 2
II 4 2 3 8
Availability 1000 1500
Minimum Demand 800 700
Profit/Unit 3000 2500

What should we do?

 Production Process
A company produces three products X, Y and Z, which sell in
market at price Rs 100/-, 105/- and 115/- per unit
respectively. Total demand for these products in market is
known to be at least 300, 200 and 400 units respectively.

These products require four different raw-materials. Raw

material quantity required per unit of finish product is given
in the table below:
X Y Z
A 1 2 1
B 1 1 2
C 3 2 2
D 15 12 20

These four raw materials cost Rs 12/-, 15/-, 6/- and 0.50/-
per unit. Company can arrange maximum of 1200, 1500, 2400 and
20000 units of raw materials respectively for production
purpose.

Company has fixed administrative cost of Rs. 20000/- and it

requires to spend Rs 5/- per unit as distribution cost to sell
one unit in the market.

What should we do?

 Sugar Production
We own a sugar processing company that operates two plants at
Nagpur and Pune. Sugarcane is procured from different regions
in the surrounding areas and the maximum availability in each
region is as follows:

 R1: 250 tonnes at Rs.4000/- per ton

 R2: 360 tonnes at Rs.4500/- per ton
 R3: 450 tonnes at Rs.3500/- per ton

Shipping costs in Rs per tonne are

Nagpur Pune
R1 300 400
R2 250 450
R3 500 720

Plant capacities and labour costs are:

Nagpur Pune
Labour cost (Rs/ton) 50 45
Capacity(tons) 450 600

The sugar produced is sold at a price of Rs. 50/kg. There is

ample demand to sell all the sugar produced.

What should we do?

Note: 1 Ton = 1000 kg

 Warehousing and Distribution Planning

We own a handloom cooperative society in Maharashtra (MHCS)

and responsible for marketing, distribution and sales of
handlooms cooperatives in the state. MHCS collects from
cooperatives all over the state and sells them in the
neighbouring states. It has recently opened warehouses to
handle the consolidation and distribution of merchandise. The
warehouses are located in Nagpur, Pune, Nashik, Kolhapur and
Latur.
The merchandise is routed through these warehouses to various
states. The merchandise is transferred in Pallets. The monthly
availability of merchandise at the warehouses (in number of
Pallets) is as given below:
Warehouse Nagpur Pune Nashik Kolhapur Latur
Availability 200 230 120 200 250

The monthly demand (Pallets) in the neighbouring states is as

follows:
State Gujarat Madhya Chhattisgarh Telangana Karnataka Goa
Pradesh
Demand 180 170 130 250 220 50

The cost of transporting one pallet from a given warehouse to

other state is given in the table below (In Rupees Thousands).
Gujarat Madhya Chhattisgarh Telangana Karnataka Goa
Pradesh
Nagpur 850 350 280 500 1100 1100
Pune 660 800 1000 560 840 450
Nashik 520 610 940 670 1060 660
Kolhapur 910 1020 1140 540 610 220
Latur 900 880 800 300 840 530

What should we do?

In the above problem the warehouses are not setup and we need
to setup those too. Each warehouse can handle 400 Pallets. The
cost of setting up a warehouse at each of the location is
given below (In Rupees Crores):
Warehouse Nagpur Pune Nashik Kolhapur Latur
Cost 1.25 1.2 0.8 1 0.9
What should we do?
 Call Centre Scheduling
We are consulting for a call centre based out of Kahinaipur.
It specialises in insurance. The company has to schedule the
employees as per the demand. The company knows how many
personnel are required for a given call volume. The call
volume keeps fluctuating throughout the day and the company
for ease of operations evaluates it in four-hour intervals.
The call centre runs 24X7 and the demand on a typical day is
as given below.
Time (24hr) Minimum Employees
required
0200 – 0600 20
0600 – 1000 50
1000 – 1400 80
1400 – 1800 100
1800 – 2200 40
2200 – 0200 30

The employees would come and join at the start of any slot,
but would continue for 8 hours (2 slots). We have to assist
the call centre in manpower planning and scheduling.
What should we do?
 Logistics of the Leisure Air Problem

Pittsburgh
Newark

Charlotte

Orlando
Myrtle Beach

Leisure Air owns two aeroplanes each with capacity of 132. One
starts from Pittsburgh, flies to Orlando with a stopover at
charlotte, the other from Newark to Myrtle Beach via
Charlotte. Q class of tickets are those which are sold more 2
weeks before at lower price, and Y class signifies the full
fare ticket. Each Q class ticket sold in advance could lead to
a loss of revenue, if a Y class passenger is turned down at a
later date. On the other hand, if a Q class customer is
declined and the flight eventually travels with an empty seat
is also a loss of revenue.
How many tickets on each flight leg of each class should be
sold by the airline?
ODI Fare ODIF Forecasted
F Origin Destination Class Code Fare Demand

1 Pittsburgh Charlotte Q PCQ 178 33

2 Pittsburgh Myrtle Beach Q PMQ 268 44

3 Pittsburgh Orlando Q POQ 228 45

4 Pittsburgh Charlotte Y PCY 380 16

5 Pittsburgh Myrtle Beach Y PMY 456 6

6 Pittsburgh Orlando Y POY 560 11

7 Newark Charlotte Q NCQ 199 26

8 Newark Myrtle Beach Q NMQ 249 56

9 Newark Orlando Q NOQ 349 39

10 Newark Charlotte Y NCY 385 15

11 Newark Myrtle Beach Y NMY 444 7

12 Newark Orlando Y NOY 580 9

13 Charlotte Myrtle Beach Q CMQ 179 64

14 Charlotte Myrtle Beach Y CMY 380 8

15 Charlotte Orlando Q COQ 224 46

16 Charlotte Orlando Y COY 582 10

Hiring and Training at Feeder-Service Airlines

The Feeder-Service Airlines Company must decide how many new

female flight attendants to hire and train over the next six
months. The requirements expressed as the number of female
attendant-flight-hours needed are 8000 in January; 9000 in
February; 8000 in March, 10,000 in April; 9000 in May; and
12,000 in June.
It takes one month of training before a flight attendant can
be put on a regular flight; so, an employee must be hired at
least a month before she is actually needed. Also, a trainee
requires 100 hours of supervision by experienced female flight
attendants during the month of training so that 100 less hours
are available for flight service by regular flight attendants.
Each experienced flight attendant can work up to 150 hours in
a month, and Feeder-Service has 60 regular female flight
attendants available at the beginning of January. If the
maximum time available from experienced flight attendants
exceeds a month's flying and training requirements, then they
are laid off. Those that are laid off in a month are not
available for rehiring in later months. Each month,
approximately 10% of the experienced female flight attendants
quit their jobs to be married or for other reasons.

An experienced flight attendant cost the company Rs. 40000 and

a trainee Rs. 15000 a month in salary and other benefits.
 Multistage Problem

An automobile tyre company has the ability to produce both

nylon and fibreglass tyres. The company has two presses, a
Wheeling machine and a Regal machine. Any machine can be used
to produce any tyre. The production hours available in the
next three months is given below. During the next three
months, they have agreed to deliver the tyres as follows:
Available Hours Delivery Required
Month Wheeling Regal Nylon Fibreglass
June 700 1500 4000 1000
July 300 400 8000 5000
August 1000 300 3000 5000

The production rate for each machine-tyre combination is as

follows:
Tyre Wheeling Regal
Nylon 0.15 0.16
Fibreglass 0.12 0.14

The variable cost of producing tyres are Rs. 2500 per

operating hour, regardless of which machine is used or which
tyre is produced. The inventory carrying costs are Rs. 50 per
month. Material costs for the nylon and fibreglass tyres are
Rs. 1550 and Rs. 1959 respectively. Finishing and packaging
and shipping costs are Rs. 115 per tyre. Prices have been set
at Rs. 3500 per nylon tyre and Rs. 4500 per fibreglass tyre.

1. What should be the production schedule for the three

months so as to maximize the profit?

2. A new Wheeling machine is due in September. At a cost of

Rs. 100,000, it would be possible to expedite its arrival to
August, making available 172 additional hours of wheeling
machine in August. Should it be expedited?
 Capital Budgeting at Agrico Inc.

AGRICO INC. is a fairly large size firm that specializes in

the manufacture and sale of agriculture related heavy
equipment. The board of directors of AGRICO INC. are faced
with a capital budgeting decision problem as summarized in
Table 1 below. As shown in the table, they have four
investment alternatives to choose from. The dollar amounts
reported in this table are in thousands. Clearly, the board
wishes to maximize the present value of total return, while
ensuring that the capital requirements are met with what is
available.

Present Value
Capital Required in Year of Net Return
by Alternative ($000s) ($000s)
Alternative 1 2 3 4 5
Expand Indian Plant 100 50 200 100 0 400
Expand Capacity in US 300 200 100 100 100 700
Build New Plant in
Chile 100 200 270 200 100 800
Build New Plant in US 200 100 400 200 200 1000
Capital Available for
Each Year 500 450 700 400 300

ADDITIONAL CONSTRAINTS
I. Choose exactly 2 projects.
II. Choose no more than 3 projects.
III. Cannot take project 4 unless project 3 is taken.
IV. Must take both 1 and 2 or neither.
V. Can take #1 if either 3 or 4 is taken.
VI. Can take #1 only if both #3 and #4 are taken.
 Orion’s Contracts Problem

Orion, a computer manufacturer plans to award contracts for

the supply of 50,000 RAM units. Three subcontractors have
submitted bids. Of these, subcontractor 1 represents an
international firm and subcontractors 2 and 3 represent
domestic firms. The manufacturer also wants to ensure that
the order must be placed with at least one domestic firm.

 Subcontractor 1 can supply any amount and offers the

following discount structure:

Price
Quantity
(Rs/unit)
0 - 10,000 1000
10,001 - 20,000 800
20,001 - 30,000 600
30,001 - 40,000 500
 40,000 400

 Subcontractor 2 will supply no more than 20,000 units at

a unit price of Rs 800 per unit.
 Subcontractor 3 will supply no less than 30,000 units at
a unit price of Rs 680 per unit.

Can this problem be formulated as an LP or an ILP? Give the

appropriate formulation.
 Advertisement Decisions at Big Bucks

The Big Bucks Placements Company wants to decide on which

advertising media to use. Its target is to reach 20,000 people
at minimum advertising cost. The media through which it may
advertise are three different weekly magazines. Fixed Costs of
developing an advertisement for the three magazines are Rs.
15000, Rs. 20,000 and Rs. 25000 respectively. Cost of
advertising is given on the basis of column length of the
advertisement and is Rs. 200, Rs. 180 and Rs. 230 per column
cm. respectively. The number of people that can be reached by
the three magazines depends on the length of the advertisement
and is as follows:

Magazine 1: 300*column length

Magazine 2: 250*column length
Magazine 3: 500*column length

Maximum length of the advertisement is to be

restricted to 30cm.

Assuming independence of readership, determine the

advertisement plan to attain the targeted reach at minimum
cost.
 Cutting Stock Problem

Paper making – deckle width determines the width of the paper

produced.
Suppose, deckle’s width is 20 feet.

Requirement:
Roll of width 9' and 7,000' long
Roll of width 7' and 12,000' long
Roll of width 5' and 9,000' long
Extra width and length produced is a waste.
What should be the cutting pattern which will minimise the
trim waste?