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Lecture 1 OTA

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17 views17 pages

Lecture 1 OTA

Uploaded by

vignaesh23
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Optimization Techniques for

Analytics
BITS Pilani
Pilani Campus
BITS Pilani
Pilani Campus

DSECLZG528, OTA

Lecture 1
Agenda

• Reddy Mikks Problem

• Formulation and graphical method

• TORA

• Urban Renewal Model

• Formulation and feasibility

• Diet problem

BITS Pilani, Pilani Campus


Linear Programming Problem

Linear programming Problem (LPP), consist of three basic


components:
1. Decision variables that we want to determine.
2. Objective that we need to optimize (maximize or minimize).
3. Constraints must satisfy the solution.

BITS Pilani, Pilani Campus


(The Reddy Mikks Company Problem)

Example: Reddy Mikks produces both interior and exterior paints from
two raw materials, M1 and M2. The following table provides the
basic data of the problem. The daily demand for interior paint cannot
exceed that for exterior paint by more than 1 ton. Also, the maximum
daily demand for interior paint is 2 tons. Reddy Mikks wants to
determine the optimum (best) product mix of interior and exterior
paints that maximizes the total daily profit.
Tons of raw material Maximum daily
per ton of availability (tons)
Raw material, M1 6 4 24

Raw material, M2 1 2 6

Profit per ton 5 4


BITS Pilani, Pilani Campus
Solution:

BITS Pilani, Pilani Campus


The complete Reddy Mikks model

Maximize z = 5x1 + 4x2 subject to


6x1 + 4x2 ≤ 24 (1)
x1 + 2x2 ≤ 6 (2)
-x1 + x2 ≤ 1 (3)
x2 ≤ 2 (4)
x1 , x2 ≥ 0

BITS Pilani, Pilani Campus


Remark

• Any values of x1 and x2 that satisfy all five constraints constitute


a feasible solution. Otherwise, the solution is infeasible.

• The goal of the problem is to find the optimum, the best feasible
solution that maximizes the total profit or to minimize the total
cost.

• The graphical method and its algebraic generalization shows


how the optimum solution can be determined in a finite number
of steps.

BITS Pilani, Pilani Campus


Graphical Method (Reddy Mikks
problem)
• Horizontal axis x1 represent the exterior paints and
Vertical axis x2 interior paint.
• Non negativity constraints restrict the variables to the first quadrant.
• Replace each inequality with an equation, and then graph resulting
straight line by locating two distinct points.
• The number of solution points in the feasible space determines the
optimum solution.
• By increasing values of z arbitrarily, we can find the direction of the
optimum point in which the profit function z = 5x1 + 4x2 increases.
(Refer to excel sheet or TORA for computational aspects)

BITS Pilani, Pilani Campus


Graphical Method(Reddy Mikks
problem)

• Optimum point are determined by solving the equations (1) and


(2) 6x1 + 4x2 = 24 and x1 + 2x2 = 6
• The solution is x1 = 3 and x2 = 1.5 with z = (5 × 3 )+ (4 × 1.5) = 21.
• Daily product mix of 3 tons of exterior paint and
1.5 tons of interior paint.
• The associated daily profit is $21,000.

BITS Pilani, Pilani Campus


Problem 2: Urban Renewal
Model
The city of Erstville is faced with a severe budget shortage. Seeking a long-term
solution, the city council votes to improve the tax base by condemning an inner-city
housing area and replacing it with a modern development. The project involves two
phases: (1) demolishing substandard houses to provide land for the new
development and (2) building the new development. The following is a summary of
the situation.
1. As many as 300 substandard houses can be demolished. Each house occupies a .
25-acre lot. The cost of demolishing a condemned house is $2000.
2. Lot sizes for new single-, double-, triple-, and quadruple-family homes (units) are .
18, .28, .4, and .5 acre, respectively. Streets, open space, and utility easements
account for 15% of available acreage.
3. In the new development, the triple and quadruple units account for at least 25% of
the total. Single units must be at least 20% of all units, and double units at least
10%.
4. The tax levied per unit for single, double, triple, and quadruple units is $1000, $1900,
$2700, and $3400, respectively.
5. The construction cost per unit for single-, double-, triple-, and quadruple-family
homes is $50,000, $70,000, $130,000, and $160,000, respectively.
6. Financing through a local bank is limited to $15 million BITS Pilani, Pilani Campus
Problem 2:
Urban Renewal Model
x1 = Number of units of single@family homes
x2 = Number of units of double@family homes
x3 = Number of units of triple@family homes
x4 = Number of units of quadruple@family homes
x5 = Number of condemned homes to be demolished
The objective is to maximize total tax collection from all four
types of homes—that is,
Maximize z = 1000x1 + 1900x2 + 2700x3 + 3400x4

BITS Pilani, Pilani Campus


Problem 2:
Urban Renewal Model

BITS Pilani, Pilani Campus


Problem 2:
Urban Renewal Model

BITS Pilani, Pilani Campus


Problem 2: Urban Renewal
Model
The complete model thus becomes
Maximize z = 1000x1 + 1900x2 + 2700x3 + 3400x4
subject to .18x1 + .28x2 + .4x3 + .5x4 +2125x5 ≤ 0
x5 ≤300
-.8x1 + .2x2 + .2x3 + .2x4 ≤ 0
.1x1 - .9x2 + .1x3 + .1x4 ≤ 0
.25x1 + .25x2 - .75x3 - .75x4 ≤ 0
50x1 + 70x2 + 130x3 + 160x4 + 2x5 ≤15000
x1 , x2 , x3 , x4 , x5 ≥0

BITS Pilani, Pilani Campus


Problem 2: Urban Renewal
Model
The optimum solution (using TORA) is Total tax collection
z = $343, 965
Number of single homes = x1 = 35.83 ≃ 36 units
Number of double homes = x2 = 98.53 ≃ 99 units
Number of triple homes = x3 = 44.79 ≃ 45 units
Number of quadruple homes = x4 = 0 units
Number of homes demolished = x5 = 244.49 ≃ 245 units
However, the feasible solution is
x1 = 36, x2 = 98, x3 = 45, x4 = 0 and x5 = 245

BITS Pilani, Pilani Campus


Problem 3 (Diet Problem)

• Ozark Farms uses at least 800 lb of special feed daily. The special feed is a
mixture of corn and soybean meal with the following compositions. The
dietary requirements of the special feed are at least 30% protein and
at most 5% fiber. The goal is to determine the daily minimum-cost
feed mix
Lb per lb of feedstuff
Feedstuff Protein Fiber Cost ($/lb)
Corn .09 .02 .30
Soybean meal .60 .06 .90
Answer: x1 = lb of corn in the daily mix = 470.6
x2 = lb of soybean meal in the daily mix = 329.4
minimum cost of the feed mix is z = .3 ×470.6 + .9 × 329.4 = $437.64 per day.

BITS Pilani, Pilani Campus

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