Integer Programming Problem
Integer Programming Problem
Problem
Dr. Vandana
Decision Sciences
• LP Relaxation
Solving the problem as a linear program ignoring the integer
constraints, the optimal solution to the linear program gives fractional
values for both x1 and x2. From the graph on the next slide, we see that
the optimal solution to the linear program is:
x1 = 2.5, x2 = 1.5,
Max 3x1 + 2x2 = 10.5
• Rounding Up
If we round up the fractional solution (x1 = 2.5, x2 = 1.5) to the LP
relaxation problem, we get x1 = 3 and x2 = 2. From the graph on the next
slide, we see that this point lies outside the feasible region, making this
solution infeasible.
• Rounding Down
• By rounding the optimal solution down to x1 = 2, x2 = 1, we see that this
solution indeed is an integer solution within the feasible region, and
substituting in the objective function, it gives 3x1 + 2x2 = 8.
Eastborne Realty has $2 million available for the purchase of new rental property. After
an initial screening, Eastborne reduced the investment alternatives to townhouses and
apartment buildings. Each townhouse can be purchased for $282,000, and five are
available. Each apartment building can be purchased for $400,000, and the developer will
construct as many buildings as Eastborne wants to purchase.
Eastborne’s property manager can devote up to 140 hours per month to these new
properties; each townhouse is expected to require 4 hours per month, and each apartment
building is expected to require 40 hours per month. The annual cash flow, after deducting
mortgage payments and operating expenses, is estimated to be $10,000 per townhouse
and $15,000 per apartment building. Eastborne’s owner would like to determine the
number of townhouses and the number of apartment buildings to purchase to maximize
annual cash flow. We begin by defining the decision variables as follows:
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Decision Variables
• The company should fund the plant expansion, the warehouse expansion, and
the new machinery projects. The new product research project should be put on
hold unless additional capital funds become available.
• The company will have $5,000 remaining in year 1, $15,000 remaining in year
2, and $11,000 remaining in year 4. Additional capital funds of $10,000 in
year 1 and $10,000 in year 3 will be needed to fund the new product research
project.
The optimal solution consists of 27.5 tons of fuel additive, 0 tons of solvent
base, and 15 tons of carpet cleaning fluid, with a value of $1850.
Decision Variables
These binary variables allow the model to account for setup costs and enforce
production limits only when a product is actually produced. Without them, the
model would not be able to conditionally apply setup costs or control
production limits based on whether or not a product is being produced.
Optimal Solution
Produce 25 tons of fuel additive.
Produce 20 tons of solvent base.
Produce 0 tons of cleaning fluid.
The value of the objective function after deducting the setup cost is $1350. The
setup cost for the fuel additive and the solvent base is $200 + $50 = $250.
The optimal solution shows SC = 0, which indicates that the more expensive $400
setup cost for the carpet cleaning fluid should be avoided.
The estimated annual fixed cost and the annual capacity for the four proposed
plants are as follows:
The shipping cost per unit from each plant to each distribution center is
shown below.
Optimal Solution
The long-range planning department for the Ohio Trust Company is considering
expanding its operation into a 20-county region in northeastern Ohio. Ohio
Trust does not have, at this time, a principal place of business in any of the 20
counties.
According to the banking laws in Ohio, if a bank establishes a principal place of
business (PPB) in any county, branch banks can be established in that county
and in any adjacent county. To establish a new PPB, Ohio Trust must either
obtain approval for a new bank from the state’s superintendent of banks or
purchase an existing bank.
The 20 counties in the region and adjacent counties are listed on the next
slide. For example, Ashtabula County is adjacent to Lake, Geauga, and
Trumbull counties; Lake County is adjacent to Ashtabula, Cuyahoga, and
Geauga counties; and so on.
As an initial step in its planning, Ohio Trust would like to determine the
minimum number of PPBs necessary to do business throughout the 20-
county region. A 0-1 integer programming model can be used to solve
this location problem for Ohio Trust.
Optimal Solution
For this 20-variable, 20-constraint problem: