Analytical Applications for Supply Chain and Operations Management

COMP 2157
Assignment #1 – Linear Programming Fundamentals and Applications

Assignment Objective:

In this assignment, you will be demonstrating the basic skills of linear programming model
implementation including solution analysis and making managerial recommendations across a broad
spectrum of problem types.

Deliverables:

Please Note: All requested submissions for this assignment must be uploaded as
attached files in the assignment folder. To ensure accuracy of feedback, please ensure
that written responses to questions are clearly identified by question number.
In this assignment you will be producing a written report FOR EACH case study, containing the following
deliverables:

Component 1: Executive Summary of Solution Approach and Recommendations (/40)

• For each solution implementation provide a brief summary of; Presenting Problem,
Solution Approach (include assumptions and sensitivities), Recommendations.
• Your audience is a business sponsor (not a management scientist) and information
should be summarized in that context (2 to 3 paragraphs max)
• Ensure that all responses to case study questions are addressed (and clearly labelled)
and integrated into your executive summary.
• For each model implementation, review the solution and sensitivity output reports and
provide a brief written summarization (i.e. one to two paragraphs max) of; constraint
impacts, marginal values, sensitivity ranges, effects of added/removed constraints or
variables, shadow prices. Do not simply produce the reports, but provide a summary
interpretation of the key insights. You’ll be evaluated on how effectively you use these
reports to better qualify and contextualize your solution recommendations12

1
In terms of sensitivity analysis, although there's not much in terms of reporting from Solver for integer problems, you can still run different
scenarios on either the parameters or the constraints to see the impact of the solution. Having reports makes it a lot more convenient,
however often times you can accomplish similar analysis by rerunning the model under specific changes to see the impact. Obviously, there's
an infinite number of scenarios of sensitivity analysis that you can do, but what I'm looking for is for you to demonstrate some reflection on the
solution and consider from a management perspective anticipating and addressing some of the issues that may arise from your model that may
be relevant to the situation. There's no one "correct" answer for doing sensitivity analysis, - but there are some that are useful, while others
are not that pertinent to the problem. Focus on sensitivities around binding constraints that you consider more "negotiable" - or look at the
effect of changes in objective function parameters where you feel there's some potential variability or uncertainty, and you can subjectively run
alternative "best case" or "worst case" scenarios, on the uncertain parameters.
2
In order to receive a proficient evaluation, you will be expected to formulate additional “what if” scenarios that extend beyond the baseline
case solution and demonstrate an ability to think beyond getting the “correct answer” and demonstrate an ability to anticipate other potential
questions or inquiries from management. Your evaluation will be based on the value and relevance of these additional scenarios.
 • In the APPENDIX of each Case Report please include the following:
1. The mathematically modelled solution(s) must be written in Standard LP
Formulation (using an equation editor, not hand written) with; variable names,
model constraints and objective function clearly defined (i.e. NOT X1, X2, … etc.
or Constraint1, Constraint2, … etc.)
2. Include clearly labelled and commented copies of all output solution and
sensitivity reports for each executed solution scenario in your case
• Submit the completed report as XX_Case_Name_Report.doc file. (where XX is the
enrolled group number, followed by the Case Name)

Component 2: Executable Solution Implementation and Program Solution and Sensitivity

output (/10)

• Submit your executable implementation as a separate additional file named

XX_Case_Name_LP_Implementation. (where XX is the enrolled group number (or First
and Last Initials if a non-group assignment), followed by the Case Name)
• Solutions must be executable (in .xls file format)

Please do not put multiple cases into the same files.

Each case study file must be separate and clearly labelled.
DO NOT submit compressed file folders with multiple files (i.e. .zip or .rar, etc.).
Marks will be deducted for doing so, as this has a significant impact on handling time for grading.
Case 1: Spectra Aluminum

Spectra Aluminum produces three grades of aluminum at two mills. Each mill has a different production
capacity (measures in tons per day) for each grade of aluminum as follows:

Aluminum Grade Mill 1 Mill 2

High 6 2
Medium 2 2
Low 4 10

The company has contracted with a manufacturing firm to supply at least 12 tons of high-grade
aluminum, 8 tons of medium-grade, and 5 tons of low-grade aluminum. It costs Spectra $6,000 per day
to operate Mill 1 and $7,000 per day to operate Mill 2. The company wants to know the number of days
to operate each mill to meet the contract at the minimum cost.

Formulate and solve the linear programming model.

a) How much extra (i.e., surplus) high, medium, and low grade aluminum does the company
produce at the optimal solution
b) What would be the effect on the optimal solution if the cost of operating Mill 1 increased from
$6,000 to $7,500 per day?
c) What would be the effect on the optimal solution if the company could supply only 10 tons of
high-grade aluminum?
d) Identify and explain the shadow prices for each of the aluminum grade contract requirements
e) Identify and discuss the sensitivity ranges for the objective function coefficients and the
constraint quantity values
f) Would the solution values change if the contract requirements for high-grade aluminum were
increased from 12 tons to 20 tons? If yes, what would the new solution values be?
Case 2: Bite Moguls

Bite Moguls is a food vendor that is looking to lease a food booth at the Sky Dome in Toronto. Booths
are leased at $1,000 per event. As food needs to be served warm, Bite Moguls must also lease a
warming oven that costs $100 per event and plans on participating in 6 events over the season. The
warming oven has 16 shelves and each shelf is 3’ by 4’. Bite Moguls will fill the warming oven with 3
items; Pizza, Hot Dogs, and Sandwiches. Pizzas are 14-inch, 8 slices at a cost of $6 per pizza. Hot Dogs
will cost $0.45 each and Sandwiches will cost $0.90 each. A Hot dog will take 16 square inches of space
in a heating oven, while a Sandwich will require 25 square inches. Pizza will be sold at $1.50 a slice, a
Hot Dog for $1.50 each, and Sandwiches will be priced at $2.25 each. Bite Moguls has a total food
expense budget of $1,500 for the first event and then will use the proceeds from the first event to make
purchases for the subsequent other 5 events. Based on consumer research, Pizza slice sales are
expected to be equivalent in volume to both Hot Dog and Sandwich sales combined. Bite Moguls are
hoping to clear at least $1,000 in profit for each event (after paying out all expenses)

a) Formulate and solve a linear programming model for Bite Moguls that can support the decision
whether to lease the booth or not.
b) If Bite Moguls where to borrow additional funds for the first event to purchase more
ingredients, would they be able to increase their profits? If so, how much should they borrow,
and how much additional profit could they make? What factors are constraining them from
borrowing more money?
c) When Bite Moguls reviewed the initial solution they realized that it would be difficult to prepare
all the hot dogs and sandwiches indicated in the solution. Would it be advisable to hire
additional staff at $100 per event? Advise if this is something that would be reasonable to do or
not.
d) Bite Moguls is assuming that everything will go according to plan. However, considering that
there are many uncertain factors and assumptions in their plans, could you consider some
possible different scenarios around your model’s assumptions (costs, constraints, etc.) and
determine a range of possible outcomes under some subjective scenarios (i.e. best case, worst
case, etc.)
Case 3: TDSB

The Toronto District School Board (TDSB) has three consolidated high schools, each with a capacity of
1,200 students. The TDSB has partitioned the city into 5 busing districts; north, south, east, west, and
central. Three schools are in each of the 5 districts. Some students must be bused outside their
districts, and the TDSB wants to minimize the total bus distance traveled by these students. The average
distances from each district to the three schools and the total student population are as follows:

Distance (Kilometres)
District Central School West School South School Student
Population

North 8 11 14 700
South 12 9 - 300
East 9 16 10 900
West 8 - 9 600
Central - 8 12 500

The TDSB wants to determine the number of students to bus from each district to each school to
minimize the total busing miles travelled.

a) Formulate and solve the linear programming model for this problem (Base Scenario)
b) The TDSB decided that because all students in the north and east districts must be bused, then
at least 50% of the students who live in the south, west, and central districts must also be bused
to another district. Reformulate and solve the linear programming model to reflect this new set
of constraints. (Busing Equity Scenario)
c) The TDSB has further decided that the enrollment at all three high schools should be equal.
Formulate this additional restriction in the linear programming model and solve (Busing Equity
and Balanced Enrollment Scenario)
d) Based on your interpretation of the Sensitivity reports from each of these modelled scenarios
provide a brief discussion around various sensitivities that each modeled scenario has. How do
they compare across each other.
Case 4: Call a Cab

Call a Cab Cab Company has 70 drivers that it must schedule in three 8-hour shifts. However, the
demand for cabs in the city varies according to the time of day. The slower period being between
midnight and 4:00 AM, where the average of fares earned during that shift is $80 (per shift) The largest
dollar amount of fares are earned during the morning shift from 4:00 AM to 8:00 AM averaging $500 in
total fares per shift. Drivers that start at 8:00 AM earn $420 on average per shift. Drivers starting at
noon average $300, and drivers starting at 4:00 PM average $270. Drivers that start at the beginning of
the 8:00 PM shift until midnight earn an average of $210 in fares during their 8-hour shift.

To retain customers and acquire new ones, Call a Cab must maintain a high customer service level. To
do so, it must determine the minimum number of drivers it needs working during every 4-hour time
segment as follows; minimum of 10 drivers from midnight to 4:00 AM, 12 drivers from 4:00 to 8:00 AM,
20 drivers from 8:00 AM to noon, 25 drivers from noon to 4:00 PM, 32 drivers from 4:00 to 8:00 PM, and
finally, 18 drivers from 8:00 PM to midnight.

a) Formulate and solve an integer program to help Call a Cab schedule its drivers. (Base Scenario)
b) If Call a Cab has a maximum of only 15 drivers available to work the late shift from midnight to
8:00 AM, reformulate and re-solve the model to reflect this added complication (Late Shift
Scenario)
c) Most drivers prefer to work the day shift from 8:00 AM to 4:00 PM, so the company has decided
to limit the number of drivers who work this 8-hour shift to 20. Reformulate and solve this
model further to reflect this added restriction. (Preferred Shift Limitation Scenario)
Case 5: Adonis

Adonis imports foods from various Middle Eastern Port Warehouses for distribution across Canada. The
following 3 ports in the Mid-East; Jazan, Khasab, and Karachi supply to Canadian Storage Warehouses in;
Montreal, Toronto, and Vancouver where they are kept temporarily before being shipped out to
regional fulfillment centres in; Calgary, Winnipeg and Sudbury, where they are shipped to customers via
online orders. The shipping costs (in $/ton) from the Mid-East ports and the available supplies of
products (in tons) are provided as follows:

Canadian City Warehouse Shipping Costs ($/ton)

Middle East Port Montreal Toronto Vancouver Supply (tons)

Jazan $420 $390 $610 55

Khasab $510 $590 $470 78
Karachi $450 $360 $480 37

The land transportation costs (in $/ton) from each Canadian city storage facility to the Distribution
Warehouses are as follows;

Canadian City Distribution Centre Transportation Costs

($/ton)
Warehouse Calgary Winnipeg Sudbury

Jazan $75 $63 $81

Khasab $125 $110 $95
Karachi $68 $82 $95
Demand (tons) 60 45 50

Determine the optimal shipments between the Middle Eastern Ports and the warehouses and the
distribution centres to minimize total transportation costs.