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Chapter 4
Linear Programming Applications
x1, x2 ≥ 0
b. The dual price for Dept. A is $15.79, for Dept. B it is $47.37, and for Dept. C it is $0.00. Therefore
we would attempt to schedule overtime in Departments A and B. Assuming the current labor
available is a sunk cost, we should be willing to pay up to $15.79 per hour in Department A and up
to $47.37 in Department B.
x2 = 65.12
Profit = $3341.34
Overtime
Dept. A 10 hrs.
Dept. B 3.186 hrs
Dept. C 0 hours
Min x1 + x2 + x3 + x4 + x5 + x6
The constraints require the total number of officers of duty each of the six four-hour periods to be at
least equal to the minimum officer requirements. The constraints for the six four-hour periods are
as follows:
Time of Day
8:00 a.m. - noon x1 + x6 ≥ 5
noon to 4:00 p.m. x1 + x2 ≥ 6
Linear Programming Applications
Solution:
Supplier
1 2 3
Solution:
Manufacture Purchase
Frames 5000 0
Supports 2692 7308
Straps 0 5000
c. Subtract values of slack variables from minutes available to determine minutes used. Divide by 60
to determine hours of production time used.
Constraint
1 Cutting: Slack = 0 350 hours used
2 Milling: (25200 - 9623) / 60 = 259.62 hours
3 Shaping: (40800 - 18300) / 60 = 375 hours
d. Nothing, there are already more hours available than are being used.
e. Yes. The current purchase price is $51.00 and the reduced cost of 3.577 indicates that for a
purchase price below $47.423 the solution may improve. Resolving with the coefficient of FP =
45 shows that 2714 frames should be purchased.
OPTIMAL SOLUTION
3.5 x11 + 2.6 x21 - 3.5 x12 - 2.6 x22 ≤ 100 Labor Smoothing for
[9]
Chapter 4
-3.5 x11 - 2.6 x21 + 3.5 x12 + 2.6 x22 ≤ 100 Month 2 [10]
The optimal solution is to produce 193 of the men's model in month 1, 162 of the men's model in
month 2, 95 units of the women's model in month 1, and 175 of the women's model in month 2.
Total Cost = $67,156
Inventory Schedule
Labor Levels
b. To accommodate this new policy the right-hand sides of constraints [7] to [10] must be changed to
950, 1050, 50, and 50 respectively. The revised optimal solution is given.
x11 = 201
x21 = 95
x12 = 154
x22 = 175 Total Cost = $67,175
We produce more men's models in the first month and carry a larger men's model inventory; the
added cost however is only $19. This seems to be a small expense to have less drastic labor force
fluctuations. The new labor levels are 1000, 950, and 994.5 hours each month. Since the added
cost is only $19, management might want to experiment with the labor force smoothing restrictions
to enforce even less fluctuations. You may want to experiment yourself to see what happens.
Objective function
or
OPTIMAL SOLUTION
5 0.000 -33.100
6 0.000 -36.600
7 0.000 -45.000
8 0.000 -50.000
OBJECTIVE COEFFICIENT RANGES
s.t.
9000 + F - s1 = 15,000 February Demand
or
(1) F1 - s1 = 6000
(4) F - I1 + D1 = 15,000
(5) M - F - I2 + D2 = 0
(6) A - M - I3 + D3 = 0
Constraints:
Regular Looms:
0.192X3R + 0.1912X4R + 0.2398X5R ≤ 21600
Dobbie Looms:
0.21598X1D + 0.21598X2D + 0.1912X3D + 0.1912X4D + 0.2398X5D ≤ 5760
Demand Constraints
X1D + Y1 = 16500
X2D + Y2 = 22000
X3R + X3D + Y3 = 62000
X4R + X4D + Y4 = 7500
X5R + X5D + Y5 = 62000
Linear Programming Applications
OPTIMAL SOLUTION
Regular Dobbie
Looms Looms Purchased
1 4669 11831
2 22000
Fabric 3 27711 34289
4 7500
5 62000
Note: This change is within the Right-Hand Side Ranges for Constraint 2.
For example, fabric one on the dobbie loom shares ranges of 0.31426 to 0.34 for the profit maximization
model or 0.64426 to 0.67 for the cost minimization model.
Note here that since demand for the fabrics is fixed, both the profit maximization and cost minimization
models will provide the same optimal solution. However, the interpretation of the ranges for the objective
function coefficients differ for the two models. In the profit maximization case, the coefficients are profit
contributions. Thus, the range information indicates how price per unit and cost per unit may vary
simultaneously. That is, as long as the net changes in price per unit and cost per unit keep the profit
contributions within the ranges, the solution will remain optimal. In the cost minimization model, the
coefficients are costs per unit. Thus, the range information indicates that assuming price per unit remains
fixed how much the cost per unit may vary and still maintain the same optimal solution.
1. Let tij = number of temporary employees hired under option i (i = 1, 2, 3) in month j (j = 1 for
January, j = 2 for February and so on)
The following table depicts the decision variables used in this case problem.
Linear Programming Applications
t11 = number of temporary employees hired under Option 1 (one-month contract) in January
t21 = number of temporary employees hired under Option 2 (two-month contract) in January
t31 = number of temporary employees hired under Option 3 (three-month contract) in January
t12 , t22 and t32 are the number of temporary employees hired under Options 1, 2 and 3 in February.
But, temporary employees hired under Option 2 or Option 3 in January will also be available to satisfy
February needs.
Note: The following table shows the decision variables used in this constraint
2.
Option Number Hired Contract Cost Training Cost Total Cost
1 7 $14,000 $6,125 $20,125
2 3 $14,400 $2,625 $17,025
3 33 $247,500 $28,875 $276,375
Total: $275,900 $37,625 $313,525
3. Hiring 10 full-time employees at the beginning of January will reduce the number of temporary employees
needed each month by 10. Using the same linear programming model with the right-hand sides of 0, 13, 9,
16, 10 and 4, provides the following schedule for temporary employees:
Option 3 0 9 0 4
Hiring 10 full-time employees is $321,095 - $313,525 = $7,570 more expensive than using temporary
employees. Do not hire the 10 full-time employees. Davis should continue to contract with WorkForce to
obtain temporary employees.
4. With the lower training costs, the costs per employee for each option are as follows:
Resolving the original linear programming model with the above costs indicates that Davis should hire all
temporary employees on a one-month contract specifically to meet each month's employee needs. Thus, the
monthly temporary hire schedule would be as follows: January - 10; February - 23; March - 19; April - 26;
May - 20; and June - 14. The total cost of this strategy is $302,400. Note that if training costs were any
lower, this would still be the optimal hiring strategy for Davis.
xij = tons of coal purchased from supplier i and used by generating unit j
The objective function minimizes the total cost to buy and burn coal. The objective
function coefficients, cij , are the cost to buy coal at mine i, ship it to generating unit j,
and burn it at generating unit j. Thus, the objective function is ∑ ∑ cij xij . In computing
the objective function coefficients three inputs must be added: the cost of the coal,
the transportation cost to the generating unit, and the cost of processing the coal at
the generating unit.
There are two types of constraints: supply constraints and demand constraints. The
supply constraints limit the amount of coal that can be bought under the various
Chapter 4
contracts. For the fixed-tonnage contracts, the constraints are equalities. For the
variable-tonnage contracts, any amount of coal up to a specified maximum may be
purchased. Let Li represent the amount that must be purchased under fixed-tonnage
contract i and Si represent the maximum amount that can be purchased under
variable-tonnage contract i. Then the supply constraints can be written as follows:
∑x
j
ij = Li for all fixed-tonnage contracts
∑x
j
ij ≤ Si for all variable-tonnage contracts
The demand constraints specify the number of mWh of electricity that must be
generated by each generating unit. Let aij = mWh hours of electricity generated by a
ton of coal purchased from supplier i and used by generating unit j, and Dj = mWh of
electricity demand at generating unit j. The demand constraints can then be written
as follows:
∑a
i
ij ijx = Dj for all generating units
Note: Because of the large number of calculations that must be made to compute the
objective function and constraint coefficients, we developed an Excel spreadsheet
model for this problem. Copies of the data and model worksheets are included after
the discussion of the solution to parts (a) through (f).
1. The number of tons of coal that should be purchased from each of the mining
companies and where it should be shipped is shown below:
The total cost to purchase, deliver, and process the coal is $53,407,243.
2. The cost of the coal in cents per million BTUs for each generating unit is as follows:
3. The average number of BTUs per pound of coal received at each generating unit is
shown
below:
Linear Programming Applications
4. The sensitivity report shows that the shadow price per ton of coal purchased from
American Coal Sales is -$13 per ton and the allowable increase is 88,492 tons. This
means that every additional ton of coal that Cinergy can purchase at the current price
of $22 per ton will decrease cost by $13. So even paying $30 per ton, Cinergy will
decrease cost by $5 per ton. Thus, they should buy the additional 80,000 tons; doing
so will save them $5(80,000) = $400,000.
5. If the energy content of the Cyprus coal turns out to be 13,000 BTUs per ton the
procurement plan changes as shown below:
The East Bend unit is the least cost producer at the margin ($18 per mWh), and the
allowable increase is 160,000 mWh. Thus, Cinergy should sell the 50,000 mWh over
the grid. The additional electricity should be produced at the East Bend generating
unit. Cinergy’s profit will be $12 per mWh.
The Excel data and model worksheets used to solve the Cinergy coal allocation
problem are as follows:
Chapter 4