Usman Institute of Technology

HW-3-B- Spring 2022 Semester

Course Code: MS 351 Course Title: Operation Research Submission Date: 19/06/2022

Maximum Marks: 10 Max Time Allowed: 7 days

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1. The Westchester Chamber of Commerce periodically sponsors public service seminars and
programs. Currently, promotional plans are under way for this year’s program. Advertising
alternatives include television, radio, and newspaper. Audience estimates, costs, and maximum
media usage limitations are as shown.

Constraints Television Radio Newspaper

To ensure a balanced use of advertising media, radio advertisements must not exceed 50% of the
total number of advertisements authorized. In addition, television should account for at least 10% of
the total number of advertisements authorized.

a) If the promotional budget is limited to $18,200, how many commercial messages should be run
on each medium to maximize total audience contact? What is the allocation of the budget
among the three media, and what is the total audience reached?

Key Decision

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The key decision is to determine the allocation of budget among television, radio and newspapers

Decision Variable

3 decision variables are required and let the variables are x 1 , x 2∧x 3where x 1 be the number of
television promotions x 2 be the number of radio promotion and x 3 be the number of newspaper
promotion

Feasibility

All decision variables are positive as count cannot be negative

Objective Function

The objective is to maximize the number of audience count

Max C=100000 x 1 +18000 x2 + 40000 x 3

Constraints

budget of advertisement available

2000 x 1+300 x 2+ 600 x 3 ≤18200

Max Television advertisements

x 1 ≤ 10

Max Radio advertisements

x 2 ≤ 20

Max Newspaper advertisements

x 3 ≤ 10

Maximum 50% of Radio advertisements

−0.5 x 1+ 0.5 x 2−0.5 x 3 ≤0

Minimum 10% of Television advertisements

0.9 x 1−0.1 x2 −0.1 x 3 ≥0

Complete Mathematical model

Max C=100000 x 1 +18000 x2 + 40000 x 3

Subjected to

2000 x 1+300 x 2+ 600 x 3 ≤18200

x 1 ≤ 10

x 2 ≤ 20

x 3 ≤ 10

−0.5 x 1+ 0.5 x 2−0.5 x 3 ≤0

0.9 x 1−0.1 x2 −0.1 x 3 ≥0

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Where x 1 , x 2 , x 3 ≥ 0

After solving the linear model

x 1=4

x 2=14

x 3=10

4 television advertisements, 14 Radio advertisements and 10 newspapers advertisements

b) By how much would audience contact increase if an extra $100 were allocated to the
promotional budget?

The audience contact increases to 51.3044

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2. The management of Hartman Company is trying to determine the amount of each of two
products to produce over the coming planning period. The following information concerns labor
availability, labor utilization, and product profitability.
Department Product (hours/unit) Labor-Hours Available
1 2
A 1.00 0.35 100
B 0.30 0.25 36
C 0.20 0.50 50
Profit contribution/unit $30.00 $15.00

a) Develop a linear programming model of the Hartman Company problem.

Key Decision

The key decision is to determine the amount of each of two products to produce over a planning
period

Decision Variables

2 decision variables are required and let the variables are x 1∧x 2where x 1 be the unit of product 1
produced x 2 be the unit of product 2 produced

Feasibility

All decision variables are positive as number of unit produced cannot be negative

Objective Function

The objective is to maximize the profitability of products

Max P=30 x 1+15 x 2

Constraints

Availability of department A hours limit

x 1+ 0.35 x 2 ≤100

Availability of department B hours limit

0.30 x 1+ 0.25 x 2 ≤36

Availability of department C hours limit

0.20 x 1+ 0.50 x 2 ≤50

Complete Mathematical model

Max P=30 x 1+15 x 2

Subjected to

x 1+ 0.35 x 2 ≤100

0.30 x 1+ 0.25 x 2 ≤36

0.20 x 1+ 0.50 x 2 ≤50

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Where x 1 , x 2 ≥ 0

b) Solve the model to determine the optimal production quantities of products 1 and 2.

The optimal solution is producing 85.51 units of product 1, 41.38 units of product 2 and the profit of
$3186.21

c) In computing the profit contribution per unit, management doesn’t deduct labor costs because
they are considered fixed for the upcoming planning period. However, suppose that overtime
can be scheduled in some of the departments. Which departments would you recommend
scheduling for overtime? How much would you be willing to pay per hour of overtime in each
department?

The price for department A is $20.69, for department B is $31.03 and for Department C is $0.
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 $20.69 per hour Department A and
up to $31.03 in Department B.

d) Suppose that 10, 6, and 8 hours of overtime may be scheduled in departments A, B, and C,
respectively. The cost per hour of overtime is $18 in department A, $22.50 in department B, and
$12 in department C. Formulate a linear programming model that can be used to determine the
optimal production quantities if overtime is made available.

Three additional decision variables are required in above model and let the variables are x A , x B∧x C
where x A is the hours of overtime in Department A, x B is the hours of overtime in Department B and
x C is the hours of overtime in Department C.

Complete mathematical model

Max P=30 x 1+15 x 2−18 x A−22.5 x B −12 x C

Subjected to

x 1+ 0.35 x 2−x A ≤ 100

0.30 x 1+ 0.25 x 2−22.5 x B ≤ 36

0.20 x 1+ 0.50 x 2−12 x C ≤ 50

x A ≤10

xB ≤ 6

xC ≤ 8

Where x 1 , x 2 x 2 , x A , x B , xC ≥ 0

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e) What are the optimal production quantities, and what is the revised total contribution to profit?
How much overtime do you recommend using in each department? What is the increase in the
total contribution to profit if overtime is used?

x 1=88.27

x 2=62.07

x A=10

x B =6

x C =0

The optimal solution is producing 88.27 units of product 1, 62.07 units of product 2 and profit of
$3264.31 if the overtime of department A is 10 hours, the overtime of department B is 6 hours and
the overtime of department C is 0 .

The increase in profit will be $3264.31-3186.21 = $78.1

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3. The employee credit union at State University is planning the allocation of funds for the coming
year. The credit union makes four types of loans to its members. In addition, the credit union
invests in risk-free securities to stabilize income. The various revenue producing investments
together with annual rates of return are as follows:
Type of Loan/Investment Annual Rate of Return (%)
Automobile loans 08
Furniture loans 10
Other secured loans 11
Signature loans 12
Risk-free securities 09

The credit union will have $2 million available for investment during the coming year. State laws and
credit union policies impose the following restrictions on the composition of the loans and
investments.
 Risk-free securities may not exceed 30% of the total funds available for investment.
 Signature loans may not exceed 10% of the funds invested in all loans (automobile,
 furniture, other secured, and signature loans).
 Furniture loans plus other secured loans may not exceed the automobile loans.
 Other secured loans plus signature loans may not exceed the funds invested in risk-free
securities.
How should the $2 million be allocated to each of the loan/investment alternatives to maximize total
annual return? What is the projected total annual return?

Key Decision The key decision is to determine amount of loan of each type to be allocated
to maximize the annual return
Decision Variable 5 decision variables are required and let the variables are
x 1 , x 2 x 2 , x 3 , x 4 ∧x 5where x 1 is the amount of automobile loans, x 2 is the amount of
furniture loans, x 3 is the amount of other secured loans, x 4 is the amount of signature loans
and x 5 is the amount of risk free securities
Feasibility
All decision variables are positive as investments can not be negative Objective Function
Objective is to maximize the total annual return

Max A=0.08 x 1 +0.10 x 2+0.1 1 x3 +0.1 2 x 4 +0.09 x5 Constraints

−0.10 x 1−0.10 x 2−0.10 x 3+ 0.90 x 4 ≤ 0 Furniture and other secured loans less than or
equal to automobile loans

−x 1+ x2 +x 3 ≤ 0 Other secured loan and signature loan less than or equal to risk free
security

x 3+ x 4−x 5 ≤0 Availability of funds

x 1+ x2 + x 3 + x 4 + x 5 ≤ 200000030%limit
x 5 ≤ 600000 Complete mathematical model

Max A=0.08 x 1 +0.10 x 2+0.1 1 x3 +0.1 2 x 4 +0.09 x5 Subjected-to:

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x 1+ x2 + x 3 + x 4 + x 5 ≤ 2000000x 5 ≤ 600000Where: x 1 , x 2 , x 3 , x 4 , x 5 ≥ 0
x 1=630000 , x2 =170000 , x 3=460000 , x 4 =140000 , x 5=600000

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4. Hilltop Coffee manufactures a coffee product by blending three types of coffee beans. The cost
per pound and the available pounds of each bean are as follows:
Bean Cost per Pound Available Pounds
1 $0.50 500
2 $0.70 600
3 $0.45 400

Consumer tests with coffee products were used to provide ratings on a scale of 0–100, with higher
ratings indicating higher quality. Product quality standards for the blended coffee require a
consumer rating for aroma to be at least 75 and a consumer rating for taste to be at least 80. The
individual ratings of the aroma and taste for coffee made from 100% of each bean are as follows.
Bean Aroma Rating Taste Rating
1 75 86
2 85 88
3 60 75
Assume that the aroma and taste attributes of the coffee blend will be a weighted average of the
attributes of the beans used in the blend.

a) What is the minimum-cost blend that will meet the quality standards and provide 1000 pounds
of the blended coffee product?

Mathematical Model

Min C = 0.50 x 1+ 0.70 x 2 +0.45 x 3

Subject to:

x 1+ x2 + x 3=1000

x 1 ≤ 500

x 2 ≤ 600

x 3 ≤ 400

75 x 1 +85 x 2+ 60 x 3
≥ 75
x 1 + x 2+ x 3

Or
10 x 2−15 x 3 ≥ 0

86 x1 +88 x 2 +75 x 3
≥ 80
x 1 + x 2+ x3
Or
6 x 1+ 8 x2 −5 x 3 ≥0

Optimal solution for bean1 = 500, bean2 =300 and bean3=200 pounds and the minimum cost
of coffee is 550 dollars

b) What is the cost per pound for the coffee blend?

Page | 9 of HW-3-B-OR
550/1000 = 0.55 dollars

c) Determine the aroma and taste ratings for the coffee blend.

aroma rating is 75 as surplus for araoma is 0 and tasting rating is 84.4 as surplus for taste is
4400. 80+(4400/1000) = 84.4

d) If additional coffee were to be produced, what would be the expected cost per pound?
Dual price = -0.60 dollar. Extra coffee can be produced at a cost of 0.60 dollars per pound

Page | 10 of HW-3-B-OR
5. Ajax Fuels, Inc., is developing a new additive for airplane fuels. The additive is a mixture of three
ingredients: A, B, and C. For proper performance, the total amount of additive (amount of A+
amount of B amount of C) must be at least 10 ounces per gallon of fuel. However, because of
safety reasons, the amount of additive must not exceed 15 ounces per gallon of fuel. The mix or
blend of the three ingredients is critical. At least 1 ounce of ingredient A must be used for every
ounce of ingredient B. The amount of ingredient C must be at least one-half the amount of
ingredient A. If the costs per ounce for ingredients A, B, and C are $0.10, $0.03, and $0.09,
respectively, find the minimum-cost mixture of A, B, and C for each gallon of airplane fuel.

Key Decision

The key decision is to determine amount of ingredient A,B and C to be mixed per gallon of fuel

Decision Variable

5 decision variables are required and let the variables are x 1 , x 2 x 2∧x 3 where x 1 is the amount of
ingredient A, x 2 is the amount of ingredient B and x 3 is the amount of ingredient C

Feasibility

All decision variables are positive as amount of ingredient can not be negative

Objective Function

Objective is to minimize the cost mixture of A,B and C for each gallon of airplane fuel

MinC=0.10 x 1 +0.03 x 2+ 0.09 x 3

Constraints

Amount of additives greater than or equals to 10 in ounces(oz)

x 1+ x2 + x 3 ≥ 10

Amount of additives less than or equals to 15 in ounces(oz)

x 1+ x2 + x 3 ≤ 15

Ingredient A greater than equal to B

x 1−x 2 ≥ 0

Ingredient C is greater than equals to half of ingredient A

−1
x +x ≥ 0
2 1 3
Complete mathematical model

MinC=0.10 x 1 +0.03 x 2+ 0.09 x 3

Subjected to

x 1+ x2 + x 3 ≥ 10

x 1+ x2 + x 3 ≤ 15

x 1−x 2 ≥ 0

Page | 11 of HW-3-B-OR
 −1
x +x ≥ 0
2 1 3

Where x 1 , x 2 , x 3 , ≥ 0

x 1=4

x 2=4

x 3=2

Minimum cost of mixture of ingredient A, B, C are $4, $4 and $2 respectively for each gallon of
airplane fuel and the cost per gallon is $0.7

The End

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