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Exercises On ILP Formulations

The document presents various integer programming problems including a fixed charge problem for manufacturing products, a set covering problem for telecommunications expansion, and two capital budgeting problems for project selection. Each problem outlines specific constraints, costs, and requirements that need to be optimized for maximum profit or minimum cost. The scenarios involve decision-making on production schedules, node openings, and project selections based on given financial and operational parameters.

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4 views4 pages

Exercises On ILP Formulations

The document presents various integer programming problems including a fixed charge problem for manufacturing products, a set covering problem for telecommunications expansion, and two capital budgeting problems for project selection. Each problem outlines specific constraints, costs, and requirements that need to be optimized for maximum profit or minimum cost. The scenarios involve decision-making on production schedules, node openings, and project selections based on given financial and operational parameters.

Uploaded by

angel1kapoor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Exercises on Integer programming formulations

1. Fixed charge problem: A company manufactures three different products: A, B and C.


The per-unit profit margins for the three products are Rs. 60, Rs 100 and Rs. 50. The
products could be manufactured using one of the two processes. The per-unit production
requirements for each product for each process is given in the following table:

Per-unit production requirements


Process Product A Product B Product C Total Hrs per week
Process 1 4 hours 6 hours 3 hours 2000
Process 2 5 hours 7 hours 4 hours 2400

The demand for product A is predicted to be between 50 and 100 units per week, demand
for product B is predicted to be within 150 and 200 units per week and demand for
product C is within 100 and 150 units per week.

If the company decides to use process 1, it will incur a setup cost of Rs. 1000 and the
setup will take 24 hours. If the company decides to use process 2, it will incur a setup
cost of Rs. 800 and the setup will take 18 hours. Determine the production schedule that
will maximize the profits for the company and also determine which of the two processes
should be utilized?

2. Set Covering problem: A telecommunications company is considering expanding its


cable and internet service operations into a new area. The area is divided into 10
neighbourhoods. The company is considering 7 location nodes to reach all 10
neighbourhoods. Of course, it costs a significant amount of money to open a node or
make a node operational. The company would like to minimize total cost but at the same
time reach all of the neighbourhoods. The cost of opening a node differs based on the
characteristics of the land and the technical aspects of setting up a node.

The costs of opening seven nodes are as follows:


Node 1 Node 2 Node 3 Node 4 Node 5 Node 6 Node 7
125 85 70 60 90 100 110

The seven nodes can reach or provide internet/cable coverage to the following areas:
Node 1: Neighbourhoods 1, 3, 4, 6, 9, 10
Node 2: Neighbourhoods 2, 4, 6, 8
Node 3: Neighbourhoods 1, 2, 5
Node 4: Neighbourhoods 3, 6, 7, 10
Node 5: Neighbourhoods 2, 3, 7, 9
Node 6: Neighbourhoods 4, 5, 8, 10
Node 7: Neighbourhoods 1, 5, 7, 8, 9
Determine which nodes should be opened to provide coverage to all neighbourhoods at a
minimum cost?

3. Capital budgeting problem (1): Five projects are being evaluated over a 3-year planning
horizon. The following table gives the expected returns for each project and the
associated yearly expenditure.
Expenditures (million $/yr)
Project 1 2 3 Returns (million $/yr)
1 5 1 8 20
2 4 7 10 40
3 3 9 2 20
4 7 4 1 15
5 8 6 10 30
Available funds 25 25 25
Projects 1 & 2 are mutually exclusive in nature. Which projects should be selected over
the 3-year planning horizon?

4. Capital budgeting problem (2): XYZ construction company has an opportunity to build
five shopping malls during the next year. The expected net profit and expected cost for
each of the shopping malls are shown in the following table:

Table: The expected net profit and expected net cost

Shopping mall Expected net profit ($000) Expected cost ($000)


1 200 150
2 150 90
3 140 50
4 125 80
5 180 100

The company has a budget of $300,000 for the construction of shopping malls during the next
year. Also due to various legal restrictions and marketing considerations, the following
relationships among the projects must be met.

i. Exactly one of the shopping malls 1, 2 and 5 must be constructed.


ii. At most only one of the two shopping malls 1 and 4 may be constructed.
iii. Shopping mall 5 is only constructed, when shopping mall 4 is constructed.
5. Fixed Charge problem: Locating a New Factory for Hardgrave Machine Company

Hardgrave Machine Company produces computer components at its factories in Cincinnati,


Kansas City, and Pittsburgh. These factories have not been able to keep up with demand for
orders at Hardgrave’s four warehouses in Detroit, Huston, New York, and Los Angeles. As a
result, the firm has decided to build a new factory to expand its productive capacity. The two
sites being considered are Seattle, Washington, and Birmingham, Alabama. Both cities are
attractive in terms of labor supply, municipal services, and ease of factory financing.

Table 1 presents the production costs and monthly supplies at each of the three existing factories,
monthly demands at each of the four warehouses, and estimated production costs at the two
proposed factories. Transportation costs from each factory to each warehouse are summarized in
Table 2.

In addition to this information, Hardgrave estimates that the monthly fixed costs of operating the
proposed facility in Seattle would be $400,000. The Birmingham plant would be somewhat
cheaper, due to the lower cost of living at that location. Hardgrave therefore estimates that the
monthly fixed cost of operating the proposed facility in Birmingham would be $325,000.

Table 1

MONTHLY COST TO
DEMAND PRODUCTION MONTHLY PRODUCE
WAREHOUS (UNITS) PLANT SUPPLY ONE UNIT
E
Detroit 10,000 Cincinnati 15,000 $48
Houston 12,000 Kansas City 6,000 $50
New York 15,000 Pittsburgh 14,000 $52
Los Angeles 9,000
___________ ________________
46,000 35,000
Supply needed from new plant = 46,000 – 35,000 = 11,000 units per month
ESTIMATED PRODUCTION COST PER UNIT AT PROPOSED PLANTS
Seattle $53
Birmingham $49
Table 2
TO
FROM DETROIT HOUSTON NEW YORK LOS
ANGELES
Cincinnati $25 $55 $40 $60
Kansas City $35 $30 $50 $40
Pittsburgh $36 $45 $26 $66
Seattle $60 $38 $65 $27
Birmingham $35 $30 $41 $50

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