OPIM 101 Management Science, Semester 3B, 10/11 Assignment 2: Integer Programming, Network Problems Due: 12pm, Thursday,

30th 2011 The maximum marks for this assignment is 100. (NOT GRADED) You do not need to submit the non-graded solutions I) Lauren Moore has sold her business for $500,000 and wants to invest in condominium units and land. She estimates that she will receive an annual return of $8,000 for each condominium and $6,000 for each arc of land. A condominium unit costs $70,000, and land costs $30,000 per acre. A condominium will cost her $1,000 per unit, an acre of land will cost $2,000 for maintenance and upkeep, and $14,000 (excluding from sale of her business) has been budgeted for these annual expenses. Lauren wants to know how much to invest in condominium and land to maximize her annual return. a) Formulate a mixed integer programming model for this problem. b) Solve this model using excel. (You do not need to submit the answer report. You only need to state the solution.)

II) The Texas Consolidated Electronics Company is contemplating a research and development program encompassing eight research projects. The company is constrained from embarking on all projects by the number of available management scientists (40) and the budget available for R& D projects ($300,000). Further, if project 2 is selected, project 5 must also be selected (but not vice versa). Following are the resource requirements and the estimated prot for each project:
Project 1 2 3 4 5 6 7 8 Expense(000) 60 110 53 47 92 85 73 65 Management Scientists Required 7 9 8 4 7 6 8 5 Estimated Prot (x106 ) 0.36 0.82 0.29 0.16 0.56 0.61 0.48 0.41

Formulate a integer programming model.

III) Globex Investment Capital Corporation owns six companies that have the following estimated returns (in millions of dollars) if sold in one of the next 3 years: To generate operating funds, the com1

Year Sold Company 1 2 3 4 5 6 1 14 9 18 16 12 21 2 18 11 23 21 16 23 3 23 15 27 25 22 28

pany must sell at least $20 million worth of assets in year 1, $25 million in year 2, and $35 million in year 3. Globex wants to develop a plan for selling these companies during the next 3 years to maximize return.

END GRADED QUESTIONS

1) Integer Programming (Rowntown Cab) (total: 20 marks, Submit Excel File) 10th Edition, Chapter 5, Question 30 a) (12 marks) b) (4 marks) c) (4 marks)

2) Integer Programming (The Reliance Manufacturing Company) (total: 15 marks, Submit Excel File) 10th Edition, Chapter 5, Question 27 Present your model and submit your answer report. (This question is not found in 9th Edition). (15 marks)

3) Transshipment problem (Walshs Fruit Company)(total: 10 marks) 10th Edition, Chapter 6, Question 38a) Present the model clearly. You do not need to solve it. (10 marks)

4a) Transportation problem (National Foods Company)(total: 20 marks, Submit Excel File) 10th Edition, Chapter 6, Question 30 2

Present the model formulation. You do not need to solve the problem. (12 marks)

b) Transportation problem (National Foods Company) 10th Edition, Chapter 6, Question 31 Present the model formulation. You do not need to solve the problem. (8 marks)

5) Shortest Route Problem (Hylton Hotel)(total: 25 marks) 10th Edition, Chapter 7, Question 7 9th Edition, Chapter 7, Question 5

i) Solve the problem using the shortest route method. (10 marks) ii) Present the LP formulation. (10 marks) iii) Suppose Hylton Hotel wants to set up network wires linking all nine locations. What is the minimum length of wire needed? (5 marks)

6) Maximum Flow Problem (FAA airline) (total: 10 marks) 10th Edition, Chapter 7, Question 33 (10 marks)

END (Not Graded) Supplementary Problems for Integer Programming:

10th Edition, Chapter 5, Question 33, 13 9th Edition, Chapter 5, Question 23, 9

Supplementary Problems for Network Models:

10th Edition, Chapter 6, Question 10, 15, 37, 60, 47 9th Edition, Chapter 6, Question 7, 24, 41, 30 3

Supplementary Problems for Network Flow: 10th Edition, Chapter 7, Question 3, 19, 35 9th Edition, Chapter 7, Question 2, 13, 23

Solutions to Not-graded questions

I)Decision variables: Let x1 denote the number of condominiums to produce. Let x2 denote the number of acres of land to produce. max s.t. 70, 000x1 + 30, 000x2 500, 000 1000x1 + 2000x2 14, 000 x1 0 and integer x2 0 1 II) Let xi = 0 (1) Z = 8000x1 + 6000x2

project i is taken, i = 1, ..., 8 otherwise max Z = 0.36x1 + 0.82x2 + 0.29x3 + + 0.41x8 s.t. 7x1 + 9x2 + ... + 5x8 40 60x1 + 110x2 + ... + 65x8 300 x 2 x5 xi = 0, 1 i = 1, .., 8 (2)

1 if Globex sells company i in year j, i = 1, .., 6 and j = 1, 2, 3 III) Let xij = 0 otherwise Parameters from problem: Let cij be the estimated returns from selling company i in year j. Eg. c23 = 15. 4

max Z = s.t.

6 i=1 {

3 j=1 cij xij }

6 i=1 ci1 xi1 6 i=1 ci2 xi2 6 i=1 ci3 xi3 3 j=1 xij

20 25 35 1

(min asset requirements in year 1) (min asset requirements in year 2) (min asset requirements in year 3) (each company can only be sold at most once) for i = 1, .., 6, j = 1, 2, 3 (3)

xij = 0, 1