Formulation Exercises in LP

Exercises
ABC Pottery Company XYZ Fertilizer Company Investment Problem Investment Problem II Staffing Problem Staffing Problem-II MAX Function Retailer Problem Flow Maximization Flow Maximization-II Portfolio Design Project Management

ABC Pottery Company

Product mix problem - ABC Pottery Company How many bowls and mugs should be produced to maximize profits given labor and materials constraints? Resource Availability: 40 hrs of labor per day, 120 lbs of clay Product resource requirements and unit profit:

Product Bowl Mug

Resource Requirements Labor Clay Profit (hr/unit) (lb/unit) ($/unit) 1 4 40 2 3 50

Problem Definition
Resource Availability: Decision Variables: Objective Function: Resource Constraints: Non-Negativity Constraints: 40 hrs of labor per day 120 lbs of clay x1 = number of bowls to produce per day x2 = number of mugs to produce per day Maximize Z = $40x1 + $50x2 Where Z = profit per day 1x1 + 2x2 40 hours of labor 4x1 + 3x2 120 pounds of clay x1 0; x2 0

LP Formulation

maximize subject to

Z=$40x1 + 50x2 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0

XYZ Fertilizer Company

Two brands of fertilizer available - Super-gro, Crop-quick. Field requires at least 16 pounds of nitrogen and 24 pounds of phosphate. Super-gro costs $6 per bag, Crop-quick $3 per bag. Problem : How much of each brand to purchase to minimize total cost of fertilizer given following data ?
Chemical Contribution Nitrogen (lb/bag) 2 4 Phosphate (lb/bag) 4 3

Brand Super-gro Crop-quick

Investment Problem
Mr. Prabandh Shikhar is looking at a 3 year planning horizon for investing Rs.100000. He has two options: a) Invest in a savings account at 5% rate of interest with maturity period of 1 year b) Invest in a security Y at 12% rate of interest with maturity period of 2 years Assume that the withdrawals can only be made at the end of maturity period. What should be his investment strategy that would maximize the total return at the end of 3 years?

Investment Problem -II

Mr. Prabandh Shikhar is looking at a 5 year planning horizon for investing Rs.1000000. He has four options: Invest in a savings account X at 5% rate of interest with maturity period of 1 year Invest in a security Y at 12% rate of interest with maturity period of 2 years Invest in a security Z at 18% rate of interest with maturity period of 3 years Invest in a security W at 24% rate of interest with maturity period of 5 years Assume that the withdrawals can only be made at the end of maturity period. What should be his investment strategy that would maximize the total return at the end of 5 years?

Staffing Problem
Daily requirements in the HR department of a company are as follows:
Day Mon Tue Wed Thu Fri Sat Sun

Requirement

A person works for 5 consecutive days and takes 2 days off. Assuming that a cyclical schedule is to be made find the minimum number of people that will meet the daily requirements.

Staffing Problem-II
The total requirements are shown in the table below.

Day Requirements

Mon

Tue

Wed

Thu

Fri

Sat

Sun

22

28

23

26

22

17

16

Assume that you can hire two kinds of workers : regular and temporary. 1) Regular worker can either : Work for 3 days at a stretch then take a day off and then work for 2 continuous days and take a day off.
OR

Work for 5 days at a stretch and take 2 days off. Regular worker gets paid for all the seven days a week (at a rate of Rs.200 /day) including the off days. 2) A temporary worker has to work for 5 days at a stretch and take 2 days off.The total number of temporary workers working on a given day should not be more than 30%. A temporary worker gets paid only on the days he/she is working.The rates for the various days are given as :

Day Rate(Rs./day)

Mon

Tue

Wed

Thu

Fri

Sat

Sun

120

130

140

150

160

170

180

Max Function
Write an LP Formulation for a Max Function shown below : Z=Max [ a1 , a2, a3, a4, a5, .. an ]

Retailing Problem
Mr. X, who operates in Indore, needs to determine his procurement and sales plan for rice for the next 4 months. He has 25 tonnes of rice to begin with. He has a warehouse that can stock maximum 100 tonnes of rice. He has access to the following information:
Month Sales Price in Indore(Rs. per tonne) Purchase price in Chattisgarh (Rs. per tonne)

4000

4000

5000

3200

4000

2900

4000

3000

Maximize Outflow
Cap=3 Cap=5
B E

Cap=1 Outflow

Cap=2
A C

Start Cap=5

Cap=Inf. Cap=3

Cap=7

End

Cap=5
D

Maximize Outflow -II

Cap=3 Cap=5
B E

Leakage =10% of the incoming flow Cap=1 Outflow Cap=7

F

Cap=2
A C

Start Cap=5

Cap=Inf.

Cap=3 Cap=5
D

End

Leakage =5% of the flow

Leakage =8% of the incoming flow

Portfolio Design
A mortgage team wants to finance Rs. 100,000,000 to various loans .Any uninvested money goes to savings account with 2.5% return.
Loan/Investment Type I Mortgages Type II Mortgages Personal Commercial Govt. Securities Return (%) 9 12 15 8 6 Risk(%) 3 6 8 2 1

Allocate the money so as to : 1. Maximize average return per rupee for one year 2. Average risk should not be more than 5(excluding the savings) 3. 20% minimum investment in commercial

Project Management
3 5 A 4 B D 5 C 2 E G 2 5 F H 1 I 2