Space

IOE 202: lecture 4 outline

� Announcements
� Last time...
� More examples of optimization problems and linear
programming models

IOE 202: Operations Modeling, Fall 2009 Page 1

Space

Last time

� Optimization problems and (mathematical) optimization

models
� Optimization model components: decision variables, objective
function, constraints
� Terminology: solution, feasible solution, optimal solution
� Linear Programming (LP) models — special kind of
optimization model
� Easy to represent and solve with computer packages, such as
Excel solver
� If a problem can be modeled with an LP model, usually this is
the model of choice!
� Modeled and solved as LP models:
� Pet food supplier’s problem
� Monet picture frame manufacturer problem

IOE 202: Operations Modeling, Fall 2009 Page 2

Space

Example: problem of optimal resource allocation1

• The Monet company produces four types of picture frames,

labeled A, B, C, and D. The table below lists the unit selling price
Monet charges for each type of frame.
• Each type requires a certain amount of skilled labor, metal, and
glass, as shown in the table. For production during the coming
week, Monet can purchase up to 4000 hours of skilled labor, 6000
ounces of metal, and 10,000 ounces of glass. The unit costs are
also indicated in the table.
• Also, market constraints are such that it is impossible to sell
more than 1000 type-A frames, 2000 type-B frames, 500 type-C
frames, and 1000 type-D frames.
• How many frames of each type should Monet produce during the
coming week to maximize its profit?

1
Another problem of this type: Recreational Vehicle problem on p. 19 of
Denardo.
IOE 202: Operations Modeling, Fall 2009 Page 3

Space

Data (inputs) for the Monet production problem

Frame Skilled Metal Glass Selling Maximal

type labor price production
Frame A 2 4 6 $28.50 1000
Frame B 1 2 2 $12.50 2000
Frame C 3 1 1 $29.25 500
Frame D 2 2 2 $21.50 1000
Max. amount 4000 6000 10,000
of resource hours oz oz
Resource $8.00 $0.50 $0.75
Unit prices per hour per 1 oz per 1 oz

IOE 202: Operations Modeling, Fall 2009 Page 4

Space

Mathematical model for Monet:

Decision variables: xA , xB , xC , xD denote the number of frames

A, B, C, and D to produce, respectively.
Mathematical model:
maximize 6xA + 2xB + 4xC + 3xD Profit objective
subject to 2xA + xB + 3xC + 2xD ≤ 4000 Labor constraint
4xA + 2xB + xC + 2xD ≤ 6000 Metal constraint
6xA + 2xB + xC + 2xD ≤ 10000 Glass constraint
xA ≤ 1000 Frame A sales constraint
xB ≤ 2000 Frame B sales constraint
xC ≤ 500 Frame C sales constraint
xD ≤ 1000 Frame D sales constraint
xA , x B , xC , x D ≥ 0 Nonnegativity constraint

This model is also a linear programming model, since all constraints

are linear, and the objective function is a linear function.

IOE 202: Operations Modeling, Fall 2009 Page 5

Space

Some comments

� An alternative (but equivalent) formulation can be constructed

by also including variables to represent the amount of labor,
metal, and glass purchased. Objective function and
constraints could be expressed in terms of this variables.
� Both integer and non-integer levels of production were allowed
in our formulation. (Is it a reasonable assumption?)
� Next time, we will discuss the changes in the models/solution
methods when the last assumption is not reasonable; for now,
let us allow variables to be non-integer.

IOE 202: Operations Modeling, Fall 2009 Page 6

Space

Optimal solution of the Monet problem

� Optimal solution:
� Optimal profit:
� Which inequality constraints are “tight” (i.e., hold as
equalities) at the optimal solution?

An alternative way to characterize the optimal solution:

“Do not make any frames of type D. Produce as many frames of
type A as you can sell. Use up all available labor and metal.”

IOE 202: Operations Modeling, Fall 2009 Page 7

Space

Perturbation Theorem

Above, we characterized the optimal solution to the Monet

problem by identifying which constraints were tight, and which
were slack at that optimal solution. This characterization comes in
handy if the data of the problem turns out to be slightly different
than we assumed when we formulated the problem.
Perturbation “Theorem”
If the data of the linear program are perturbed by small amounts,
its optimal solution can change, but its tight constraints stay tight,
and its slack constraints stay slack.

IOE 202: Operations Modeling, Fall 2009 Page 8

Space

x2 Solving LPs graphically

✻
max 3x1 +5x2
x1 ≤4
2x2 ≤ 12
3x1 +2x2 ≤ 18.
x1 , x2 ≥ 0

✲
x1

IOE 202: Operations Modeling, Fall 2009 Page 9

Space

x2 Demystifying the perturbation theorem

✻
max 3x1 +5x2
x1 ≤4
2x2 ≤ 12
3x1 +2x2 ≤ 21
x1 , x2 ≥ 0

✲
x1

IOE 202: Operations Modeling, Fall 2009 Page 10

Space

Shipping model2
A forest production company manufactures plywood in three plants
located in different timber zones, and ships it to four depots. Each
plant has a monthly production capacity, and each depot has a
monthly demand (these demands must be satisfied exactly). The
table below specifies the capacities, demands, and the unit shipping
costs from each plant to each depot. The cost of producing
plywood has been omitted since it is the same in each plant. What
is the cheapest way to ship plywood to the depots each month?

Depot 1 Depot 2 Depot 3 Depot 4 Capacity (units)

Plant 1 $4 $7 $3 $5 2500
Plant 2 $10 $9 $3 $6 4000
Plant 3 $3 $6 $4 $4 3500
Demand 2000 3000 2500 1500
(units)
2
This is the problem considered in Section 4.5 of Denardo
IOE 202: Operations Modeling, Fall 2009 Page 11

Space

Representation of the shipping model

Plant Depot
✓✏ ✓✏
✲
✒✑ ✒✑
1 1
❍❍ ❃
✚
❅ ❍
❏ ✚ ✣
✡
✡
❏❅ ❍ ❍✚ ✚
✡❍ ✓✏
❍ ✡
❏❅ ✚ ❍
❏ ❅✚ ❥
❍
✒✑
✚ ✡ ✘✿ 2
✘
✓✏ ✚ ❏✘✘✘❅ ✡ ✘
✚
✘ ✘ ✘ ❏ ✡❅ ✒
�
�
✒✑
2  ❏ ❅
❘✓✏
 ✡ �❅
 
✡ ❏�
 ❅
 ✡ ❏ ③

 �
✡ � ❏ ✟✟✯✒✑3
✡ � ✟✟ ❏
✟ 
❏
✓✏ ❏✓✏
✡� ✟✟
✡ ❏
✟✟ 
� ⑦

✲
✒✑ ✒✑
3 4

IOE 202: Operations Modeling, Fall 2009 Page 12

Space

Operational decisions in the shipping problem

� What decisions do you need to make?

� What performance measure are you using to compare different

decisions?

� What constraints (restrictions) must your decisions satisfy?

� What assumptions are being made?

IOE 202: Operations Modeling, Fall 2009 Page 13

Space

Formulation of a mathematical model for the shipping problem

Decision variables: represent decisions by variables.

Objective function: express the performance criterion in terms of

the decision variables; should it be minimized of maximized?

IOE 202: Operations Modeling, Fall 2009 Page 14

Space

Formulation of a model for the shipping problem – cont.

Constraints: express all (explicit and implicit) constraints and
restrictions on the values of the decision variables.

Optimal solution:

IOE 202: Operations Modeling, Fall 2009 Page 15

Space

A blending model3
After last week’s bakeoff, you have a few ingredients left over (see
table below), and you have decided to use them to make candy to
sell to spectators at a minor league ballgame this weekend. You
are considering producing two types of candies: “Easy Out” and
“Slugger,” both of which consist solely of sugar, nuts, and
chocolate.
Ingredient Sugar Nuts Chocolate
Amount available 10,000 oz 2,000 oz 3,000 oz

The mixture used to make Easy Out must contain at least 20%
nuts, while the mixture used to make Slugger must contain at least
10% nuts and 10% chocolate. Each ounce of Easy Out can be sold
for $0.50, and each ounce of Slugger can be sold for $0.40 — how
can you maximize revenue?
Note that there is quite a bit of flexibility in the recipes for the
candy!
3
For a similar model, see Section 4.3 of Denardo
IOE 202: Operations Modeling, Fall 2009 Page 16
Space

Representation of the blending model

10,000 Sugar
oz Sllugger

2,000 Nuts
oz

Easy Out
3,000 Choc
oz olate

IOE 202: Operations Modeling, Fall 2009 Page 17

Space

Operational decisions in the candy-making business

� What decisions do you need to make?

� What performance measure are you using to compare different

decisions?

� What constraints (restrictions) must your decisions satisfy?

� What assumptions are being made?

IOE 202: Operations Modeling, Fall 2009 Page 18

Space

Formulation of a mathematical model for candy-making

Decision variables: represent decisions by variables.

Objective function: express the performance criterion in terms of

the decision variables; should it be minimized of maximized?

IOE 202: Operations Modeling, Fall 2009 Page 19

Space

Formulation of a model for candy-making – cont.

Constraints: express all (explicit and implicit) constraints and
restrictions on the values of the decision variables.

Optimal solution:

IOE 202: Operations Modeling, Fall 2009 Page 20

Space

Postal employee scheduling4

A post office requires different numbers of employees on different

days of the week. The number of employees required is as follows:

Day Mon Tue Wed Thu Fri Sat Sun

Min. required 17 13 15 19 14 16 11

Union rules state that each employee must work 5 consecutive days
and then receive 2 days off. For example, an employee might work
Wednesday through Sunday, and be off Monday and Tuesday. The
post office wants to minimize the number of employees it needs to
hire while meeting the daily requirements.
Note: Each employee hired needs to be assigned to one of the
seven schedules, or “tours.”

4
Similar to the problem discussed in Section 4.8 of Denardo
IOE 202: Operations Modeling, Fall 2009 Page 21

Space

Operational decisions in the scheduling problem

� What decisions do you need to make?

� What performance measure are you using to compare different

decisions?

� What constraints (restrictions) must your decisions satisfy?

� What assumptions are being made?

IOE 202: Operations Modeling, Fall 2009 Page 22

Space

Formulation of a mathematical model for the scheduling problem

Decision variables: represent decisions by variables.

Objective function: express the performance criterion in terms of

the decision variables; should it be minimized of maximized?

IOE 202: Operations Modeling, Fall 2009 Page 23

Space

Formulation of a model for the scheduling problem – cont.

Constraints: express all (explicit and implicit) constraints and

restrictions on the values of the decision variables.

Starting day of the schedule

Mo Tu We Th Fr Sa Su
Mo ≥
Tu ≥
We ≥
Th ≥
Fr ≥
Sa ≥
Su ≥

Optimal solution:

IOE 202: Operations Modeling, Fall 2009 Page 24

Space

An investment model5
Presently, you have $1,000 to invest. Cash flows associated with 5
available investments are shown in the table; you can put no more
than $500 in any investment. In addition to these investments, you
can invest as much money as you want into 12-month CDs, which
pay 6% interest. How should you invest to maximize your cash at
hand at the end of year 3?
Investment Now Year 1 Year 2 Year 3
A -$1.00 +$1.40
B -$1.00 +$1.15
C -$1.00 +$1.28
D -$1.00 +$1.15
E -$1.00 +$1.32
Note: each year, you can only invest cash available on hand!
5
Although presented in a different setting, the model in this problem turns
out to be similar to the Activity Analysis models of Section 4.10 of Denardo
IOE 202: Operations Modeling, Fall 2009 Page 25

Space

Operational decisions in the investment problem

� What decisions do you need to make?

� What performance measure are you using to compare different

decisions?

� What constraints (restrictions) must your decisions satisfy?

� What assumptions are being made?

IOE 202: Operations Modeling, Fall 2009 Page 26

Space

Formulation of a mathematical model for the investment problem

Decision variables: represent decisions by variables.

Objective function: express the performance criterion in terms of

the decision variables; should it be minimized of maximized?

IOE 202: Operations Modeling, Fall 2009 Page 27

Space

Formulation of a model for the investment problem – cont.

Constraints: express all (explicit and implicit) constraints and
restrictions on the values of the decision variables.

Optimal solution:

IOE 202: Operations Modeling, Fall 2009 Page 28