Optimisation models in Decision Making

Liner Programming model

Qus 1:

A manufacturer of toys maks two types of toys A and B. Processing of these two toy is done on two machines X and Y. the toy
mmachine Y. Toy B requires 4 hours on machine X and 5 hours onmachine Y. There are 16 hours of time per day available on M
on both the toys is same. i.e. Rs. 5 per toy. Formulate and solve this problem as a linear programming problem to determine t

Ans:

Machine
Toy A Toy B Total hours Available

Machine X 2 4 16 16
Machine Y 6 5 30 30
Profit 5 5
Production 2.86 2.57

Total profit 15.428571

The daily production of machine should be

Machine
Toy A Toy B Total hours
Available

Machine X 2 4 16 16
Machine Y 6 5 30 30
Profit 5 5
Machine X 8.00 0.00
Machine Y 0.00 6.00
Total profit 24

The daily production should be 8 Toy A on machine X & 6 Nos Toy B on Machine Y to maximise profit
 machines X and Y. the toy A requires two hours on machine X and 6 hours on
time per day available on Machine X and 30 hours on Machine Y. The profit obtained
ng problem to determine the daily production of each toy.

ximise profit
Optimisation models in Decision Making

Liner Programming model

Qus 2:
An airlines owns an aging fleet of Boeing 737 jet airplanes. It is considering a major purchase of up to 17 new Boeing models 7

1 The airlines can finance up to Rs. 4000 millions in purchases.

2 Each Boeing 757 will cost Rs. 530 million while each Boeing 767 will cost Rs. 220 million
3 At least one third of the planes purchased should be longer ranged 757.
4 The annual maintenance budget is to be no more than Rs. 80 million.
5 The Annual Maintenance cost per 757 is estimeted to be Rs. 800000 and it is Rs. 500000 for each 767 purchased
6 Each 757 can carry 125000 passengers per year while each 767 can fly 81000 passengers annually.

Formulate and solve this problem as linear programming problem to maximize the annual passenger carrying capac

Ans:

Boeing 757 Boeing 767

Cost of plane in millions 530 220
Maintainance cost 0.8 0.5
Passenger capacity of plane 125000 81000
Plane to be purchased 4 8 12 17 6.56
5.666667
2120 1760 3880 4000
3.2 4 7.2 80
500000 648000

Passenger per annum 1148000

No Of planes to be purchsed Boeing 757 4

Boeing 767 8
up to 17 new Boeing models 757 and 767 jets. The decision must be take into account several costs and capacity factors including followin

000 for each 767 purchased

gers annually.

nnual passenger carrying capacity.

acity factors including following:
Optimisation models in Decision Making

Liner Programming model

Qus 3:
Aviation Electronics produces three types of switching devices. Each type involves a two steps assembly operations.
Assembly Time per Unit(minutes)
Stations 1 Station 2
Model A 2.5 3
Model B 1.8 1.6
Model C 2 2.2

Each workstation has a daily working time of 7.5 hours. Manager wants to obtain the greatest possible profit during the next fi
of $8.25 per unit, Model B a profit of $7.50 per unit and Model C a profit of $7.80 per unit. Assume that the firm can sell all it p
outstatnding orders for 20 units of each model type. Formulate the linear programming model and use solver to obtain the so

Ans:

Model A Model B Model C constraints

Station 1 50 2160 40 2250 2250
Station 2 60 1920 44 2024 2250
No of model 20 1200 20 1240 20
Rate per unit 8.25 7.5 7.8

Profit 9321
eps assembly operations.

test possible profit during the next five working days. Model A yeilds a profit
Assume that the firm can sell all it produces during this time but it must fill
odel and use solver to obtain the solution of this problem.

constraints
total minute
total minute
Mimimum 20 units
Optimisation models in Decision Making

Liner Programming model

Qus 4:
A firm produces 5 different products from a single raw material. Raw material is available in abundance at Rs. 6 per kg. The lab
all products. The plant capacity is 21000 labour hours for the budget period. Production facilities can produce all the products
Rs. 8 per hour, compromising Rs. 5.60 per hour as fixed overhead and Rs. 2.40 per hour as variable overhead. The selling comi
price. formulate the linear programming models to miximize the company's profit, on the basis of following information.

Product Selling Price Labour hrs Raw material

per required per required per unit
Market Demand (Units) units( Rs.) unit (in grams)
A 4000 32 1 700
B 3600 30 0.8 500
C 4500 48 1.5 1500
D 6000 36 1.1 1300
E 5000 44 1.4 1500

Ans:

Selling Price Labour hrs Raw material

Product Market Demand (Units) per required per required per unit Total lanour
units( Rs.) unit (in grams) Product hours
A 4000 32 1 700 4000 4000
B 3600 30 0.8 500 3600 2880
C 4500 48 1.5 1500 4500 6750
D 6000 36 1.1 1300 6000 6600
E 5000 44 1.4 1500 550 770
21000
21000

Product A B C D E
Unit Demand 4000 3600 4500 6000 5000
Seilling price 32 30 48 36 44
Labour hours required per un 1 0.8 1.5 1.1 1.4
Raw material required per un 700 500 1500 1300 1500
Raw material required per un 0.7 0.5 1.5 1.3 1.5
504 120 810 1560 270
Raw material price 6 6 6 6 6
Lanour rate 8 8 8 8 8
Total labour hours 120 32 135 220 42
960 256 1080 1760 336
overhead 5.6 5.6 5.6 5.6 5.6
2.4 2.4 2.4 2.4 2.4
960 320 720 1600 240
Product cost 2424 696 2610 4920 846
selling comission 242.4 69.6 261 492 84.6
Production cost 2666.4 765.6 2871 5412 930.6
Unit produce 120 40 90 200 30
sale cost 3840 1200 4320 7200 1320
Profit 3720 1160 4230 7000 1290

Profit 17400
 ce at Rs. 6 per kg. The labour rate is Rs. 8 per hour for
produce all the products. The factory overhead rate is
verhead. The selling comission is 10% of the product
owing information.

raw
product sales material production
price price price Labour ovehead cost comission Profit
128000 128000 16800 32000 32000 80800 8080 39120
108000 108000 10800 23040 28800 62640 6264 39096
216000 216000 40500 54000 36000 130500 13050 72450
216000 216000 46800 52800 48000 147600 14760 53640
24200 24200 4950 6160 4400 15510 1551 7139

692200 Total profit 211445

 3264 cost of raw material

549 21000
cost of labour

overhead cost
11496

17880 sales cost

Q
Optimisation models in Decision Making

Liner Programming model

Qus 5:
An electronics company produces 3 types of parts for automatic washing machine. It purchases casting of the parts from a loc
the part on drilling, shaping & polishing machines. The selling prices of the Parts A,B & C respectively are Rs. 8, rs. 10 & Rs. 14.
castings for parts A, B and C repectively cost Rs. 5, Rs. 6 & Rs. 10. The shop possesses only one of each type of machine. Costs
three machines are Rs. 20 for drilling, Rs. 30 for shaping & Rs. 30 for polishing. The capacities (parts per hour) for each machin
table.

Capacity per hour

Machine Part A Part B Part C
Drilling 25 40 25
Shaping 25 20 20
Polishing 40 30 40

The management of the shop wants to know how many parts of each type it should produce per hour in order to maximize pr
Formulate this problem as an LP model so as to maximise total profit to the company.

Ans:

Trial 1
Capacity per hour
Cost per hour Cost per
Machine Part A Part B Part C B
to run part A
Drilling 25 40 25 20 0.8 0.5
Shaping 25 20 20 30 1.2 1.5
Polishing 40 30 40 30 0.75 1
2.75 3
selling price 8 10 14
casting price 5 6 10

Part produce 10 10 10 25
selling cost 80 100 140 20
casting rate 50 60 100 20
27.5 30 30.5

Profit 2.5 10 9.5

total Profit 22
Trial 2
Capacity per hour
Cost per hour
Machine Part A Part B Part C
to run
Drilling 25 40 25 20
Shaping 25 20 20 30
Polishing 40 30 40 30

selling price 8 10 14
casting price 5 6 10
Cost per part
Drilling 0.8 0.5 1.25
Shaping 1.2 1.5 1.5
Polishing 0.75 1 0.75
Part produce 0 20 0
constatnt 0.25 1 0.95

Profit 20

Equation 1 0 0.5 0 0.5 1

Equation 2 0 1 0 1 1
Equation 3 0 0.666667 0 0.666667 1
ting of the parts from a local foundry and then finishes
y are Rs. 8, rs. 10 & Rs. 14. All parts made can be sold.
ch type of machine. Costs per hour to run each of the
per hour) for each machine are shown in following

ur in order to maximize profit for an hour's run.

0.8
1.5
0.75
3.05
Optimisation models in Decision Making

Liner Programming model

Qus 6:

A person is interested in investing Rs. 500000 in a mix of investemnts. The investement choices and expected rates of return o
Investement Projected Rate of return
Mutual Fund A 0.12
Mutual Fund B 0.09
Money Market Fund 0.08
Goverement Bonds 0.085
Shares Y 0.16
Shares X 0.18

The investor wants at least 35% of his invesment in government bonds. Becasuse of the heigher preceived risk of the two shar
the combined investement in these not to be exceed Rs. 80000. The investor has also specified that at laest 20 % of the invest
market fund and that the amount of money invested in shares should not exceed the amount invested in mutual funds. His fin
is that the amount invested in mutual fund A should not be more than the amount invested in mutual fund B. The problem is t
money to invested in each altenative so as to obtain the heighest annual total return. Formulate the above as linear programm
total investment.

Ans:
Money market Government
Mutual Fund A Mutual Fund B fund Bonds
Rate of return 0.12 0.09 0.08 0.085
Money invested 56250 56250 100000 175000
Return on money 6750 5062.5 8000 14875
Budget limit
Govrn Bonds
Money market limit
Share & mutual fund limit
Fund A & Fund B

Total investemtn 54937.5

d expected rates of return on each one of them are:

eceived risk of the two shares, he was specified that

t at laest 20 % of the investemnt should be in money
ted in mutual funds. His final investement condition
ual fund B. The problem is to decide the amount of
e above as linear programming problem and suggest

Shares Y Shares X
0.16 0.18
0 112500 500000
0 20250 54937.5
500000
175000
100000
112500 share <= mutual fund
112500 fund A<= fund B
Optimisation models in Decision Making

Liner Programming model

Qus 7:
An investor wishes to diversify his portfolio and make due allowance for long term potentialities, but at the same times wishes
cinsidered various securities in which he might invest and has classified them into four types:

a. Type A: relatively high elements of risk, with commensurately high dividend and considerable growth potential.
b. Type B: speculative stock with considerable risk, high dividends but less growth potential than type A
c. Stock with little risk, considerable growth potential, but relatively low dividend income at present.
d Stock with little risk, not much growth potential and fairly high dividends. Because of the elements of risk, the inves

To enhance prospects for long term growth of his investments, he wishes to have at least 40% of his total outlay in types A an
current dividend income. Total investemnt is Rs. 100000. Dividend return on the 4 types of investemnts are A:6%, B:7%, C:3%,
the total investment to be allocate.

Ans:

Type A Type B Type C Type D

Return on investement 0.06 0.07 0.03 0.05
Amount Invested 20000 15000 40000 25000 100000
Return on invested 1200 1050 1200 1250 4700
Investement constarints 100000 100000
Type A & Type B 35000 30000
Type A & Type C 60000 40000

Return on investemnts 4700

at the same times wishes to maximize his current dividend income. He has

ble growth potential.

ements of risk, the investor wishes to restrict purchases of type A & Type B to not more than 30% of his investment.

otal outlay in types A and C. Within these restrictions, he wishes to maximize his
ts are A:6%, B:7%, C:3%, D:5%. formulate this problem as an LP model to suggest

Type A & Type B to be purchased

Optimisation models in Decision Making

Liner Programming model

Qus 8:
L&T construction company wants cement at three of its project sites Powai, Wadala and Bandra. It procures cement from four
Pune, Surat, Nagpur and Aurangabad. Transportation costs per ton, capacities and requirements are as follows. Determine op
allocation of requirements

Powai Wadala Bandra Capacity(tons)

Pune 5 8 12 300
Surat 7 6 10 600
Nagpur 13 4 9 700
Aurangabad 10 13 11 400
Requirement 700 400 800

Ans:

Powai Wadala Bandra Capacity(tons)

Pune 0 0 300 300 300
Surat 0 0 600 600 600
Nagpur 700 0 0 700 700
Aurangabad 0 400 0 400 400
700 400 900 2000
Requirement 700 400 800

Total output 23900

dra. It procures cement from four plants
nts are as follows. Determine optimal
Optimisation models in Decision Making

Liner Programming model

Qus 9:
A wholesale company has three warehouses from which supplies are drawn for four retail customers. The company deals in a
of which at each warehouses are given below. The table gives the trasporation cost per unit from each ware house to each cu
supplies to despatch from each of the warehouses to each customer so as to minimize overall transporation cost

Warehouse Customer 1 Customer 2 Customer 3 Customer 4 Supply units

1 3 6 8 5 20
2 6 1 2 5 28
3 7 8 3 9 17
Demand (Units) 15 19 13 18

Ans:

Warehouse Customer 1 Customer 2 Customer 3 Customer 4

1 11 0 0 9 20
2 0 19 0 9 28
3 4 0 13 0 17
15 19 13 18
Demand (Units) 15 19 13 18

Supplies to dispatch 209

mers. The company deals in a single product, the supplies
each ware house to each customer. Determine what
nsporation cost

Supply units
20
28
17
Optimisation models in Decision Making

Liner Programming model

Qus 10:

A manufacyurer producses three models I, II and III of a certain product. He uses two types of raw material A and B of which 4
available. The raw material requirements per unit of three models are as follows:

Raw Material Requirements per unit of given model

I II III
A 2 4 5
B 4 2 7

The labour time of each unit of model I is twice that of model II and three times that of model III. The entire labour force of th
2500 units of model I. A market survey indicates that the minimum demand of the three modelsis 500, 500 and 375 units. How
units produced must be equal to 3:2:5. Assume that the profits per units of model I, II, II are Rs. 60, Rs. 40 and Rs. 100. Formul
determine the number of units of each product which will maximize profit.

Ans:

Raw Material Requirements per unit of given model

I II III
A 2 4 5
B 4 2 7
Labour time of each unit 1 0.5 0.33
Minimum demand 500 500 375
ratio 0.3 0.2 0.5
Profit 60 40 100
Unit produce 300 200 500

Cost of raw material 300 100 165

Material A 600 800 2500 3900 4000
Material B 1200 400 3500 5100 6000
Labour unit 300 300 2500
Labour unit 100 100 5000
Labour unit 165 165 7500
Market demand 300 300 500
Market demand 200 200 500
Market demand 500 500 375
production ratio 0.3
production ratio 0.2
production ratio 0.5
Total profit 76000
raw material A and B of which 4000 and 6000 units respectively are

III. The entire labour force of the factory can produce equivalent of
elsis 500, 500 and 375 units. However the ratio of the number of
s. 60, Rs. 40 and Rs. 100. Formulate this problem as an LP model to