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Modeling Examples

The document describes a linear programming problem to determine the optimal product mix for a clothing company. The company wants to maximize profit by deciding how many dozen of each shirt type (front print sweatshirt, front/back print sweatshirt, etc.) to produce given constraints of production time, shipping capacity, budget, and available inventory. The problem is formulated with four decision variables representing units of each shirt, an objective function to maximize total profit, and constraints for time, shipping, budget, and inventory. The optimal solution is presented.

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Kimberly Pascual
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220 views

Modeling Examples

The document describes a linear programming problem to determine the optimal product mix for a clothing company. The company wants to maximize profit by deciding how many dozen of each shirt type (front print sweatshirt, front/back print sweatshirt, etc.) to produce given constraints of production time, shipping capacity, budget, and available inventory. The problem is formulated with four decision variables representing units of each shirt, an objective function to maximize total profit, and constraints for time, shipping, budget, and inventory. The optimal solution is presented.

Uploaded by

Kimberly Pascual
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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LINEAR

PROGRAMMING:
MODELING
EXAMPLES
A Product Mix Example
Quick-Screen is a clothing manufacturing company that specializes in producing
commemorative shirts immediately following major sporting events such as the World
Series, Super Bowl, and Final Four. The company has been contracted to produce a
standard set of shirts for the winning team, either State University or Tech, following a
college football bowl game on New Year's Day. The items produced include two
sweatshirts, one with silk-screen printing on the front and one with print on both sides,
and two T-shirts of the same configuration. The company has to complete all production
within 72 hours after the game, at which time a trailer truck will pick up the shirts. The
company will work around the clock. The truck has enough capacity to accommodate
1,200 standard-size boxes. A standard-size box holds 12 T-shirts, and a box of 12
sweatshirts is three times the size of a standard box. The company has budgeted $25,000
for the production run. It has 500 dozen blank sweatshirts and T-shirts each in stock,
ready for production
A Product Mix Example
The resource requirements, unit costs, and profit per dozen for each type of shirt are shown
in the following table:
Processing Time Cost per Dozen Profit per Dozen
(hr.) per Dozen
Sweatshirt (F) 0.10 $36 $90
Sweatshirts (B/F) 0.25 48 125
T-shirt (F) 0.08 25 45
T-shirt (B/F) 0.21 35 65

The company wants to know how many dozen (boxes) of each type of shirt to produce in
order to maximize profit.
A Product Mix Example
Summary of Linear Programming Model Formulation Steps
Step 1. Define the decision variables
How many (dozens of) T-shirts and sweatshirts of each type to
produce
Step 2. Define the objective function
Maximize profit
Step 3. Define the constraints
The resources available, including processing time, blank shirts,
budget, and shipping
A Product Mix Example
This problem contains four decision variables, representing the
number of dozens (boxes) of each type of shirt to produce:
x1 = sweatshirts, front printing
x2 = sweatshirts, back & front printing
x3 = t-shirts, front printing
x4 = t-shirts, back & front printing
A Product Mix Example
The objective function:
The total profit is the sum of the individual profits gained
from each type of shirt
maximize Z = $90x1 + 125x2 + 45x3 + 65x4
A Product Mix Example
Model Constraints:
The first constraint is for processing time. The total available
processing time is the 72-hour period between the end of the
game and the truck pickup
0.10x1 + 0.25x2 + 0.08x3 + 0.21x4 ≤ 72 hr
A Product Mix Example
Model Constraints:
The second constraint is for the available shipping capacity,
which is 1,200 standard-size boxes. A box of sweatshirts is three
times the size of a standard-size box. Thus, each box of
sweatshirts is equivalent in size to three boxes of T-shirts.
3x1 + 3x2 + x3 + x4 ≤ 1,200 boxes
A Product Mix Example
Model Constraints:
The third constraint is for the cost budget. The total budget
available for production is $25,000:
$36x1 + 48x2 + 25x3 + 35x4 ≤ $25,000
A Product Mix Example
Model Constraints:
The last two constraints reflect the available blank
sweatshirts and T-shirts the company has in storage:
x1 + x2 ≤ 500 dozen sweatshirts
x3 + x4 ≤ 500 dozen T-shirts
A Product Mix Example
Model Summary:
maximize Z = $90x1 + 125x2 + 45x3 + 65x4
Subject to
0.10x1 + 0.25x2 + 0.08x3 + 0.21x4 ≤ 72
3x1 + 3x2 + x3 + x4 ≤ 1,200
$36x1 + 48x2 + 25x3 + 35x4 ≤ $25,000
x1 + x2 ≤ 500
x3 + x4 ≤ 500
x1, x2, x3, x4 ≥ 0
A Product Mix Example
The model solution is
x1 = 175.56 boxes of front-only sweatshirts
x2 = 57.78 boxes of front and back sweatshirts
x3 = 500 boxes of front-only T-shirts
Z = $45,522.22 profit
An Investment Example
Kathleen Allen, an individual investor, has $70,000 to divide among several investments. The alternative
investments are municipal bonds with an 8.5% annual return, certificates of deposit with a 5% return, treasury
bills with a 6.5% return, and a growth stock fund with a 13% annual return. The investments are all evaluated
after 1 year. However, each investment alternative has a different perceived risk to the investor; thus, it is
advisable to diversify. Kathleen wants to know how much to invest in each alternative in order to maximize the
return.
The following guidelines have been established for diversifying the investments and lessening the risk
perceived by the investor:
1. No more than 20% of the total investment should be in municipal bonds.
2. The amount invested in certificates of deposit should not exceed the amount invested in the other three
alternatives.
3. At least 30% of the investment should be in treasury bills and certificates of deposit.
4. To be safe, more should be invested in CDs and treasury bills than in municipal bonds and the
growth stock fund, by a ratio of at least 1.2 to 1.

Kathleen wants to invest the entire $70,000.


Decision Variable
Four decision variables represent the monetary
amount invested in each investment alternative:
x1 = amount ($) invested in municipal bonds
x2 = amount ($) invested in certificates of deposit
x3 = amount ($) invested in treasury bills
x4 = amount ($) invested in growth stock fund
The Objective Function
The objective of the investor is to maximize the total return from the
investment in the four alternatives. The total return is the sum of the
individual returns from each alternative.
maximize Z = $0.085x1 + 0.05x2 + 0.065x3 + 0.130x4
Where
Z = total return from all investments
0.085 x1 = return from the investment in municipal bonds
0.05 x2 = return from the investment in certificates of deposit
0.065 x3 = return from the investment in treasury bills
0.130 x4 = return from the investment in growth stock fund
Model Constraints
In this problem the constraints are the guidelines established for diversifying the
total investment. Each guideline is transformed into a mathematical constraint
separately.
The first guideline states that no more than 20% of the total investment should be
in municipal bonds. The total investment is $70,000; 20% of $70,000 is $14,000
x1 ≤ $14,000
The second guideline indicates that the amount invested in certificates of deposit
should not exceed the amount invested in the other three alternatives. Because the
investment in certificates of deposit is x2 and the amount invested in the other
alternatives is x1 + x 3+ x4
x2 ≤ x 1 + x 3 + x 4
Model Constraints
In standard form, all the variables would be on the left-hand side of the
inequality (≤), and all the numeric values would be on the right side. To convert
this constraint to standard form, x1 + x3 + x4 must be subtracted from both sides
of the ≤ sign to put this constraint in proper form:
x 2 - x 1 - x 3 - x4 ≤ 0
The third guideline specifies that at least 30% of the investment should be in
treasury bills and certificates of deposit. Because 30% of $70,000 is $21,000 and
the amount invested in certificates of deposit and treasury bills is represented
by x2 + x3, the constraint is
x2 + x3 ≥ $21,000
Model Constraints
The fourth guideline states that the ratio of the amount invested in certificates
of deposit and treasury bills to the amount invested in municipal bonds and the
growth stock fund should be at least 1.2 to 1:
[(x2 + x3)/(x1 + x4)] ≥ 1.2
This constraint is not in standard linear programming form because of the
fractional relationship of the decision variables, (x2 + x3)/(x1 + x4). It is converted
as follows
x2 + x3 ≥ 1.2 (x1 + x4)
-1.2x1+x2+x3 – 1.2x4 ≥ 0
Model Constraints
Finally, the investor wants to invest the entire $70,000 in the four
alternatives. Thus, the sum of all the investments in the four
alternatives must equal $70,000:
x1 + x2 + x3 + x4 = $70,000
Model Summary
maximize Z = $0.085x1 + 0.05x2 + 0.065x3 + 0.130x4
subject to
x1 ≤ $14,000
x2 - x1- x3- x4 ≤ 0
x2 + x3 ≥ $21,000
-1.2x1+x2+x3 – 1.2x4 ≥ 0
x1 + x2 + x3 + x4 = $70,000
x1, x2, x3, x4 ≥ 0
The solution is
x3 = $38,181.82 invested in treasury bonds
x4 = $31,818.18 invested in a growth stock fund
Z = $6,818.18

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