Homework 2
1. Planning plants
A Manufacturing Company is planning to selectively build plants in five candidate cities, P1, P2,
P3, P4, and P5. If a plant is built, there will be an operating cost each week. Each week, each
warehouse has a requirement, presented in the table below. Each plant’s capacity and operational
cost for each week is given below. The unit cost to ship from a plant to a warehouse is also
shown in the table. Which plant(s) should be built and how many products should be shipped
from each plant to each warehouse in each week to satisfy the requirements with the objective of
minimizing the total cost (distribution cost + operational cost)?
Table 1. Parameters
Unit cost Ci,j (To) Warehouse
Operational
(From) Plant W1 W2 W3 W4 Capacity
cost
P1 $0.45 $0.56 $0.23 $0.62 9,000 2,500
P2 0.23 0.6 0.53 0.52 12,000 4,800
P3 0.64 0.34 0.42 0.49 8,000 1,900
P4 0.65 0.37 0.54 0.34 10,000 3,600
P5 0.45 0.56 0.33 0.77 12,000 4,800
Requirement 7,000 5,000 10,000 8,000
a. Build the mixed integer linear programming model for this problem.
1. Define sets
Sets of plants: P = {P1, P2, P3, P4, P5}
Sets of warehouses: W = {W1, W2, W3, W4}
2. Identify parameters
Ci,j : the unit cost to ship a carton of product from Plant i to Warehouse j. i P, j W
Cpi: the plant i’s production capacity. i P
Dj: the demand of warehouse j. j W
OCi: the operational cost of Plant i if it is built
3. Define variables
Xi,j : the cartons of product ship from Plant i to Warehouse j. i P, j W
Yi: if Plant i is built, Yi = 1, otherwise Yi = 0
4. Define the objective function
Here, the objective function is to minimize the operational cost and the total shipment cost.
Distribution cost
4. Define constraints
Constraint 1: each warehouse’s requirement must be satisfied.
Constraint 2: Need to formulate this logic: if Plant i is built, then the total volume shipped to all
warehouses should not exceed its capacity; if Plant i is not built, then the volume shipped to all
warehouses must be “0”.
Constraint 3: each variable Xi,j should be nonnegative and Yi should be binary
Xi,j ≥ 0, for each i P and j W
Yi = 0 or 1, for each i P
b. Use the excel solver to get the optimal results.
Solved in Excel
c. Presents the results in a diagram.
2. Planning the distribution center
A Chemical Company manufactures fertilizer in four plants, referred to as P1, P2, P3, and P4.
Capacities in each day exist at the plants. The company plans to selectively build distribution
centers in four places, which are designated as D1 D2, D3, and D4. If a distribution center is
built, there will be an operational cost; otherwise no operational cost occurs. At the distribution
centers, no demand occurs and no capacity limits exist. Three warehouses, denoted as W1, W2,
and W3, have demand for the products for each day. The products are shipped from plants to
distribution centers in the first stage, and in the second stage the products are shipped from
distribution centers to warehouses. The units for capacity and demand are pounds of fertilizer,
and the unit costs are given per pound. The daily warehouse demand, daily plant capacities, daily
operational cost of distribution center, and unit cost to ship one pond of fertilizer is given in the
tables below
To
Capacities
Unit cost C(i, k) D1 D2 D3 D4
Cp(i)
P1 1.06 1.32 1.57 1.24 2500
P2 0.96 0.87 1.43 1.63 2600
From
P3 1.98 0.87 0.89 0.99 2700
P4 1.06 1.67 1.93 1.07 2800
Operational cost
100 100 100 100
OC(k)
From
Unit cost C(j ,k) D1 D2 D3 D4 Demand Dm(j)
W1 0.5 0.45 0.4 0.34 2300
To W2 0.35 0.56 0.35 0.65 5000
W3 0.45 0.25 0.45 0.38 2200
Which distribution centers should be built, how many pounds of fertilizer are shipped from each
plant to each distribution center and how many pounds of fertilizer are shipped from each
distribution center to each warehouse each day with the objective of minimizing the daily
shipment cost and operational cost satisfying that each plant’s capacity cannot be exceeded, that
each warehouse’s demand must be satisfied, and that each distribution center’s flow-in and flow-
out products should be equal?
a. Build the mixed integer linear programming model for this problem.
Step 1. Define sets.
Set of plants P = {P1, P2, P3, P4}
Set of potential distribution centers D = {D1, D2, D3, D4}
Set of warehouses W = {W1, W2, W3}
Step 2. Identify parameters
Ci,k : the unit cost to ship one pound of product from Plant i to distribution center k. i P, k
D
Cj,k: the unit cost to ship from distribution center k to Warehouse j. j W, k D
Cpi: the plant i’s production capacity. i P
Dmj: the demand of warehouse j. j W
OCk: the operational cost of distribution center k. k D
Step 3. Define variables
Xi,k : the pounds of product shipped from Plant i to distribution center k. i P, k D
Xj,k: the pounds of product shipped from distribution center k to Warehouse j. j W, k D
Yk: if the distribution center k is built, Yk = 1, otherwise Yk = 0
Step 4. Formulate the objective function
Step 5. Formulate constraints
b. Use the excel solver to get the optimal results.
Solved in excel.
c. Presents the results in a diagram.