GROUP MEMBER
No Full name Students ID
1 Phạm Nguyễn Bảo Hà 31231025938
2 Trương Diệu Khánh
3 Hồ Thị Yến Như
4 Trịnh Ngọc Minh Quân 31231026187
Contribution
3.13. Exercise 3.13 page 108
a. Indicate why this is a cost–benefit–trade-off problem by identifying both the activities and the
-> This is a cost-benefit-trade-off problem because Web Mercantile have to balance the leasing costs at th
of the company over five months.
- Benefits: The primary benefit is the ability to store and manage inventory, which is essential for fulfilling c
sufficient warehouse space, they cannot operate effectively. The company can gain the benefits of:
+ Meeting demand: Company will have enough inventory on hand to satisfy customer orders promptly.
+ Efficient operations: The company can ensure the Streamlined logistics and order fulfillment processes
+ Business continuity: The company can ensure smooth operations and avoiding out-of-stock risks.
- Costs: The costs are directly related to the leasing of warehouse space and the company has to face with
+ Lease payments: The company has to pay for the monetary expense of renting the space, which varies
+ Potential opportunity cost: The company has to type up capital in long-term leases when that capital cou
We can see that the trade-off is that leasing space for a longer duration will reduce the per-square-foot cos
the other hand, leasing only the required space each month will avoid excess costs but incurs a higher per
b. Identify verbally the decisions to be made, the constraints on these decisions, and the overall
- Decisions to be made:
+ How much space to lease each month?: Determining the square footage required f
+ Lease duration: Deciding whether to lease space on a month-to-month basis, for the entire fiv
+ Timing of leases: When to begin and end each lease to align with space requirement
- Constraints:
+ Space requirements: The company must have at least enough warehouse space to meet its storage ne
than the required amount.
+ Leasing Costs: The cost per square foot varies depending on the lease duration, creating a financial co
leasing.
+ Lease time options: The available lease terms are limited to durations of 1, 2, 3, 4, or 5 months so
- Performance measure: The objective is to minimize the total leasing cost while ensuring that the
c. Constraints: x11 + x12 + x13 + x14 + x15 ≥ 30, 000
x12 + x13 + x14 + x15 + x21 + x22 + x23 + x24 ≥ 20, 000
x13 + x14 + x15 + x22 + x23 + x24 + x31 + x32 + x33 ≥ 40, 0
x14 + x15 + x23 + x24 + x32 + x33 + x41 + x42 ≥ 10, 000
x15 + x24 + x33 + x42 + x51 ≥ 50, 000
and xij ≥ 0, fori = 1, ..., 5 and j = 1, ..., 6 − i.
Measure of performance: inimize C = 65(x11 + x21 + x31 + x41 + x51) + 100(x12 + x22 + x32 + x42) +13
d. Spreadsheet
Leasing period
(months) 1 2 3
Cost 65 100 135
Lease durations
Month Lease for 1M Lease for 2M Lease for 3M
1 0 0 0
2 0 0 0
3 10000 0 0
4 0 0 0
5 20000 0 0
Total 30000 0 0
Total available space for each month
1 2 3
30000 30000 40000
>= >= >=
30000 20000 40000
e. Algebraic form: Let xij = the amount of space leased in month i for a period of j months
Minimize C = 65(x11 + x21 + x31 + x41 + x51) + 100(x12 + x22 + x32 + x42) +135(x13 + x23
subject to x11 + x12 + x13 + x14 + x15 ≥ 30, 000
x12 + x13 + x14 + x15 + x21 + x22 + x23 + x24 ≥ 20, 000
x13 + x14 + x15 + x22 + x23 + x24 + x31 + x32 + x33 ≥ 40, 0
x14 + x15 + x23 + x24 + x32 + x33 + x41 + x42 ≥ 10, 000
x15 + x24 + x33 + x42 + x51 ≥ 50, 000
and xij ≥ 0, fori = 1, ..., 5 and j = 1, ..., 6 − i.
13. Exercise 3.13 page 108
identifying both the activities and the benefits being sought from these activities.
e have to balance the leasing costs at the minimum total leasing cost and the storage needs
ventory, which is essential for fulfilling customer orders and running the business. Without
ompany can gain the benefits of:
to satisfy customer orders promptly.
logistics and order fulfillment processes for their customers.
ns and avoiding out-of-stock risks.
space and the company has to face with:
ense of renting the space, which varies based on the duration and size of the lease.
n long-term leases when that capital could be used elsewhere in the business.
ation will reduce the per-square-foot cost, but it may result in paying for unused space. On
oid excess costs but incurs a higher per-square-foot rate.
ints on these decisions, and the overall measure of performance for the decisions.
- Decisions to be made:
etermining the square footage required for each of the next five months.
a month-to-month basis, for the entire five months, or for some intermediate period.
ch lease to align with space requirements and minimize the leasing costs.
- Constraints:
warehouse space to meet its storage needs in each of the 5 months. They cannot lease less
than the required amount.
he lease duration, creating a financial constraint while the company has a limited budget for
leasing.
to durations of 1, 2, 3, 4, or 5 months so they cannot negotiate custom lease durations.
total leasing cost while ensuring that the required space is available in each month.
s: x11 + x12 + x13 + x14 + x15 ≥ 30, 000
4 + x15 + x21 + x22 + x23 + x24 ≥ 20, 000
x22 + x23 + x24 + x31 + x32 + x33 ≥ 40, 000
3 + x24 + x32 + x33 + x41 + x42 ≥ 10, 000
+ x24 + x33 + x42 + x51 ≥ 50, 000
≥ 0, fori = 1, ..., 5 and j = 1, ..., 6 − i.
1 + x51) + 100(x12 + x22 + x32 + x42) +135(x13 + x23 + x33) + 160(x14 + x24) + 190x15
4 5
160 190
e durations
Lease for 4M Lease for 5M
0 30000
0 0
0 0
0 0
0 0
0 30000
space for each month
4 5
30000 50000
>= >= Total cost
10000 50000 7650000
e leased in month i for a period of j months for i = 1, ..., 5 and j = 1, ..., 6 − i.
100(x12 + x22 + x32 + x42) +135(x13 + x23 + x33) + 160(x14 + x24) + 190x15
x11 + x12 + x13 + x14 + x15 ≥ 30, 000
4 + x15 + x21 + x22 + x23 + x24 ≥ 20, 000
x22 + x23 + x24 + x31 + x32 + x33 ≥ 40, 000
3 + x24 + x32 + x33 + x41 + x42 ≥ 10, 000
+ x24 + x33 + x42 + x51 ≥ 50, 000
≥ 0, fori = 1, ..., 5 and j = 1, ..., 6 − i.
The Weigelt Cor. Mixed problem
b.
Size
Plant Large Medium Small
1 516.666666667 177.777777778 0
2 0 666.666666667 166.666666667
3 0 0 416.666666667
Total unit produced 516.666666667 844.444444444 583.333333333
<= <= <=
Unit sold per day 900 1200 750
Profit per unit
Plan 1 420 360 300
Plan 2 420 360 300
Plan 3 420 360 300
Size
Plant Large Medium Small
1 20 15 12
2 20 15 12
3 20 15 12
a. The decision variables:
xP1L = number of large units produced per day at Plant 1
xP1M = number of medium units produced per day at Plant 1
xP1S = number of small units produced per day at Plant 1
xP2L = number of large units produced per day at Plant 2
xP2M = number of medium units produced per day at Plant 2
xP2S = number of small units produced per day at Plant 2
xP3L = number of large units produced per day at Plant 3
xP3M = number of medium units produced per day at Plant 3
xP3S = number of small units produced per day at Plant 3
The linear programming model:
Maximize P = 420 xP1L + 360 xP1M + 300 xP1S + 420 xP2L + 360 xP2M + 300 xP2S + 4
xP1L + xP1M + xP1S < 750
xP3L + xP3M + xP3S < 450
20 xP1L + 15 xP1M + 12 xP1S < 13000
20 xP2L + 15 xP2M + 12 xP2S < 12000
20 xP3L + 15 xP3M + 12 xP3S < 5000
xP1L + xP2L + xP3L < 900
xP1M + xP2M + xP3M < 1200
xP1S + xP2S + xP3S < 750
xP1L > 0, xP1M > 0, xP1S > 0, xP2L > 0, xP2M > 0, xP2S > 0, xP3L > 0, xP3M
Total unit produced Capacity Same percentage
694.444444444445 <= 750 0.92592592593
833.333333333334 <= 900 0.92592592593
416.666666666667 <= 450 0.92592592593
Space available Space used
13000 <= 13000
12000 <= 12000
5000 <= 5000
Total profit
696000
+ 360 xP2M + 300 xP2S + 420 xP3L + 360 xP3M + 300 xP3S
xP3L > 0, xP3M > 0, xP3S > 0
percentage