Formulation Exercise
1. Production Optimization
Hawaii Sugar Company produces brown sugar, processed (white) sugar, powdered sugar, and
molasses from sugar cane syrup. The company purchases 4000 tons of syrup weekly and is contracted
to deliver at least 25 tons weekly of each type of sugar. The production process starts by
manufacturing brown sugar and molasses from the syrup. A ton of syrup produces 0.3 ton of brown
sugar and 0.1 ton of molasses. White sugar is produced by processing brown sugar. It takes 1 ton of
brown sugar to produce 0.8 tons of white sugar. Powdered sugar is produced from white sugar
through a special grinding process that has a 95% conversion efficiency. The profits per ton from
brown sugar, white sugar, powdered sugar and molasses are $150, $200, $230, and $35, respectively.
Formulate the problem as a linear program, and determine the weekly production schedule.
2. Investment Planning
An investor has money-making activities A and B available at the beginning to each of the next five
years. Each dollar invested in A at the beginning of a year returns $1.4 two years later. Each dollar
invested in B at the beginning of a year returns 1.7 three years later.
In addition, investment opportunities C and D will each be available only once in future. Each dollar
invested in C at the beginning of year 2 returns $1.90 at the end of year 5. Each dollar invested in D at
the beginning of year of year 5 returns $1.3 at the end of year 5.
The investor begins with $60,000 and wishes to know which investment plan maximizes the amount
of money at the end of five years. Formulate the problem as a linear program.
3. Airline Fuel Purchase Planning
Trans-East Airlines operates planes on the following route: Los Angeles — Houston — New York —
Miami — Los Angeles. The lengths (in miles) of the four legs of this trip are 1500, 1700, 1300 and 2700,
respectively. At each stop the plane may purchase up to 10,000 gallons of fuel. The price of fuel at
each city is as follows: Los Angeles: $1.88, Houston: $1.15, New York: $1.05, Miami: $1.95. The plane's
fuel tank can hold at most 12,000 gallons. To allow for the possibility of circling before landing, the
ending fuel level for each leg of flight must be at least 600 gallons. On the average, the plane consumes
one gallon of fuel per mile. Formulate an LP to minimize the fuel cost incurred in completing the
schedule.
4. Warehouse Leasing
A company needs to lease warehouse storage space over next five months. The company will lease
any required amount of space for a desired number of months according to the tariff given below.
Leasing Period (months) 1 2 3 4 5
Cost/1000 sq. ft. ($) 650 1000 1350 1600 1900
The amount of space required each month is different and is given below.
Month 1 2 3 4 5
Space Requirement. (1000 sq. ft.) 30 20 40 10 50
Since these space requirements are quite different, it is not clear what the most economical way to
fulfill them is. Is it more economical to lease only the amount needed each month on a month- to-
month basis? Or, since the additional cost for leasing space for additional months is much less than
for the first month, is it better to lease the maximum amount needed for the entire five months?
Another option is the intermediate approach of changing the total space leased (by adding a new lease
and/or having an old lease expire) one or more times during the 5-month period.
The objective is to minimize the total leasing cost for meeting the space requirements. Formulate a
linear programming model for this problem.