IOE441 WI2019 HW4 Solutions PDF

IOE 441 Winter 2019 Homework 4 Solutions
Problem 1. Over the next six weeks, Fancy Bike Company’s assembly facility in Singapore
will be assembling five different bikes that are called CityDweller (CD), UrbanBike (UB),
ParkCruiser (PC), RoughTerrain (RT), Hike&Camp (HC). The first three are road bikes,
and the last two are mountain bikes. The company policy does not allow backlogging of
demand. The next six weeks’ demand for these five bikes is forecasted as follows:
Week CD UB PC RT HC
1 200 190 260 150 110
2 250 210 280 190 120
3 310 250 320 260 140
4 370 320 340 240 180
5 270 290 270 180 160
6 240 260 240 170 150
Currently the facility employs 25 assembly workers each of whom works for 40 hours per
week. Due to equipment failures, the facility is down 10% of the scheduled production time.
The contract with the worker union requires that the assembly workers get paid even when
the facility is down. Overtime can be scheduled, but it is limited to 20% of the regular time
available. The time it takes a worker to assemble each of the five bikes is given below. The
assembly times are in hours.
Bike Assembly Time
CD 0.6
UB 0.8
PC 0.9
RT 1
HC 1.1
The cost of running the facility is $100 per hour. This rate is charged even when the facility is
down. Assembly workers are paid $14 per hour of regular time and $25 per hour of overtime.
The inventory holding cost is 30 cents per year for every dollar worth of inventory. The
dollar value of one hour of assembly work is estimated to be $160 for a road bike and $180
for a mountain bike. The company requires that the ending inventory of each bike be zero,
and the initial inventories are as follows:
Bike Initial Inventory
CD 10
UB 15
PC 20
RT 0
HC 25
Fancy Bikes wants to determine how many hours of regular and overtime production to
schedule in each of the next six weeks.
1
This study source was downloaded by 100000842510015 from CourseHero.com on 04-30-2022 02:24:00 GMT -05:00
https://www.coursehero.com/file/59259047/IOE441-WI2019-HW4-Solutionspdf/
(a) Define two aggregate products and a unit of production in order to measure the produc-
tion level for each aggregate product. (Note: although there are several choices, there
is one natural choice given the data and the objective of the company.) Convert the
weekly demand data for the five different bikes into weekly total demand for each of the
two aggregate products (measured in the unit of production that you chose).
(b) Formulate this aggregate planning problem as a linear programming problem. Define
the notation you are using and state any additional assumptions you may make.
Solution.
(a) The two aggreage products are: road bike, which includes CD, UB, and PC; and moun-
tain bikes, which includes RT and HC.
To convert the weekly demand data, we multiply the demand with the production time
for one product for each individual product
Week CD UB PC Aggr Group 1 W/H RT HC Aggr Group 2 W/H

1 190 175 240 470 150 85 243.5
2 250 210 280 570 190 120 322
3 310 250 320 674 260 140 414
4 370 320 340 784 240 180 438
5 270 290 270 637 180 160 356
6 240 260 240 568 170 150 335
Note: an alternate solution is to calculate the work hour for one unit for each aggregate
group first, and then multiply that by the aggregate demand.
(b) Notation:
t index of week, t = 1, . . . , 6
i index of aggregate product, i = 1, 2
Parameter:
Dti demand for aggregate product i in week t
Decision variables:
Rti regular hours for aggregate product i in week t
Oti overtime hours for aggregate product i in week t
Iti inventory level of aggregate product i at the end of week t
2
The problem can be formulated as follows:

6
" 2 #
X X 0.3
100(Rti + Oti ) + 14Rti + 25Oti + (160It1 + 180It2 )

min
t=1 i=1
52
s.t. Iti = It−1
i
+ 0.9(Rti + Oti ) − Dti ∀i, t
Rt1 + Rt2 ≤ 1000 ∀t
Ot1 + Ot2 ≤ 200 ∀t
I01 = 0
I02 = 0
I61 = 0
I62 = 0
Rti , Oti , Iti ≥ 0, integer ∀i, t
Note: the following objective function is also correct:

6
" 2 #
X X 0.3
100(Rti + Oti ) + 14 · 25Rti + 25 · 25Oti + (160It1 + 180It2 )

t=1 i=1
52
Problem 2. Remember Harold Gray from the last homework? Harold Grey owns a small
farm in the Salinas Valley that grows apricots. The apricots are dried on the premises and
sold to a number of large supermarket chains. Based on past experience and committed
contracts, he estimates that sales over the next five years in thousands of packages will be
as follows:
Year Forecasted Demand (thousands of packages)
1 250
2 130
3 200
4 140
5 135
Assume that each worker stays on the job for at least one year, and that Grey currently has
two workers on the payroll. He estimates that he will have 20,000 packages on hand at the
end of the current year. Assume that, on average each worker is paid $25,000 per year and
is responsible for producing 30,000 packages. Inventory costs have been estimated to be 4
cents per package per year, and shortages are not allowed.
Based on the effort of interviewing and training new workers, Farmer Grey estimates that it
costs $500 for each worker hired. Severance pay amounts to $1,000 per worker.
(a) Formulate the problem of determining the optimal hiring policy to minimize total cost
as an integer linear program.
3
(b) Solve the linear program using linear programming solver. Round the variables in the
resulting solution and determine the cost of the plan you obtain.
Solution.
(a) Notation:
t index of month, t = 1, . . . , 5
Parameters:
Dti demand for aggregate product i in week t
K production output for each worker each year
Decision variables:
Wt number of workers in month t
Ht number of workers hired in month t
Ft number of workers fired in month t
It inventory at the end of month t (in thousands)
We can formulate this problem as follows:

5
X
min (500Ht + 1000Ft + 40It + 25000Wt )
t=1
s.t. Wt = Wt−1 + Ht − Ft ∀t
It = It−1 + KWt − Dt ∀t
I0 = 20
W0 = 2
Wt , It , Ht , Ft ≥ 0, integer ∀t
Using an optimization software, we obtain the following solution:
Year Ft Ht It Wt
1 0 6 10 8
2 2 0 60 6
3 1 0 10 5
4 0 0 20 5
5 1 0 5 4
with objective function value of 711,700.
Problem 3. A retailer has decided to carry a new product, for which the demand will be
deterministic and stable at a rate of λ units per day. The products distributor charges c per
4
unit. The retailer expects to incur a holding cost of h per unit per day. The retailers policy
does not allow shortages. The distributor offered the retailer the following plan: whenever
the retailer places an order, the distributor will send the order in two shipments (assume
that the lead times for the shipments are negligible). The size of the first shipment will be
three fourth of the order. The remainder of the order will be sent in the second shipment,
which will be timed so that the retailer receives the second shipment just before it runs out
of inventory. The distributor will charge the retailer K for the two shipments combined. Let
G(Q) denote the retailers total daily cost (the sum of shipment, holding, and purchase costs
per day) when the order size is Q.
(a) Derive an expression for G(Q).
(b) Derive the optimal order quantity for this case. Please make sure to verify the quantity
minimizes G(Q), which you derived in part (a).
Solution.
(a)

λ h 3 3Q 1 1Q
G(Q) =7 cQ + K + Q· + Q·
Q 2 4 4λ 4 4λ
Kλ 5
=cλ + + hQ
Q 16
(b) We use the fist-order optimality condition:
Kλ
G0 (Q) = −
Q2
2Kλ
G00 (Q) = >0 i.e.convex in Q
Q3
r
16Kλ
G0 (q)0 → Q∗ =
5h
5
Powered by TCPDF (www.tcpdf.org)

IOE441 WI2019 HW4 Solutions PDF

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

IOE441 WI2019 HW4 Solutions PDF

Uploaded by

Copyright:

Available Formats

IOE 441 Winter 2019 Homework 4 Solutions

Week CD UB PC Aggr Group 1 W/H RT HC Aggr Group 2 W/H

The problem can be formulated as follows:

Note: the following objective function is also correct:

We can formulate this problem as follows:

Using an optimization software, we obtain the following solution:

with objective function value of 711,700.

You might also like