BSP 340 (Operations Research)

Project 1: Linear programing

Due: January 25, 2024 (upload on Google Classroom)

Instructions:
1. This is a group project. Each group should consist of 1, or 2 members only. Only one
project should be turned in if two students work together.
2. Read the questions/instructions carefully and provide answers according to get full credit.
3. You are required to turn in the POM for Windows LP formulation and solutions and a
snap short of a hand written report showing the LP formulation in detail and the
interpretation of the solution.

The XYZ company produces a variety of paint products for both commercial and private use.
The demand for paint is highly seasonal, peaking in the third quarter. Initial inventory is
250,000 gallons, and ending inventory should be 300,000 gallons. XYZ’s manufacturing
manager wants to determine the best production plan using the following demand
requirements and capacity plan. Demands and capacities here are expressed in thousands of
gallons (rather than employee-period equivalents). The manager knows that the regular-time
cost is $1.00 per unit, overtime cost is $1.50 per unit, subcontracting cost is $1.90 per unit,
and inventory holding cost is $0.30 per unit per quarter. Undertime is paid and the cost is
$0.50 per unit. It is less than the regular-time cost because only labor costs are involved, not
materials and variable overhead going into paint production.

The following constraints apply:

a. The maximum allowable overtime in any quarter is 20 percent of the regular-time
capacity in that quarter.
b. The subcontractor can supply a maximum of 200,000 gallons in any quarter.
Production can be subcontracted in one period and the excess held in inventory for a
future period to avoid a stockout.
c. No planned backorders or stockouts are permitted
Formulate and solve the Linear Programming Problem that minimizes the production
costs.