Module 2: Dynamic Programming

Compilation of Exercises
Knapsack Packing Problem A wilderness hiker must pack three items: food, first-aid kits, and clothes. The backpack has a capacity of 3 cu. ft. Each unit of food takes 1 cu. ft. A first-aid kit occupies cu. ft and each piece of cloth takes about cu ft. The hiker assigns the priority weights 3,4, and 5 to food, first aid, and clothes, which means that clothes are the most valuable of the three items. From experience, the hiker must take at least one unit of each item and no more than two first-aid kits. How many of each item should the hiker take?

Quality Assurance Assignment Problem The Inn S. Pect Corp. has 6 QC inspectors who can be stationed at four positions in the assembly line. At least one inspector must be stationed at each position. The probability that a defective product will pass through an inspection station depends upon the number of inspectors assigned to the position as shown in the table below. The probability that a product will pass through all positions without detection of a defect is equal to the product of the probabilities at each position. What is the optimal policy?

# of Inspectors 1 2 3
Equipment Replacement Problem

Position 1 0.2 0.1 0.1

Position 2 0.4 0.3 0.1

Position 3 0.3 0.1 0.1

Position 4 0.3 0.2 0.1

A company needs to have a working machine during each of the next six years. Currently, it has a new machine. At the beginning of each year, the company may keep the machine or sell it and buy a new one which costs $5,000. A machine cannot be kept for more than three years. The table below summarizes the revenues, operating cost and salvage value for each age of machine. Assuming you replace machines at the start of each year, what is the best equipment replacement strategy? Cost Item Revenues ($) Operating Cost ($) Salvage Value ($) Brand New 4,500 500 X 1 Year 3,000 700 3,000 2 Years 1,500 1,100 1,800 3 Years X X 500

Media Exposure Planning Ruiz, Exercises, SY 2004-2005 A firm is planning its advertising budget. Three different media are considered: television, glossy periodicals and store promotions. The advertising agency comes up with the following proposals listed. The total amount of advertising funds available for the campaign is P40,000,000. The problem is to find the optimal combination of advertising media that maximizes customer reach. Potential Customers (in 000) reached at various Advertising Budgets per Medium

Medium Television Ads Glossy Periodicals Store Promotions

10,000,000 X 120 80

Advertising Budget 20,000,000 30,000,000 180 280 190 250 160 240

40,000,000 320 300 310

Cargo Loading The following table specifies the unit weights and values of five products held in storage. The quantity of each item is unlimited. Product A B C D E Weight 7 5 4 3 1 Value 9 4 3 2 1

A plane with a capacity of 13 weight units is to be used to transport the products. How should the plane be loaded to maximize the value of goods shipped?

Representation A state in the US consists of three cities with the following population: City 1 has 1.2million, City 2 has 1.4 million while City 3 has 400,000 people. It has five representatives. Since it aims to have proportional representation, it wants that the five representatives to be proportionally allocated, based on population, to the cities. Formulate an objective function that would measure proportional representation. Solve the problem using Dynamic Programming Road Trip Yap, Long Test 2, SY 2006-2007 You are going on a long trip. You start on the road at milepost 0. Along the way, there are 5 hotels whose distances from milepost 0 are as follows: Hotel 1 150km, Hotel 2 225km, Hotel 3- 425, Hotel 4 455 and Hotel 5 - 730. The only places you are allowed to have a stopover are at these hotels but you do not need to stop at all of them. You must, however, stop at the last hotel which is your destination. You ideally would like to travel 200 miles a day but this may not be possible because of the location of the hotels. Any deviation from the target 200 miles is penalized at (200 minus distance travelled)2. You want to minimize the total penalty for your travel.

Inventory Management 1 Yap, Long Test 2, SY 2004-2005 The Ankara shoe store sells rubber shoes for a protective use in snow. Past experience has indicated that the selling season is only six months long. The sales division has forecast the following demand for next year. Month October November December January February March Demand 40 20 30 40 30 20

The shoe is purchased from a single supplier at the start of each month at a cost of $4.00 per pair. It can only purchase in volumes of 10, 20, 30, 40 or 50 pairs. If the company buys in larger volumes, the supplier extends discount to the company- 5% for 30 pairs, 10% for 40 pairs and 15% for 50 pairs. Aside from purchase costs, the company also incurs delivery costs and storage cost. Every time the company orders, the supplier charges a fixed amount of $10/order to cover transportation, packaging and insurance costs. As per storage cost, the company is charged $0.20/pair/month based on end-month inventory. Since the product is highly seasonal and subject to design changes, incoming and outgoing inventory should be zero. Determine an optimal ordering policy for the next six months that minimizes inventory-related costs.

Power Plant Expansion Planning Ruiz, Exercises, 2004-2005 NAPOCOR is considering the following electric utility expansion planning problem. New generating units are available in two sizes namely 500MW and 1000MW. One new unit of either type can be bought in the year 2000, 2005 and 2010. There is an economy-ofscale advantage to the larger unit and a significant discount rate is assumed. The present value of purchase costs are shown as function of time and unit in the table below. Unit 500 MW 1000 MW 2000 P10,000,000 P16,000,000 2005 P5,000,000 P8,000,000 2010 P2,500,000 P4,000,000

The system load is increasing over the planning period. The cumulative increase in system peak load per year is as follows: 400MW in 2000, 800MW in 2005 and 1,200MW in 2010. If the capacity is able to meet the peak load, then operating cost is normal. Deficit of supply compared to demand cannot exceed 400MW. If there is a shortfall less than or equal to 400MW, increase in operating cost is as follows: Shortfall 100MW 200MW 300MW 400MW 2000 P2,000,000 P4,000,000 P6,000,000 P8,000,000 2005 P1,000,000 P2,000,000 P3,000,000 P4,000,000 2010 P500,000 P1,000,000 P1,500,000 P2,000,000

Determine the facilities plan that minimizes powerplant purchase and operating costs for all three years. Assume that no more than one unit of powerplant can be built in a single year.

Coin Toss Strategy A coin will be tossed 4 times. Before each toss, you can wager $0, $1, $2 or $3 (provided you have enough funds) and there is a 50% chance to double your wager. You begin with $2, and you need to maximize the probability of having $5 at the end of the game.

Double Coin Toss Strategy Yap, Long Test 2, SY 2004-2005 You and a friend can play the following game in a casino. You bet a certain amount of money, and each of you flips a fair coin independently. For each $1 you bet, the house will pay back $3 (giving a net gain of $2)if the outcome is Heads-Heads. Otherwise, you lose the amount you bet. Assuming that you and your friend have a $1 starting money, determine the game strategy that will maximize the probability of ending up with $4 after three games.

Tennis Serve Strategy Chua, Long Test 2, SY 2002-2003 Aly Yap, the tennis pro, has analyzed his service. He has two serves, the smash and the spin. Let psmash and pspin denote the probability that the serve will be in-bounds. Let wsmash and wspin be the probability that he wins the point if the serve is in-bounds. Determine whether Aly should slam on the first and second try given the following parameters: psmash = 0.7, wsmash =0.7, pspin=0.9 and wspin = 0.5.

Stock Trading A stockbroker speculating on the forward market has signed an agreement to deliver a certain stock at a price of $49 per share on Friday. She does not hold any of this stock on Monday forcing her to buy prior to the due date. The present price is $48. The price per share changes randomly from day to day. Base on historical stock price behavior, she estimates that the probability that the price will increase by a $1.00 is 40%, decrease by $1.00 is 30% and staying at the same level is 30%. Once she has made her purchase, she would hold the stock until Friday. What should her strategy be?

Purchasing Strategy A purchasing agent must buy for her company a special beryllium alloy in a market which trades only once a week. Based on historical data, the price for the next period is highly dependent on the price this period it can be the same, increase by 1,000 or decrease by 1,000. Probability of these changes depending on price for this period is shown in the table below. Based on the companys production schedule, the alloy must be bought within the next five trading weeks with the price for the first trading week being 10,000. Develop an optimal strategy for the decision problem. Price this Period 9,000 to 12,000 11,000 and Up 25% 45% 30% 20% 35% 45%

Price Movement Next Period Increase 1000 Same Decrease 1000

8,000 & Below 55% 30% 15%

Job Interview Ruiz, Long Test 1 You are to interview four candidates for the job of a typist. You want to hire the candidate who can type the fastest. From past experience, the candidates are likely to have the following probabilities of typing speeds: Typing Speed Probability 40 10% 45 15% 50 20% 55 25% 60 15% 65 10% 70 5%

Suppose that you must make a decision as to whether a candidate should be hired as soon as the interview for the candidate has been completed and before the remaining candidates have been seen,

Machine Failure Problem Patterned after Yap, Long Test 2, SY 2008-2009 Western Digital has a machine that produces hard drives. This machine has a certain part that deteriorates as it produces the product. The company may decide not to replace the part before producing the next hard drive but the probability of producing a defective product will be higher, directly proportional to the number of functional hard drives produced since the part was last replaced (shown in the table). Number of good quality Hard Drives produced since last part replacement 0 1 2 3 4 Probability of failure in the next production 0 10% 40% 80% 100%

* Assuming that the company has produced 3 good quality units with the currently installed part, probability of making a defective product in the next production is 80%. If part is replaced, there is no chance that the resulting product will be defective.

If it costs Php50 if the production fails and Php30 to replace the part before production, when should the company replace the part to produce its eight hard drive requirement the next period to minimize cost? Assume that if the part fails, the company may still opt not to replace it. Probability of failure in the next production is the same as that of the previous production.

Inventory Management 2 Patterned after Yap, Long Test 2, SY 2007-2008 MEA is looking into selling umbrellas in the next three days. The organization will buy umbrellas at the start of each day at P80.00/pc. and will sell it at P95.00/pc.. The demand for the product in the next three days is shown below. Any excess inventory held at the end of the day will cost P5.00 per umbrella per day for storage. Their supplier requires orders to be between 3 to 6 umbrellas only. At the end of the three days, any excess umbrella can be returned to the supplier but at a delivery cost of P5.00/umbrella. Determine the optimal order quantity per day that will maximize revenues assuming no inventory at the start of the 1st day. Units 0 1 2 3 4 5 6 Day 1 0% 15% 20% 20% 15% 30% 0% Day 2 20% 25% 15% 20% 20% 0% 0% Day 3 0% 0% 20% 20% 10% 25% 25%