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Assignment 2 Question

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41 views

Assignment 2 Question

Uploaded by

Arnika Das
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CB2203 Data-Driven Business Modeling

Assignment 2

Please save your files as Asm2-XXXXXXXX.xlsx/.pdf/.docx as appropriate, where XXXXXXXX


is your student id number.

Question 1
City Manufacturing has four machines for producing a particular computer chip. The
production manager has to decide on the machine(s) to use for producing 1650 units of the chip.
Machine 1’s production capacity is between 300 and 1500 units. Machine 2 and/or Machine 3
can be used only if Machine 1’s production is greater than or equal to 1000 units. Machine 4
can be used with no restrictions and can make any number of units.

City Manufacturing has to pay a fixed cost if the machine is in operation. In addition, a variable
cost per unit will be incurred.

Machine Fixed cost ($) Variable cost Min. production Max. production
per unit ($)
1 500 2.00 300 1500
2 800 0.50 500 1200
3 200 3.00 100 800
4 50 5.00 - -

The objective of City Manufacturing is to minimize the total cost by meeting the production
requirements.

(a) Write down the integer linear program to determine the optimal production plan.
[Hint: Use an additional binary variable to indicate when Machines 2 and 3 can be used.]
(25 marks)
(b) Develop an Excel spreadsheet model and use Solver to compute the optimal production
plan and the minimum total cost. (Request Excel “Keep Solver Solution”, and generate
“Answer Report”) (You have to submit the Excel file for grading. Screencap the “Solver
Parameter” sub-window whenever appropriate.) (10 marks)
Question 2
The following linear program model is used to optimize the production of four products (X1,
X2, X3 and X4), with two different manufacturing processes and two different material
requirements.

Max Z = $48X1 + $52X2 + $57X3 + $60X4 (Total profit)


s.t. 4X1 + 2.1X2 + 2.6X3+ 3.9X4  500 (Process 1)
3.5X1 + 4.6X2 + 3.5X3+ 1.9X4  600 (Process 2)
15X1 + 21X2 + 19X3+ 22X4  3500 (Material A)
7.5X1 + 11.5X2 + 9.5X3+ 10.6X4  1600 (Material B)
X1, X2, X3, X4  0

The linear program model is solved using Excel Solver and sensitivity reports are given as
below:

Adjustable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$15 Product 1 29.10 0 48 25.35 1.68
$C$15 Product 2 0 -17.02 52 17.02 1E+30
$D$15 Product 3 139.37 0 57 1.40 7.23
$E$15 Product 4 5.44 0 60 5.14 4.56

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$F$18 Process 1 500 0.72 500 268.93 34.29
$F$19 Process 2 600 2.16 600 12.97 135.19
$F$20 Material A 3204.35 0 3500 1E+30 295.65
$F$21 Material B 1600 5.01 1600 141.53 48.98

Based on the sensitivity reports, answer the following questions:

(a) What is the optimal production mix and total profit? (5 marks)
(b) Holding all other factors remain unchanged, what is the profit contribution of Product 1 so
that the optimal production mix remains the same. (2 marks)
(c) Which is the most valuable resource to the firm? Why? (2 marks)
(d) One of the four products is not produced in the optimal mix. What would the profit become
if one unit of such a product was produced while other conditions remain the same?
(2 marks)
(e) If the manufacturer can obtain an extra amount of 100 units of Material B at the price of
$4.0 each, should he do so or not? Explain. What is the new total profit? (4 marks)

- End -

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