Case 7-1 Assigning Art 261

cost from each warehouse site to each region of the country, production and distribution of the WebSurfer from
the fixed cost per week of each warehouse if it is operated, and the various plants, through the warehouses, to the
the maximum capacity of each warehouse (if it is operated) are customers that will minimize total costs.
shown in the table. Formulate and solve a mixed BIP model in a
spreadsheet to determine which warehouse sites Noble Amazon Fixed Cost
should operate and how books should be distributed from each Plant ($/week)
warehouse to each region of the country to minimize total cost. Atlanta $8,000
E*7.19. Aberdeen Computer Corp. (ACC) is located in Aber- Kansas City $9,000
deen, Washington. The company has developed the WebSurfer, Aberdeen $9,000
a low-cost e-mail and Web-surfing appliance. This product is Austin $10,000
manufactured at four plants, located in Atlanta, Kansas City,
Aberdeen, and Austin. After production, the WebSurfers are
shipped to three warehouses, located in Nashville, San Jose, Fixed Cost
and Houston. ACC sells the WebSurfers through the retail Warehouse ($/week)
channel. In particular, five different retailers currently sell the Nashville $4,000
WebSurfer—Sears, Best Buy, Fry’s, Comp USA, and Office San Jose $5,000
Max. ACC makes weekly shipments to the main warehouses of Houston $5,000
these five retailers. The shipping cost from each plant to each
warehouse, along with the production cost and weekly produc- b. Now suppose that ACC is considering saving
tion capacity at each plant, are given in the table below. money by closing some of its production facilities

Shipping Cost ($/unit)

Production Capacity
Plant Nashville San Jose Houston Cost ($/unit) (units/week)
Atlanta $30 $40 $50 $208 200
Kansas City $25 $45 $40 $214 300
Aberdeen $45 $30 $55 $215 300
Austin $30 $50 $30 $210 400

The shipping cost from each warehouse to each customer, the and/or warehouses. Suppose there is a fixed cost
variable cost (cost per unit moved through the warehouse), the to operate each plant and each warehouse as indi-
capacity (maximum number of units that can be moved through cated in the tables above. Add binary variables to
the warehouse per week) for each warehouse, and the weekly your model in part a to incorporate the decision of
demand for each customer are given in the table below. which plants and warehouses to keep open so as to

Shipping Cost ($/unit)

Variable
Best Comp Office Cost Capacity
Warehouse Sears Buy Fry’s USA Max ($/unit) (units/week)
Nashville $40 $45 $30 $25 $20 $4 300
San Jose $15 $50 $25 $15 $40 $5 500
Houston $50 $35 $15 $40 $50 $5 500
Customer demand 100 50 75 300 150
(per week)

a. Formulate and solve a linear programming model minimize total cost (including the fixed costs for
in a spreadsheet to determine the plan for weekly any plant or warehouse that is operated).

Case 7-1
Assigning Art
It had been a dream come true for Ash Briggs, a struggling art- Ash did not want to squander his winnings on materialistic, triv-
ist living in the San Francisco Bay area. He had made a trip to ial items. Instead he wanted to use his money to support his true pas-
the corner grocery store late one Friday afternoon to buy some sion: art. Ash knew all too well the difficulties of gaining recognition
milk, and, on impulse, he had also purchased a California lottery as an artist in this post-industrial, technological society where artistic
ticket. One week later, he was a multimillionaire. appreciation is rare and financial support even rarer. He therefore
262 Chapter Seven Using Binary Integer Programming to Deal with Yes-or-No Decisions

decided to use the money to fund an exhibit of up-and-coming mod- wire mesh sculpture to the delicate lines in a two-dimensional
ern artists at the San Francisco Museum of Modern Art. computer-generated drawing. He therefore wants at least one
Ash approached the museum directors with his idea, and the wire-mesh sculpture displayed if a computer-generated draw-
directors became excited immediately after he informed them that ing is displayed. Alternatively, he wants at least one computer-
he would fund the entire exhibit in addition to donating $1 million to generated drawing displayed if a wire-mesh sculpture is dis-
the museum. Celeste McKenzie, a museum director, was assigned played. Furthermore, Ash wants to expose viewers to all painting
to work with Ash in planning the exhibit. The exhibit was slated styles, but he wants to limit the number of paintings displayed to
to open one year from the time Ash met with the directors, and the achieve a balance in the exhibit between paintings and other art
exhibit pieces would remain on display for two months. forms. He therefore decides to include at least one photo-realistic
Ash began the project by combing the modern art commu- painting, at least one cubist painting, at least one expressionist
nity for potential artists and pieces. He presented a list (shown painting, at least one watercolor painting, and at least one oil
below) of artists, their pieces, and the price of displaying each painting. At the same time, he wants the number of paintings to
piece1 to Celeste. be no greater than twice the number of other art forms.
Ash possesses certain requirements for the exhibit. He Ash wants all his own paintings included in the exhibit since
believes the majority of Americans lack adequate knowledge of he is sponsoring the exhibit and since his paintings celebrate the
art and artistic styles, and he wants the exhibit to educate Ameri- San Francisco Bay area, the home of the exhibit.
cans. Ash wants visitors to become aware of the collage as an Ash possesses personal biases for and against some artists.
art form, but he believes collages require little talent. He there- Ash is currently having a steamy affair with Candy Tate, and he
fore decides to include only one collage. Additionally, Ash wants wants both of her paintings displayed. Ash counts both David
viewers to compare the delicate lines in a three-dimensional Lyman and Rick Rawls as his best friends, and he does not want

Artist Piece Description of Piece Price

Colin Zweibell Perfection A wire-mesh sculpture of the human body $300,000
Burden A wire-mesh sculpture of a mule 250,000
The Great Equalizer A wire-mesh sculpture of a gun 125,000
Rita Losky Chaos Reigns A series of computer-generated drawings 400,000
Who Has Control? A computer-generated drawing intermeshed with lines 500,000
of computer code
Domestication A pen-and-ink drawing of a house 400,000
Innocence A pen-and-ink drawing of a child 550,000
Norm Marson Aging Earth A sculpture of trash covering a larger globe 700,000
Wasted Resources A collage of various packaging materials 575,000
Candy Tate Serenity An all-blue watercolor painting 200,000
Calm before the Storm A painting with an all-blue watercolor background and a black 225,000
watercolor center
Robert Bayer Void An all-black oil painting 150,000
Sun An all-yellow oil painting 150,000
David Lyman Storefront Window A photo-realistic painting of a jewelry store display window 850,000
Harley A photo-realistic painting of a Harley-Davidson motorcycle 750,000
Angie Oldman Consumerism A collage of magazine advertisements 400,000
Reflection A mirror (considered a sculpture) 175,000
Trojan Victory A wooden sculpture of a condom 450,000
Rick Rawls Rick A photo-realistic self-portrait (painting) 500,000
Rick II A cubist self-portrait (painting) 500,000
Rick III An expressionist self-portrait (painting) 500,000
Bill Reynolds Beyond A science fiction oil painting depicting Mars colonization 650,000
Pioneers An oil painting of three astronauts aboard the space shuttle 650,000
Bear Canton Wisdom A pen-and-ink drawing of an Apache chieftain 250,000
Superior Powers A pen-and-ink drawing of a traditional Native American rain dance 350,000
Living Land An oil painting of the Grand Canyon 450,000
Helen Row Study of a Violin A cubist painting of a violin 400,000
Study of a Fruit Bowl A cubist painting of a bowl of fruit 400,000
Ziggy Lite My Namesake A collage of Ziggy cartoons 300,000
Narcissism A collage of photographs of Ziggy Lite 300,000
Ash Briggs All That Glitters A watercolor painting of the Golden Gate Bridge 50,000*
The Rock A watercolor painting of Alcatraz 50,000*
Winding Road A watercolor painting of Lombard Street 50,000*
Dreams Come True A watercolor painting of the San Francisco Museum of Modern Art 50,000*
*Ash does not require personal compensation, and the cost for moving his pieces to the museum from his home in San Francisco is minimal. The cost of displaying his pieces therefore
only includes the cost of constructing the display and insuring the pieces.

1
The display price includes the cost of paying the artist for loaning the piece to the museum, transporting the piece to San Francisco, con-
structing the display for the piece, insuring the piece while it is on display, and transporting the piece back to its origin.
 Case 7-2 Stocking Sets 263

to play favorites among these two artists. He therefore decides to Please explore the following questions independently except
display as many pieces from David Lyman as from Rick Rawls where otherwise indicated.
and to display at least one piece from each of them. Although
Ziggy Lite is very popular within art circles, Ash believes Ziggy a. Ash decides to allocate $4 million to fund the exhibit. Given
makes a mockery of art. Ash will therefore only accept one dis- the pieces available and the specific requirements from Ash
play piece from Ziggy, if any at all. and Celeste, formulate and solve a binary integer program-
Celeste also possesses her own agenda for the exhibit. As a ming problem to maximize the number of pieces displayed in
museum director, she is interested in representing a diverse pop- the exhibit without exceeding the budget. How many pieces
ulation of artists, appealing to a wide audience, and creating a are displayed? Which pieces are displayed?
politically correct exhibit. To advance feminism, she decides to b. To ensure that the exhibit draws the attention of the pub-
include at least one piece from a female artist for every two pieces lic, Celeste decides that it must include at least 20 pieces.
included from a male artist. To advance environmentalism, she Formulate and solve a binary integer programming prob-
decides to include either one or both of the pieces Aging Earth lem to minimize the cost of the exhibit while displaying at
and Wasted Resources. To advance Native American rights, she least 20 pieces and meeting the requirements set by Ash and
decides to include at least one piece by Bear Canton. To advance Celeste. How much does the exhibit cost? Which pieces are
science, she decides to include at least one of the following displayed?
pieces: Chaos Reigns, Who Has Control?, Beyond, and Pioneers. c. An influential patron of Rita Losky’s work who chairs the
Celeste also understands that space is limited at the museum. museum’s board of directors learns that Celeste requires at
The museum only has enough floor space for four sculptures and least 20 pieces in the exhibit. He offers to pay the minimum
enough wall space for 20 paintings, collages, and drawings. amount required on top of Ash’s $4 million to ensure that
Finally, Celeste decides that if Narcissism is displayed, exactly 20 pieces are displayed in the exhibit and that all of
Reflection should also be displayed since Reflection also sug- Rita’s pieces are displayed. How much does the patron have
gests narcissism. to pay? Which pieces are displayed?

Case 7-2
Stocking Sets
Daniel Holbrook, an expediter at the local warehouse for Furniture Brenda decided to investigate the inventory situation at the
City, sighed as he moved boxes and boxes of inventory to the side local warehouse. She walked the short distance to the building
to reach the shelf where the particular item he needed was located. next door and gasped when she stepped inside the warehouse.
He dropped to his hands and knees and squinted at the inven- What she saw could only be described as chaos. Spaces allo-
tory numbers lining the bottom row of the shelf. He did not find cated for some items were overflowing into the aisles of the
the number he needed. He worked his way up the shelf until he warehouse while other spaces were completely bare. She walked
found the number matching the number on the order slip. Just his over to one of the spaces overflowing with inventory to deter-
luck! The item was on the top row of the shelf! Daniel walked back mine what item was overstocked. She could not believe her
through the warehouse to find a ladder, stumbling over boxes of eyes! The warehouse had at least 30 rolls of pea-green wallpa-
inventory littering his path. When he finally climbed the ladder to per! No customer had ordered pea-green wallpaper since 1973!
reach the top shelf, his face crinkled in frustration. Not again! The Brenda marched over to Daniel demanding an explanation.
item he needed was not in stock! All he saw above the inventory Daniel said that the warehouse had been in such a chaotic state
number was an empty space covered with dust! since his arrival one year ago. He said the inventory problems
Daniel trudged back through the warehouse to make the occurred because management had a policy of stocking every
dreaded phone call. He dialed the number of Brenda Sims, the furniture item on the showroom floor in the local warehouse.
saleswoman on the kitchen showroom floor of Furniture City, Management only replenished inventory every three months, and
and informed her that the particular light fixture the customer when inventory was replenished, management ordered every item
had requested was not in stock. He then asked her if she wanted regardless of whether it had been sold. Daniel also said that he had
him to look for the rest of the items in the kitchen set. Brenda tried to make management aware of the problems with overstock-
told him that she would talk to the customer and call him back. ing unpopular items and understocking popular items, but manage-
Brenda hung up the phone and frowned. Mr. Davidson, her cus- ment would not listen to him because he was simply an expediter.
tomer, would not be happy. Ordering and receiving the correct light Brenda understood that Furniture City required a new inven-
fixture from the regional warehouse would take at least two weeks. tory policy. Not only was the megastore losing money by making
Brenda then paused to reflect upon business during the last customers unhappy with delivery delays, but it was also losing
month and realized that over 80 percent of the orders for kitchen money by wasting warehouse space. By changing the inventory
sets could not be filled because items needed to complete the policy to stock only popular items and replenish them immedi-
sets were not in stock at the local warehouse. She also realized ately when sold, Furniture City would ensure that the majority of
that Furniture City was losing customer goodwill and business customers would receive their furniture immediately and that the
because of stockouts. The furniture megastore was gaining a valuable warehouse space would be utilized effectively.
reputation for slow service and delayed deliveries, causing cus- Brenda needed to sell her inventory policy to management.
tomers to turn to small competitors that sold furniture directly Using her extensive sales experience, she decided that the most
from the showroom floor. effective sales strategy would be to use her kitchen department
264 Chapter Seven Using Binary Integer Programming to Deal with Yes-or-No Decisions

as a model for the new inventory policy. She would identify all a. Formulate and solve a binary integer programming problem
kitchen sets comprising 85 percent of customer orders. Given to maximize the total number of kitchen sets (and thus the
the fixed amount of warehouse space allocated to the kitchen number of customer orders) Furniture City stocks in the local
department, she would identify the items Furniture City should warehouse. Assume that when a customer orders a kitchen
stock to satisfy the greatest number of customer orders. She set, all the particular items composing that kitchen set are
would then calculate the revenue from satisfying customer replenished at the local warehouse immediately.
orders under the new inventory policy, using the bottom line to b. How many of each feature and style should Furniture City
persuade management to accept her policy. stock in the local warehouse? How many different kitchen
Brenda analyzed her records over the past three years and sets are in stock?
determined that 20 kitchen sets were responsible for 85 percent c. Furniture City decides to discontinue carrying nursery sets,
of the customer orders. These 20 kitchen sets were composed and the warehouse space previously allocated to the nurs-
of up to eight features in a variety of styles. Brenda listed each ery department is divided between the existing departments
feature and its popular styles in the tables below. at Furniture City. The kitchen department receives enough
Brenda then created a table (given on the next page) showing additional space to allow it to stock both styles of dishwash-
the 20 kitchen sets and the particular features composing each ers and three of the four styles of ranges. How does the opti-
set. To simplify the table, she used the codes shown in paren- mal inventory policy for the kitchen department change with
theses below to represent the particular feature and style. For this additional warehouse space?
example, kitchen set 1 consists of floor tile T2, wallpaper W2,
d. Brenda convinces management that the kitchen department
light fixture L4, cabinet C2, countertop O2, dishwasher D2, sink
should serve as a testing ground for future inventory policies.
S2, and range R2. Notice that sets 14 through 20 do not contain
To provide adequate space for testing, management decides
dishwashers.

Floor Tile Wallpaper Light Fixtures Cabinets

(T1) White textured tile (W1) Plain ivory paper (L1) One large rectangular frosted fixture (C1) Light solid wood cabinets
(T2) Ivory textured tile (W2) Ivory paper with (L2) Three small square frosted fixtures (C2) Dark solid wood cabinets
dark brown pinstripes
(T3) White checkered tile (W3) Blue paper with (L3) One large oval frosted fixture (C3) Light-wood cabinets with
with blue trim marble texture glass doors
(T4) White checkered tile (W4) Light yellow paper (L4) Three small frosted globe fixtures (C4) Dark-wood cabinets with
with light yellow trim with marble texture glass doors

Countertops Dishwashers Sinks Ranges

(O1) Plain light-wood (D1) White energy-saving dishwasher (S1) Sink with separate hot (R1) White electric oven
countertops and cold water taps
(O2) Stained light-wood (D2) Ivory energy-saving dishwasher (S2) Divided sink with separate (R2) Ivory electric oven
countertops hot and cold water taps and
garbage disposal
(O3) White lacquer-coated (S3) Sink with one hot and cold (R3) White gas oven
countertops water tap
(O4) Ivory lacquer-coated (S4) Divided sink with one hot (R4) Ivory gas oven
countertops and cold water tap and gar
bage disposal

Brenda knew she had only a limited amount of warehouse to allocate all the space freed by the nursery department
space allocated to the kitchen department. The warehouse could to the kitchen department. The extra space means that the
hold 50 square feet of tile and 12 rolls of wallpaper in the inven- kitchen department can store not only the dishwashers and
tory bins. The inventory shelves could hold two light fixtures, ranges from part c, but also all sinks, all countertops, three
two cabinets, three countertops, and two sinks. Dishwashers of the four light fixtures, and three of the four cabinets. How
and ranges are similar in size, so Furniture City stored them in much does the additional space help?
similar locations. The warehouse floor could hold a total of four e. How would the inventory policy be affected if the items
dishwashers and ranges. composing a kitchen set could not be replenished immedi-
Every kitchen set always includes exactly 20 square feet of ately? Under what conditions is the assumption of immediate
tile and exactly five rolls of wallpaper. Therefore, 20 square feet replenishment nevertheless justified?
of a particular style of tile and five rolls of a particular style of
wallpaper are required for the styles to be in stock.
 T1 T2 T3 T4 W1 W2 W3 W4 L1 L2 L3 L4 C1 C2 C3 C4 O1 O2 O3 O4 D1 D2 S1 S2 S3 S4 R1 R2 R3 R4
Set 1 X X X X X X X X
Set 2 X X X X X X X X
Set 3 X X X X X X X X
Set 4 X X X X X X X X
Set 5 X X X X X X X X
Set 6 X X X X X X X X
Set 7 X X X X X X X X
Set 8 X X X X X X X X
Set 9 X X X X X X X X
Set 10 X X X X X X X X
Set 11 X X X X X X X X
Set 12 X X X X X X X X
Set 13 X X X X X X X X
Set 14 X X X X X X X
Set 15 X X X X X X X
Set 16 X X X X X X X
Set 17 X X X X X X X
Set 18 X X X X X X X
Set 19 X X X X X X X
Set 20 X X X X X X X

Case 7-2
Stocking Sets
265
266 Chapter Seven Using Binary Integer Programming to Deal with Yes-or-No Decisions

Case 7-3
Assigning Students to Schools (Revisited)
Reconsider Case 3-5. The Springfield School Board now has b. Referring to part c of Case 3-5, determine how much the total
made the decision to prohibit the splitting of residential areas busing cost increases because of the decision to prohibit the
among multiple schools. Thus, each of the six areas must be splitting of residential areas among multiple schools.
assigned to a single school.
c, d, e, f. Repeat parts d, e, f, g of Case 3-5 under the new school
a. Formulate and solve a BIP model for this problem under the board decision to prohibit splitting of residential areas among
current policy of providing busing for all middle school stu- multiple schools.
dents who must travel more than approximately a mile.

Case 7-4
Broadcasting the Olympic Games (Revisited)
Reconsider part b of Case 6-4. Use the spreadsheet model devel- GB/s from the Olympics site (A) to the home studios (G) at the
oped there to incorporate the following consideration. lowest possible cost?
An additional concern not considered in Case 6-4 is that
the routers at nodes C and F are each already maxed out. If
any additional capacity is built into or out of node C or node Additional Cases
F, then the routers at these stations must be upgraded. This
would cost a total of $2 million at node C or a total of $3 mil- An additional case for this chapter also is available at the Uni-
lion at node F. Which network segments should be increased in versity of Western Ontario Ivey School of Business website,
capacity and by how much so as to increase the total capacity cases.ivey.uwo.ca/cases, in the segment of the CaseMate area
of the network enough to transmit the peak requirement of 35 designated for this book.