HW 02 - Ise 303

King Fahd University of Petroleum and Minerals
Industrial & Systems Engineering Department

ISE 303: Operations Research I
Term 232
Dated: 12th February 2024

Due Date: 19th February 2024 (Submission online, Blackboard)
Homework # 2
NOTES:
• Please submit fair work, no rough work will be graded.
FORMULATIONS (10 points each)
1. A company produces two products A and B over the next three months. The demand of both the
products as well as the company’s production capacity (in hrs.) varies each month. The production
rates in units per hour are 0.7 and 1 for products A and B, respectively. All demands must be met;
however, the company can produce more in earlier months to fill the demand of later months. The
holding costs per unit per month are $0.90 and $0.75 for products A and B, respectively. The unit
production costs for the two products are $30 and $28 for products A and B, respectively. Formulate
the LP problem that can generate the optimum production schedule.
Month 1 Month 2 Month 3

Demand for Product A 500 750 5000
Demand for Product B 1000 1200 1200
Production Capacity (hrs.) 3000 3000 3500
2. A refinery manufactures two grades of jet fuel, J1 and J2, by blending four types of gasoline, A, B, C,
and D. Fuel J1 uses gasolines A, B, C and D in ratio of 1:1:2:4 and Fuel J2 uses gasolines A, B, C and
D in ratio of 2:2:1:3. The supply limits for A, B, C, and D are 1000, 1200, 900 and 1400 bbl/day,
respectively. The cost per bbl for gasolines for A, B, C, and D are $120, $90, $100 and $150,
respectively. Fuels J1 and J2 sell for $200 and $250 per bbl, respectively and minimum demand for
Fuel J1 and J2 is 300 and 500 bbl/day, respectively. Develop a LP model to determine the optimum
production mix for J1 and J2 fuels.
3. Each day, workers at a Police Department work two 6-hour shifts chosen from 12 A.M. to 6 A.M., 6
A.M. to 12 P.M., 12 P.M. to 6 P.M., and 6 P.M. to 12 A.M. The following number of workers is
needed during each shift. Workers whose two shifts are consecutive are paid $12 per hour; workers
whose shifts are not consecutive are paid $16 per hour. Formulate an LP that can be used to minimize
the cost of meeting the daily workforce demands of the Police Department. (HINT: Think of all
possible combinations of shifts).
Shifts Required workers

12 A.M. to 6 A.M. 15 workers
6 A.M. to 12 P.M 7 workers
12 P.M. to 6 P.M 13 workers
6 P.M. to 12 A.M 12 workers
1
Practice Only Problems (No Submission)
4. The demand for an item over the next four quarters is 300, 400, 450 and 250 units, respectively. The
price per unit starts at $20 in the first quarter and increases by $3.00 each quarter thereafter. The
supplier can provide no more than 400 units in any one quarter. Although, we can order more in early
quarters and store them, however a cost of $3.80 is incurred per unit per quarter and you cannot store
more than 80 units in any one quarter. Determine the model that constructs optimum schedule to
purchase the item to meet the demand with minimal cost.
5. In anticipation of the immense college expenses, Mike and Judy started an annual investment program
on their child’s eighth birthday that will last until the eighteenth birthday. They plan to invest the
following amounts at the beginning of each year:
Year 1 2 3 4 5 6 7 8 9 10
Amount 2000 2000 2500 2500 3000 3500 3500 4000 4000 5000
To avoid unpleasant surprises, they want to invest the money safely in the following options: Insured
savings with 7.5% annual yield, 6-year government bonds that yield 7.9% and have a current market
price equal to 98% of face value, and 9-year municipal bonds yielding 8.5% and having current market
price of 1.02 of face value. How should the money be invested to get the maximum return at the child’s
eighteenth birthday?
6. The city of Hafr-Al Batin is in process of approving a construction site for a new 220,000ft 2 stadium.
Two sites have been proposed. The table provides data about proposed (contiguous) properties in both
sites together with the acquisition cost.
Site 1 Site 2
Property Area (1000ft2) Cost ($1000) Area (1000ft2) Cost ($1000)
1 20 1000 80 2800
2 50 21000 60 1900
3 50 2350 50 2800
4 30 1850 70 2500
5 60 2950
Partial acquisition is possible. At least 80% of property 4 must be acquired if site1 is selected, and at
least 60% of property 3 is acquired if site 2 is selected. Although site 1 property is more expensive,
the construction cost is less than site 2 because of better existing infrastructure at site 1. Construction
cost at site 1 is $30 million and at site 2 is $32 million. Determine LP model(s) to decide which site is
cheaper for constructing the new stadium.

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HW 02 - Ise 303

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King Fahd University of Petroleum and Minerals

Industrial & Systems Engineering Department

Dated: 12th February 2024

FORMULATIONS (10 points each)

Month 1 Month 2 Month 3

Shifts Required workers

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