a. Which of the warehouse locations will/will not be selected?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter11: Simulation Models
Section: Chapter Questions
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WK Qu. 7-11 A firm has prepared the following binary...
A firm has prepared the following binary integer program to evaluate a number of potential locations for new
warehouses. The firm's goal is to maximize the net present value of their decision while not spending more than their
currently available capital.
Max 35x1 + 25x2 +15x3+ 30x4
s.t. 7x1 + 8x2 +7x3 + 13x4 ≤ 18 [Constraint 1}
+ x4 ≥ 2 [Constraint 2}
X1 + x2 + x3
X1 + X2 ≤ 1 [Constraint 3}
X1 + X3 ≥ 1 [Constraint 4)
X2=X4 [Constraint 5)
1, if location j is selected
xj =
0, otherwise
Solve this problem to optimality and answer the following questions:
a. Which of the warehouse locations will/will not be selected?
Location 1
will
Location 2
will
Location 3
will
Location 4
will
be selected
not be selected
Net present
value
be selected
not be selected
b. What is the net present value of the optimal solution? (Round your answer to the nearest whole number.)
50
c. How much of the available capital will be spent (Hint: Constraint 1 enforces the available capital limit)? (Round your
answer to the nearest whole number.)
Available capital
Transcribed Image Text:WK Qu. 7-11 A firm has prepared the following binary... A firm has prepared the following binary integer program to evaluate a number of potential locations for new warehouses. The firm's goal is to maximize the net present value of their decision while not spending more than their currently available capital. Max 35x1 + 25x2 +15x3+ 30x4 s.t. 7x1 + 8x2 +7x3 + 13x4 ≤ 18 [Constraint 1} + x4 ≥ 2 [Constraint 2} X1 + x2 + x3 X1 + X2 ≤ 1 [Constraint 3} X1 + X3 ≥ 1 [Constraint 4) X2=X4 [Constraint 5) 1, if location j is selected xj = 0, otherwise Solve this problem to optimality and answer the following questions: a. Which of the warehouse locations will/will not be selected? Location 1 will Location 2 will Location 3 will Location 4 will be selected not be selected Net present value be selected not be selected b. What is the net present value of the optimal solution? (Round your answer to the nearest whole number.) 50 c. How much of the available capital will be spent (Hint: Constraint 1 enforces the available capital limit)? (Round your answer to the nearest whole number.) Available capital
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