MIE262: Operations Research I, Lab project D.M. Aleman
Lab project: WARP Shoe Company
Contents
1 Introduction 1
2 Problem statement 1
3 Questions 2
4 Assignment 3
5 Database tables 3
6 Helpful hints 4
1 Introduction
The WARP Shoe Company is one of the oldest shoe companies in Canada. Over the past
three years, the WARP management found it helpful and sometimes profitable to consult
with students from the department of Industrial Engineering of the University of Toronto.
Please make yourselves familiar with the information on the company’s website:
S:\ecfpc\warp\WarpShoes.Inc
All information needed on the WARP Shoe Company, including the database, can be found
at
S:\ecfpc\warp\Warp2011W.mdb
The management of WARP Shoe Company would like to thank you in advance for your
effort and help.
2 Problem statement
At the beginning of year 2006, one of the major market competitors of WARP went bankrupt.
Thus, WARP market analysts predict that for the month of February the demand for all
types of shoes will double. Assume that closing inventory of January 2006 was zero for all
types of shoes. Assume also that all sales happen at the end of the month.
The management of WARP wants to know what is the most profitable production plan.
You are advised to take the following considerations into account:
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MIE262: Operations Research I, Lab project D.M. Aleman
• The budget for raw materials is $10,000,000.
• Sales price on shoes remains the same as in the Product Master Table.
• Not meeting the demand for any type of shoe means loss of new potential customers,
and hence has been evaluated at a cost of $10/pair. Demand for each month from
1997-2003 can be found in the Product_Demand table.
• It has been decided that during February 2006 the WARP shoe production plant,
including all machines, will work up to 12 hours a day, 28 days a month. The cost of
operation of each machine is given in the Machine_Master table. Assume that setup
times and costs are negligible. The amount of time (s) each shoe requires from each
machine is given in the Machine_Assign table.
• Workers are paid on an hourly basis at the rate of $25/hour. Each machine has to be
operated by one worker.
• The total warehouse capacity can be obtained from the Warehouse_Master table.
• Transportation costs can be ignored.
• The manufacturing sequence can be ignored.
3 Questions
If you had to use the LP relaxation method (see Hint 2 in Section 6), answer all questions
for the LP relaxation solution unless the question specifically states otherwise.
1. How should you estimate the demand for the month of February?
2. How many variables and constraints do you have?
3. If you had to relax your integer program to an LP, how many constraints were violated
after rounding the LP solution to the closest integer solution?
4. Which constraints are binding, and what is the real-world interpretation of those binding
constraints?
5. Assume that some additional warehouse space is available at the price of $10/box of
shoes. Is it economical to buy it? What is the optimal amount of space to buy in this
situation?
6. Imagine that machines were available for only 8 hours per day. How would your solution
change? Which constraints are binding now? Does the new solution seem realistic to
you?
7. If in addition there were a $7,000,000 budget available to buy raw materials, what
would you do? Change your formulation and solve again.
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MIE262: Operations Research I, Lab project D.M. Aleman
4 Assignment
Complete the following:
• Formulation of the problem (decision variables, objective function, constraints)
• Gurobi solution report
• Answers to the questions in Section 3.
• Explanation of obtained results
To solve this problem, you will need to obtain data from the database. The relevant database
contents are described in Section 5.
5 Database tables
Table Description Contents
Product_Master Basic product info Product name
Sales price
Product_Demand How much was sold by each store per month Year
Month
Store number
Demand
Machine_Master Basic machine info Machine name
Setup cost per month
Operating cost per
minute
Setup time (min)
Section
Machine_Assign The processing time of each shoe on each
machine
Product number
Machine number
Average duration (s)
Step number
RM_Master Basic raw material info Raw material name
Cost
Available quantity
Category
BOM Bill of materials (raw material required per
product)
Product number
Raw material number
Quantity required
MIE262: Operations Research I, Lab project D.M. Aleman
6 Helpful hints
1. It might be helpful to construct (or consider) the following tables:
• Shoe type and profit from selling of one pair
• Machine number, product number, and average processing time required
2. If the computational time for solving your integer model is more than 10 minutes, relax
your model to an LP by removing the integer requirements for the variables. After
solving the relaxed LP model, round the values of the relaxed variables to the closest
integer (round up if the decimal part is ≥ 0.5, and round down otherwise). This LP
relaxation method is a common workaround to get decent solutions to IPs quickly.