MATH 335

Woo Jung Feb 16, 2019

Homework 4

Problem 4: Leasing space

Solution:

(a) Let xi,j be the amount of space leased in month i for j months for i ∈ {1, . . . , 5} and
j ∈ {1, . . . , 6 − i} such that x1,3 represents the amount of space leased month 1 for a period
of 3 months. Note that j ∈ {1, . . . , 6 − i} since, for example, at month 5, we cannot lease
space for a period of 5 months.

We can model this problem as a linear program as follows:

5
X 4
X 3
X 2
X
minimize 65 xi,1 + 100 xi,2 + 135 xi,3 + 160 xi,4 + 190x1,5
i=1 i=1 i=1 i=1
5
X
subject to xi,1 ≥ 30, 000
i=1
X5 4
X
xi,1 + x2,i ≥ 20, 000
i=2 i=1
X5 X4 3
X
xi,1 + x2,i + xi,3 ≥ 40, 000
i=3 i=2 i=1
5
X 4
X 3
X 2
X
xi,1 + x2,i + xi,3 + xi,4 ≥ 10, 000
i=4 i=3 i=2 i=1

x1,5 + x2,4 + x3,3 + x4,2 + x5,1 ≥ 50, 000.

(b) Let us solve this linear program using LINGO as follows:

! problem 4: leasing space;

! minmize total cost of leasing;

MIN = 65*(x11 + x21 + x31 + x41 + x51) + 100*(x12 + x22 + x32 + x42)
+ 135*(x13 + x23 + x33) + 160*(x14 + x24) + 190*x15;

1
 MATH 335
Woo Jung Feb 16, 2019

! monthly required space constraints;

x11 + x12 + x13 + x14 + x15 >= 30000;
x12 + x13 + x14 + x15 + x21 + x22 + x23 + x24 >= 20000;
x13 + x14 + x15 + x22 + x23 + x24 + x31 + x32 + x33 >= 40000;
x14 + x15 + x23 + x24 + x32 + x33 + x41 + x42 >= 10000;
x15 + x24 + x33 + x42 + x51 >= 50000;

LINGO calculates that Web Mercantile should lease 30,000 ft2 in month 1 for 5 months,
10,000 ft2 in month 3 for a month, and 20,000 ft2 in month 5 for a month for a total cost of
$7,650,000.00.