An airline is preparing to replace its old planes with three new styles of jets.

Question

An airline is preparing to replace its old planes with three new styles of jets. The airline needs 17 new planes to service its current routes. The decision regarding which planes to purchase should balance cost with capability factors, including the following: 1) The airline can finance up to $700 million in purchases;2) each 7A7 jet will cost $38 million, each 7B7 jet will cost $27 million, and each 7C7 jet will cost $22 million; 3) at least one-third of the planes purchased should be the longer-range 7A7; 4) the annual maintenance budget is to be no more than $12 million; 5) the annual maintenance cost per 7A7 is estimated to be $800,000, $600,000 for each 7B7, and $500,000 for each 7C7; and 6) annually, each 7A7 can carry 125,000 passengers, each 7B7 can fly 95,000 passengers, and each 7C7 can fly 80,000 passengers. Formulate this as an IP problem to maximize the annual passenger-carrying capability. Solve it by using Excel.

Explanation / Answer

The final solution required is : 6 7A7 jets, 12 7B7 jets , 0 7C7 jets, with annual maximum passenger capacity of 1,890,000

I have also uploaded the excel file in the following link:

https://docs.google.com/file/d/0B_OhyWb0ohpBZ1FDYkJuSnV6azg/edit?usp=sharing

Below is the solution table:

Cost (in million $) Maintainence (in million $ per jet) Annual Passenger Capacity Number of Each Planes Required: 7A7 jet 38 0.8 125000 6 7B7 jet 27 0.6 95000 12 7C7 jet 22 0.5 80000 0 Total Financable Cost (in million $): 700 Maintanence budget (in million $): 12 Total Cost (in million $): 552 Total maintainence (in million $): 12 Total Planes: 18 Maximized Total Annual Passenger Capacity: 1,890,000

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