Model 6: Warehousing
A company needs to lease warehouse storage space over the next 5 months.
Just how much space will be required in each of these months is known.
However, since these space requirements are quite different, it may be most
economical to lease only the amount needed each month on a month-by-month
basis. On the other hand, the additional cost for leasing space for
additional months is much less than for the first month, so it may be less
expensive to lease the maximum amount needed for the entire 5 months.
Another option is the intermediate approach of changing the total amount of
space leased (by adding a new lease and/or having an old lease expire) at
least once but not every month.
The space requirement (in thousands of square feet) and the leasing costs
(in hundreds of dollars) for the various leasing periods are as follows:
| Month |
Required
space |
|
Leasing
period
(months) |
Cost ($) per 1,000
sq ft
leased |
| 1 |
30 |
|
1 |
650 |
| 2 |
20 |
|
2 |
1,000 |
| 3 |
40 |
|
3 |
1,350 |
| 4 |
10 |
|
4 |
1,600 |
| 5 |
50 |
|
5 |
1,900 |
The objective is to minimize the total leasing cost for meeting the space
requirement. Formulate the linear programming model for this problem.