For some years, the City of Armstrong Power Authority has used 4-20 mA technology to measure parameters such as pressure, temperature, flow rates, and speed of various machinery and systems installed in its generation facilities. It now plans to use the same technology to measure vibration on all of its rotating machinery with the goal of evaluating continuously the health of the equipment, to include friction buildup, breakdown prediction, and preventive maintenance needs. Depending upon the vendors chosen, the useful lives and anticipated annual net savings will vary, as reflected in the estimates shown.
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Develop the linear programming model and use a spreadsheet to select the vendor(s) that offer the best opportunity economically. The city’s MARR is 5% per year and the investment limit is $1,600,000.
Linear programming model: In $1000 units,
Maximize Z = 501x1 + 261x2 + 202x3 + 481x4
Constraints: 500x1 + 700 x2 + 900 x3 + 1000 x4 ? 1600
xk = 0 or 1 for k = 1 to 4
Spreadsheet solution: Enter all estimates on a spreadsheet with a b = $1600 constraint in Solver to obtain the answer:
Select projects 1 and 4 with Z = $982,000 and $1.5 million invested
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