Unit 1 Introduction

Introduction to Operations Research, Stages of Development of Operations Research, Applications of

Operations Research, Limitations of Operations Research Linear programming problem, Formulation,
graphical method, Simplex method, artificial variable techniques.
https://www.zweigmedia.com/RealWorld/tutorialsf4/framesSimplex.html
1.1.Introduction to Operations Research

The subject OPERATIONS RESEARCH is a branch of mathematics - specially applied

mathematics, used to provide a scientific base for management to take timely and effective
decisions to their problems. It tries to avoid the dangers from taking decisions merely by
guessing or by using thumb rules. Management is the multidimensional and dynamic concept. It
is multidimensional, because management problems and their solutions have consequences in
several dimensions, such as human, economic social and political fields. As the manager
operates his system in an environment, which will never remain static, hence is dynamic in
nature. Hence any manager, while making decisions, considers all aspects in addition to
economic aspect, so that his solution should be useful in all aspects.
The general approach is to analyze the problem in economic terms and then
implement the solution if it does not aggressive or violent to other aspects like human,
social and political constraints.

1.1. CHARACTERISTICS OF OPERATION RESEARCH

i) System (or executive) orientation

ii) Use of interdisciplinary teams

iii) Application of scientific method

iv) Uncovering of new problems

v) improvement in quality of decision

vi) use of computer

vi) quantitative solutions

viii) human factors

1.2. Stages of Development of Operations Research-

O.R. involves ‘research on operations’. Thus operation research is applied to problems that
concern how to conduct and co-ordinate the operations within organizations. The nature of
organization is immaterial and in fact OR has been applied extensively in such diverse areas as
manufacturing, transportation, construction, tele-communication, financial planning and health
care. Therefore the breadth of application is usually wide. OR resembles the way research is
conducted in established scientific field. It frequently attempts to find the best possible solution
to the problem. Operation Research has had an impressive impact on improving the efficiency of
numerous organizations around the world. In the process, OR has made a significant contribution
to increasing the productivity of the economics of various countries.
 Figure 1. Phases of Solving Operations Research Problems.
Phase 1: Formulation
This phase requires the problem to be formulated in the form of an appropriate model.
This includes finding objective functions, constraints or restrictions, inter-relationships, possible
alternate course of action, time limits for making decisions, ranges of controllable and
uncontrollable variables which might affect the possible solutions. Hence one must be very
careful while executing this phase.

Phase 2: Construction of a mathematical model

This phase is concerned with reformation of problem in an appropriate form which is
useful in analysis. The most suitable model is a mathematical model representing the problem
under study. A mathematical model should include decision variables, objective functions and
constraints. The advantage of a mathematical model is that it describes the problem more
concisely which makes the overall structure of the problem more comprehensible and it also
helps to reveal important cause and effect relation.

Phase 3: Derivation of solutions from mathematical model

This phase is devoted to computation of those values of decision variables which
maximize or minimize the objective function. It is always important to arrive at the optimal
solution of the problem.
Phase 4: Testing the mathematical model and its solution
The completed model is tested for errors if any. The principle of judging the validity of
the model is whether or not it predicts the relative effects of the alternative courses of action with
sufficient accuracy to permit a sound decision. A good model should be applicable for a longer
time and thus updates the model time to time taking into account the past, present and future
Specifications of the problem.

Phase 5: Establishing control over the solution

After the testing phase the next step is to install a well documented system for applying
the model. It includes the solution procedure and operating procedure for implementation. This
Phase establishes a control over the solution with some degree of satisfaction. This phase also
Establishes a systematic procedure for detecting changes and controlling the situation.

Phase 6: Implementation
The implementation of controlled solution involves the translation of models which results into
operating instructions. It is important in OR to ensure that the solution is accurately translated
into an operating procedure to rectify faults in the solution.

1.3. Applications of Operations Research

Today, almost all fields of business and government utilizing the benefits of Operations
Research. There are voluminous of applications of Operations Research. Although it is not
feasible to cover all applications of O.R. in brief. The following are the abbreviated set of typical
operations research applications to show how widely these techniques are used today

1. Accounting:
 Assigning audit teams effectively
 Credit policy analysis
 Cash flow planning
 Developing standard costs
 Establishing costs for byproducts
 Planning of delinquent account strategy
2. Construction:
 Project scheduling, monitoring and control
 Determination of proper work force
 Deployment of work force
 Allocation of resources to projects
3. Facilities Planning:
 Factory location and size decision
 Estimation of number of facilities required
 Hospital planning
 International logistic system design
 Transportation loading and unloading
 Warehouse location decision
4. Finance:
 Building cash management models
 Allocating capital among various alternatives
 Building financial planning models
 Investment analysis
 Portfolio analysis
 Dividend policy making
5. Manufacturing:
 Inventory control
 Marketing balance projection
 Production scheduling
 Production smoothing
6. Marketing:
 Advertising budget allocation
 Product introduction timing
 Selection of Product mix
 Deciding most effective packaging alternative
7. Organizational Behavior / Human Resources:
 Personnel planning
 Recruitment of employees
 Skill balancing
 Training program scheduling
 Designing organizational structure more effectively
8. Purchasing:
 Optimal buying
 Optimal reordering
 Materials transfer
9. Research and Development:
 R & D Projects control
 R & D Budget allocation
 Planning of Product introduction
1.4.Advanages of Operation Research

Fig.2.Advantages of Operation Research

1. Effective Decisions
Operations Research (OR) helps the managers
to take better and quicker decisions. It increases
the number of alternatives. It helps the managers to
evaluate the risk and results of all the alternative
decisions. So, OR makes the decisions more effective
2. Better Coordination
Operations Research (OR) helps to coordinate all the decisions of the organization. It
coordinates all the decisions taken by the different levels of management and the various
departments of the organization. For e.g. it coordinates the decisions taken by the production
department with the decisions taken by the marketing department.
3. Facilitates Control
Operations Research (OR) helps the manager to control his subordinates. It helps the
manager to decide which work is most important. The manager does the most important work
himself, and he delegates the less important work to his subordinates.
Operations Research (OR) helps a manager to fix standards for all the work. It helps him to
measure the performance of the subordinates. It helps the manager to find out and correct the
deviations (difference) in the performance. So, OR facilitates control.
4. Improves Productivity
Operations Research (OR) helps to improve the productivity of the organization. It helps to
decide about the selection, location and size of the factories, warehouses, etc. It helps in
inventory control. It helps in production planning and control. It also helps in manpower
planning. OR is used in expansion, modernization, installation of technology, etc. OR uses
many different mathematical and statistical techniques to improve productivity. Simulation is
used by many organizations to improve their productivity. That is, they try out many production
improvement techniques on a small scale. If these techniques are successful then they are used
on a large scale.
1.6.Introduction to Linear Programming
Linear Programming is a special and versatile technique which can be applied to a variety
of management problems viz. Advertising, Distribution, Investment, Production, Refinery
Operations, and Transportation analysis. The linear programming is useful not only in industry
and business but also in non-profit sectors such as Education, Government, Hospital, and
Libraries.
The main important feature of linear programming model is the presence of linearity in
the problem. The use of linear programming model arises in a wide variety of applications. Some
model may not be strictly linear, but can be made linear by applying appropriate mathematical
transformations. Still some applications are not at all linear, but can be effectively approximated
by linear models. The ease with which linear programming models can usually be solved makes
an attractive means of dealing with otherwise intractable nonlinear models.

1.6.1.Mathematical formulation of a linear programming:

A mathematical problem is an optimization problem in which the objective and
constraints are given as mathematical functions and functional relationships. The procedure for
mathematical formulation of a LPP consists of the following steps

Step1: write down the decision variables (Products) of the problem

Step2: formulate the objective function to be optimized (maximized or minimized) as linear
function of the decision variables
Step3: formulate the other conditions of the problem such as resource limitation, market,
constraints, and interrelations between variables etc., linear in equations or equations in terms of
the decision variables.
Step4: add non-negativity constraints.
The objective function set of constraint and the non-negative constraint together form a
Linear Programming Problem
1.6.2.Common terminologies used in Linear Programming
Let us define some terminologies used in Linear Programming using the above example.

 Decision Variables: The decision variables are the variables that will decide my output.
They represent my ultimate solution. To solve any problem, we first need to identify the
 decision variables. For the above example, the total number of units for A and B denoted
by X & Y respectively are my decision variables.
 Objective Function: It is defined as the objective of making decisions. In the above
example, the company wishes to increase the total profit represented by Z. So, profit is
my objective function.
 Constraints: The constraints are the restrictions or limitations on the decision variables.
They usually limit the value of the decision variables. In the above example, the limit on
the availability of resources Milk and Choco are my constraints.
 Non-negativity restriction: For all linear programs, the decision variables should always
take non-negative values. This means the values for decision variables should be greater
than or equal to 0.

1.6.3. Formulating a problem – Let’s manufacture some chocolates

 Example: Consider a chocolate manufacturing company that produces only two types of
chocolate – A and B. Both the chocolates require Milk and Choco only.  To manufacture
each unit of A and B, the following quantities are required:
Each unit of A requires 1 unit of Milk and 3 units of Choco
Each unit of B requires 1 unit of Milk and 2 units of Choco

The company kitchen has a total of 5 units of Milk and 12 units of Choco. On each sale,
the company makes a profit of
 Rs 6 per unit A sold
 Rs 5 per unit B sold.
Now, the company wishes to maximize its profit. How many units of A and B should it produce
respectively?
Solution: The first thing I’m gonna do is represent the problem in a tabular form for better
understanding.
Milk Choco Profit per unit
A 1 3 Rs 6
B 1 2 Rs 5
Total 5 12
 
Let the total number of units produced by A be = X
Let the total number of units produced by B be = Y

Now, the total profit is represented by Z

The total profit the company makes is given by the total number of units of A and B produced
multiplied by its per-unit profit of Rs 6 and Rs 5 respectively.
Profit: Max Z = 6X+5Y

which means we have to maximize Z.

The company will try to produce as many units of A and B to maximize the profit. But the
resources Milk and Choco are available in a limited amount.
As per the above table, each unit of A and B requires 1 unit of Milk. The total amount of Milk
available is 5 units. To represent this mathematically,
X+Y ≤ 5

Also, each unit of A and B requires 3 units & 2 units of Choco respectively. The total amount of
Choco available is 12 units. To represent this mathematically,
3X+2Y ≤ 12

Also, the values for units of A can only be integers.

So we have two more constraints, X ≥ 0  &  Y ≥ 0

For the company to make maximum profit, the above inequalities have to be satisfied.
This is called formulating a real-world problem into a mathematical model.

 1.6.4.Areas in which We can apply Linear programming Technique

i) Product Mix ii) Use of Resoources iii) blending Problems iv) staffing Problem v)Production
scheduling vi) Transportation Problems vii) Assignment Problem viii)Networks etc.

EXAMPLE 1. (PRODUCTION ALLOCATION PROBLEM)

A firm produces three products. These products are processed on three different machines. The
time required to manufacture one unit of each of the three products and the daily capacity of the
three machines are given in the table below:

It is required to determine the daily number of units to be manufactured for each product. The
profit per unit for product 1, 2 and 3 is Rs. 4, Rs.3 and Rs.6 respectively. It is assumed that all
the amounts produced are consumed in the market. Formulate the mathematical (L.P.) model that
will maximize the daily profit.

Formulation of Linear Programming Model

Step 1
From the study of the situation find the key-decision to be made. In the given situation
key decision is to decide the extent of products 1, 2 and 3, as the extents are permitted to vary.
Step 2
Assume symbols for variable quantities noticed in step 1. Let the extents (amounts) of
products 1, 2 and 3 manufactured daily be x1, x2 and x3 units respectively.
Step 3
Express the feasible alternatives mathematically in terms of variable. Feasible
alternatives are those which are physically, economically and financially possible. In the given
situation feasible alternatives are sets of values of x1, x2 and x3 units respectively.
where x1, x2 and x3 ≥ 0.
since negative production has no meaning and is not feasible.
Step 4
Mention the objective function quantitatively and express it as a linear function of
variables. In the present situation, objective is to maximize the profit.
i.e., Z = 4x1+ 3x2 + 6x3
Step 5
Put into words the influencing factors or constraints. These occur generally because of
constraints on availability (resources) or requirements (demands). Express these constraints also
as linear equations/inequalities in terms of variables.
Here, constraints are on the machine capacities and can be mathematically expressed as
2x1+ 3x2 + 2x3 ≤ 440
4x1+ 0x2 + 3x3 ≤ 470
2x1+ 5x2 + 0x3 ≤ 430

EXAMPLE 2: PRODUCT MIX PROBLEM

A factory manufactures two products A and B. To manufacture one unit of A, 1.5 machine hours and
2.5 labour hours are required. To manufacture product B, 2.5 machine hours and 1.5 labour hours are
required. In a month, 300 machine hours and 240 labour hours are available.
Profit per unit for A is Rs. 50 and for B is Rs. 40. Formulate as LPP.
Solution:

There will be two constraints. One for machine hours availability and for labour hours
availability.

Decision variables
X1 = Number of units of A manufactured per month.
X2 = Number of units of B manufactured per month.
The objective function:
Max Z = 50x1+ 40x2
Subjective Constraints
For machine hours
 1.5x1+ 2.5x2 ≤ 300
For labour hours
2.5x1+ 1.5x2 ≤ 240

Non negativity
x1, x2 ≥0
EXAMPLE: 3
A company produces three products A, B, C.
For manufacturing three raw materials P, Q and R are used.
Profit per unit
A - Rs. 5, B - Rs. 3, C - Rs. 4
Resource requirements/unit

Maximum raw material availability:

P - 80 units; Q - 100 units; R - 150 units. Formulate LPP.
Solution:
Decision variables:
x1 = Number of units of A
x2 = Number of units of B
x3 = Number of units of C

Objective Function
Since Profit per unit is given, objective function is maximization
Max Z = 5x1+ 3x2 + 4x3
Constraints:
For P:
0x1+ 20x2 + 30x3 ≤ 80
For Q:
20x1+ 30x2 + 20x3 ≤ 100
For R:
50x1+ 0x2 + 40x3 ≤ 150
(for B, R is not required)
x1, x2, x3 ≥ 0

EXAMPLE 4: PORTFOLIO SELECTION (INVESTMENT DECISIONS)

An investor is considering investing in two securities 'A' and 'B'. The risk and return
associated with these securities is different
Security 'A' gives a return of 9% and has a risk factor of 5 on a scale of zero to 10. Security 'B'
gives return of 15% but has risk factor of 8.
 Total amount to be invested is Rs. 5, 00, 000/- Total minimum returns on the investment
should be 12%. Maximum combined risk should not be more than 6. Formulate as LPP.

Solution:
Decision Variables:
X1 = Amount invested in Security A
X2 = Amount invested in Security B
Objective Function:
The objective is to maximize the return on total investment.

Max Z = 0.09 X1 + 0.015 X2 ((% = 0.09, 15% = 0.15)

Constraints:

1. Related to Total Investment:

X1 + X2 = 5, 00, 000
2. Related to Risk:
5 X1 + 8 X2 = (6 X 5, 00, 000)
5 X1 + 8 X2 = 30, 00, 000
3. Related to Returns:
0.09X1 + 0.15X2 = (0.12 X 5, 00, 000)
0.09X1 + 0.15X2 = 60, 000
4. Non-negativity
X1, X2 ≥ 0

EXAMPLE 5: INSPECTION PROBLEM

A company has two grades of inspectors, I and II to undertake quality control inspection. At least
1, 500 pieces must be inspected in an 8-hour day. Grade I inspector can check 20 pieces in an
hour with an accuracy of 96%. Grade II inspector checks 14 pieces an hour with an accuracy of
92%. Wages of grade I inspector are Rs. 5 per hour while those of grade II inspector are Rs. 4
per hour. Any error made by an inspector costs Rs. 3 to the company. If there are, in all, 10 grade
I inspectors and 15 grade II inspectors in the company, find the optimal assignment of inspectors
that minimize the daily inspection cost.
Solution:
Let x1 and x2 denote the number of grade I and grade II inspectors that may be assigned the job
of quality control inspection.
The objective is to minimize the daily cost of inspection. Now the company has to
incur two types of costs; wages paid to the inspectors and the cost of their inspection
errors. The cost of grade I inspector/hour is

Rs. (5 + 3 X 0.04 X 20) = Rs. 7.40.

Similarly, cost of grade II inspector/hour is
Rs. (4 + 3 X 0.08 X 14) = Rs. 7.36.
The objective function is
Minimize Z = 8(7.40x1 + 7.36x2) = 59.20 x1 + 58.88 x2.
Constraints are on the number of grade I inspectors: x1 ≤ 10,
On the number of grade II inspectors: x2 ≤ 15
On the number of pieces to be inspected daily: 20 x 8x 1 + 14 x 8x2 ≥ 1500
or 160 x1 + 112 x2≥ 1500
Where, x1, x2 ≥ 0.

EXAMPLE 6: TRIM LOSS PROBLEM

A manufacturer of cylindrical containers receives tin sheets in widths of 30 cm and 60 cm
respectively. For these containers the sheets are to be cut to three different widths of 15 cm, 21
cm and 27 cm respectively. The number of containers to be manufactured from these three
widths is 400, 200 and 300 respectively. The bottom plates and top covers of the containers are
purchased directly from the market. There is no limit on the lengths of standard tin sheets.
Formulate the LPP for the production schedule that minimizes the trim losses.
Solution:
Key decision is to determine how each of the two standard widths of tin sheets be cut to the
require widths so that trim losses are minimum.
From the available widths of 30 cm and 60 cm, several combinations of the three required widths
of 15 cm, 21 cm and 27 cm are possible.
Let xij represent these combinations. Each combination results in certain trim loss.
Constraints can be formulated as follows:
The possible cutting combinations (plans) for both types of sheets are shown in
the table below:

Thus, the constraints are

2x11 + 4x21 + 2x22 + 2x23 + x24 ≥ 400
x12 + x22 + 2x24 + x25 ≥ 200
x13 +x23 + x25 + x26 ≥ 300
Objective is to maximize the trim losses.
i.e., minimize Z = 9x12 + 3x13 + 9x22 + 3x23 + 3x24 + 12x25 + 6x26

where x11, x12, x13, x21, x22, x23, x24, x25, x26 ≥ 0
EXAMPLE 7: MEDIA SELECTION
An advertising agency is planning to launch an ad campaign. Media under consideration are T.V.,
Radio & Newspaper. Each medium has different reach potential and different cost.
Minimum 10, 000, 000 households are to be reached through T.V. Expenditure on newspapers
should not be more than Rs. 10, 00, 000. Total advertising budget is Rs. 20 million.
Following data is available:

Solution:
Decision Variables:
x1 = Number of units of T.V. ads,
x2 = Number of units of Radio ads,
x3 = Number of units of Newspaper ads.
Objective function: (Maximize reach)
Max. Z = 20, 00, 000 x1 + 10, 00, 000 x2 + 2, 00, 000x3
Subject to constraints:
20, 00, 000 x1 ≥ 10, 000, 000........ (for T.V.)

40, 000 x3 ≤ 10, 00, 000........... (for Newspaper)

2, 00, 000 x1 + 80, 000 x2 + 40, 000 x3 ≤ 20, 000, 000.......... (Ad. budget)

x1, x2, x3 ≥ 0
Simplifying constraints:
For T.V. 2 x1 ≥ 10

x1 ≥ 5
For Newspaper 4 x3 ≤ 100

x3 ≤ 25
For Ad. Budget
20 x1 + 8 x2 + 4 x3 ≤ 2000

5 x1 + 2 x2 + x3 ≤ 500

x1, x2, x3 ≥ 0

EXAMPLE 8: DIET PROBLEM

Vitamins B1 and B2 are found in two foods F1 and F2. 1 unit of F1 contains 3 units of B1 and 4 units of
B2. 1 unit of F2 contains 5 units of B1 and 3 units of B2 respectively.
Minimum daily prescribed consumption of B 1 & B2 is 50 and 60 units respectively. Cost per unit of
F1 & F2 is Rs. 6 & Rs. 3 respectively.
Formulate as LPP.
Solution:

Decision Variables:
x1 = No. of units of P1 per day.
x2 = No. of units of P2 per day.
Objective function:
Min. Z = 100 x1 + 150 x2
Subject to constraints:
3 x1+ 5x2 ≥ 30 (for N1)

5 x1+ 7x2 ≥ 40 (for N2)

x1, x2 ≥ 0
EXAMPLE 9: BLENDING PROBLEM

A manager at an oil company wants to find optimal mix of two blending processes.
Formulate LPP.
Data:
Data: Process Input (Crude Oil) Output (Gasoline)
Grade A Grade B X Y
P1 6 4 6 9
P2 5 6 5 5

Variables:
x1 = No. of operations of P1
x2 = No. of operations of P2
Objective Function:
Max. Z = 4000 x1 + 5000 x2
Subjective to constraints:
6x1+ 5x2 ≤ 500
4x1+ 6x2 ≤ 400
6x1+ 5x2 ≥300
9x1+ 5x2 ≥200
x1, x2 ≥ 0
EXAMPLE 10: FARM PLANNING

A farmer has 200 acres of land. He produces three products X, Y & Z. Average yield per acre for
X, Y & Z is 4000, 6000 and 2000 kg.
Selling price of X, Y & Z is Rs. 2, 1.5 & 4 per kg respectively. Each product needs
fertilizers. Cost of fertilizer is Rs. 1 per kg. Per acre need for fertilizer for X, Y & Z is 200, 200
& 100 kg respectively. Labour requirements for X, Y & Z are 10, 12 & 10 man hours per acre.
Cost of labour is Rs. 40 per man hour. Maximum availability of labour is 20, 000 man hours.
Formulate as LPP to maximize profit.

Objective function
Max. = 7400 x1 + 8320 x2 + 7500 x3
Subject to constraints:
x1+ x2 + x3 = 200 (Total Land)
10 x1 + 12 x2 + 10 x3 ≤ 20, 000 (Max Man hours)
x1, x2, x3 ≥ 0
MERITS OF LPP

1. Helps management to make efficient use of resources.

2. Provides quality in decision making.
3. Excellent tools for adjusting to meet changing demands.
4. Fast determination of the solution if a computer is used.
5. Provides a natural sensitivity analysis.
6. Finds solution to problems with a very large or infinite number of possible solution.

DEMERITS OF LPP
1. Existence of non-linear equation: The primary requirements of Linear Programming is the
objective function and constraint function should be linear. Practically linear relationship do not
exist in all cases.
2. Interaction between variables: LP fails in a situation where non-linearity in the equation
emerge due to joint interaction between some of the activities like total effectiveness.
3. Fractional Value: In LPP fractional values are permitted for the decision variable.
4. Knowledge of Coefficients of the equation: It may not be possible to state all coefficients in
the objective function and constraints with certainty.
Graphical Method:-
Step 1:-Convert each inequality into equality
i.e. replaces ≤ and ≥ by =
Step 2:- Convert each equation into the standard form
x y
+ =1
a b
which, represents a straight line in intercepts form. The line passing through (a,0) and (0,b)
Step 3:- Find shape the feasible region
A feasible region is region in which all the constraints hold good.
Step 4:- Substitute the co-ordinates of the corner points of feasible region in the given objective
function to optimize the given linear programming problem (LPP)

Note:-
1. If all the constraints are of the type ≤ , then feasible region will be towards the origin.
2. When all the constraints are of the type ≥ ,then the feasible region will be away from the
origin.
3. x= constraints is a line parallel to y-axis
4, y= constraints as line parallel to x-axis
5. y =x is a straight line passing that the origin making an make angle of 450 with line’ +’ ve
x –axis.
Example 1 Solve the following linear programming problem graphically:
Maximize, Z = 4x + y
subject to the constraints:
x + y  50
3x + y  90
x  0, y  0

Solution
Line 1:
3x + y  3x + y 
3x + y  3x + y 
Dividing by 90 Dividing by 90

3x y 3x y
+ =1 + =1
90 90 90 90

Putting y=0 then we get, Putting x=0 then we get,

x = 30 y = 30

(30,0) (0,90)

The points are A(30,0) and (0,90)

Line 2:
x + y x + y
x + y x + y
Dividing by 50 Dividing by 50
x y x y
+ =1 + =1
50 50 50 50
Putting y=0 then we get, Putting x=0 then we get,
x = 50 y = 50
Therefore, Therefore,

 
 The points are B(50,0) and (0,50)

Identification of Feasible Region

First of all we plot the point A(30,0) and (0,90) and B(50,0) and (0,50)
Then the plotted region showed in fig.

The shaded region in Fig is the feasible region determined by the system. We observe that the
feasible region OABC is bounded. So, we now use Corner Point Method to determine the
maximum value of Z.
The coordinates of the corner points O, A, B and C are (0, 0), (30, 0), (20, 30) and (0, 50)
respectively. Now we evaluate Z at each corner point
Corner Point Corresponding value of
Z = 4x + y

(0, 0) 0
(30, 0) 120 aximum
(20, 30) 110
(0, 50) 50

Hence, maximum value of Z is 120 at the point (30, 0).

Example 2 A company manufactures two products A and B. Both products are processed on two
machines M1 & M2
Profit per unit for A is Rs. 100 and for B is Rs. 80. Find out the monthly production of A and B to
maximize profit by graphical method.
Solution
Formulation of LPP
X1 = No. of units of A/Month
X2 = No. of units of B/Month
Max Z = 100 X1 + 80 X2
Subject to constraints:
6 X1 + 4 X2 ≤ 7200
2 X1 + 4 X2 ≤ 4000
X1, X2 ≥ 0
Line 1:
6 X1 + 4 X2 = 7200
6 X1 + 4 X2 ≤ 7200
6 X1 + 4 X2 = 7200 Dividing by 7200
Dividing by 7200 6 X1 4 X2
6 X1 4 X2 + =1
7200 7200
+ =1
7200 7200 Putting X1=0 then we get,
Putting X2 =0 then we get,
X2 = 1800
X1 = 1200;
(0, 1800)
(1200,0)
The points are A (1200, 0)and (0, 1800)
Plot the first Line 1

Line 2:
2 X1 + 4 X2 ≤ 4000
2 X1 + 4 X2 = 4000
Dividing by 4000
2 X 1 4 X2 2 X1 + 4 X2 = 4000
+ =1
4000 4000 Dividing by 4000
 Putting X2 =0 then we get,
X1 = 2000; 2 X 1 4 X2
+ =1
Therefore, 4000 4000

(2000, 0) Putting X1=0 then we get,

X2 = 1000
Therefore,
(0, 1000)

The points are B(2000, 0) and (0, 1000)

Plot the Line2

Now the final graph will look like this:

Identification of Feasible Region

Hence, the feasible region is the polygon OABC. 'O' is the origin whose coordinates are (0, 0). O, A,
B and C are called vertices of the feasible region

Now we evaluate Z at each corner point

Corner Point Corresponding value of
Z = 100 X1 + 80 X2
O(0, 0) 0
A(0,1000 ) Rs. 80, 000
B(800, 600) Rs. 1, 28, 000
C(1200,0) Rs. 1, 28, 000

Max. Z = Rs. 1, 28, 000 (At point B)

For B is at the intersection of two constraint lines 6 X1 + 4 X2 ≤ 7200 and 2 X1 + 4 X2 ≤ 4000.

Hence, values of X1 and X2 at B must satisfy both the equations.

We have two equations and two unknowns, X1 and X2.

Solving simultaneously.
6 X1 + 4 X2 ≤ 7200 -----------------Eq(1)
2 X1 + 4 X2 ≤ 4000 -----------------Eq(2)
Subtracting (2) from (1)
4 X1 = 3200
X1 = 800
Substituting value of X1 in equation (1), we get
4 X2 = 2400
X2 = 600
Answer
Optimal Profit = Max Z = Rs. 1, 28, 000
Product Mix:
X1 = No. of units of A / Month = 800
X2 = No. of units of A / Month = 600

Simplex method
Simplex method is the method to solve ( LPP ) models which contain two or more
decision variables.
Basic variables:
Are the variables which coefficients One in the equations and Zero in the other equations.
Non-Basic variables:
Are the variables which coefficients are taking any of the values, whether positive or negative or
zero.
Slack, surplus & artificial variables:
a) If the inequality be (less than or equal, then we add a slack variable + S to change to =.
b) If the inequality be (greater than or equal, then we subtract a surplus variable - S to
Change to =.
c) If we have = we use artificial variables.

Optimality condition:
The entering variable in a maximization (minimization) problem is the non-basic variable
having the most negative (positive) coefficient in the Z-row.
The optimum is reached at the iteration where all the Z-row coefficient of the non-basic
variables are non-negative (non-positive).
Feasibility condition:
For both maximization and minimization problems the leaving variable is the basic
associated with the smallest non-negative ratio (with strictly positive denominator).
Pivot row:
a) Replace the leaving variable in the basic column with the entering variable.
b) New pivot row equal to current pivot row divided by pivot element.
Steps involved in Simplex Method:-
Step 1: Convert the LP problem to a system of linear equations.
We do this by turning each constraint inequality into a linear equation by adding new
variables we call slack variables, and rewriting the objective function
Step 2: Represent the system of equations obtained above in the form of an augmented matrix

Step 3: Select a pivot column.

The rule for the selecting a pivot column is this: Look at all the numbers in the bottom
row, excluding the last entry on the right (in the Answer column). From these, choose the
negative number with the largest magnitude; its column is the pivot column. If there are two or
more candidates, choose any one. If there are no negative numbers to choose, then you are done,
and the current basic solution is the optimal solution
Step 4: Select the pivot.
Use the following rules to decide which of the entries in the column you selected to use
as the pivot:
1) The pivot must always be a positive number (zeros or negative numbers are not permitted as
pivots).
2) For each positive entry b in the pivot column, compute the ratio a/b, where a is the number in
the rightmost column in that row. We call this a test ratio. These ratios choose the smallest one.
The corresponding number b is the pivot.

Step 5: Use the pivot to clear the pivot column in the normal manner.
This gives the next tableau. To clear the column, or "pivot," we follow the exact
prescription for formulating the row operations

Step 6: Repeat Steps 3–5 until there are no more negative numbers in the bottom row (with
the possible exception of the Answer column).
That is, we take the most negative number in the bottom row of the current tableau
(excluding the rightmost entry) and clear its column using a pivot selected as per Step 4 to obtain
the next tableau, and so on, until there are no more negative numbers in the bottom row
(excluding the rightmost entry). At that point, we are done, and the solution to the LP problem is
the corresponding basic solution.

Example1