Topics 2

 Linear Programming – An overview

 Model Formulation
 Characteristics of Linear Programming Problems
 Assumptions of a Linear Programming Model
 Advantages and Limitations of a Linear
Programming.
 A Maximization Model Example
 Graphical Solutions of Linear Programming Models
 A Minimization Model Example
 Irregular Types of Linear Programming Models
Linear Programming: An Overview 3

 Objectives of business decisions frequently involve

maximizing profit or minimizing costs.
 Linear programming uses linear algebraic
relationships to represent a firm’s decisions, given a
business objective, and resource constraints.
 Steps in application:
1. Identify problem as solvable by linear
programming.
2. Formulate a mathematical model of the
unstructured problem.
3. Solve the model.
4. Implementation
 Model Components 4

• Decision variables - mathematical symbols representing levels of

activity of a firm.

• Objective function - a linear mathematical relationship describing

an objective of the firm, in terms of decision variables - this
function is to be maximized or minimized.

• Constraints – requirements or restrictions placed on the firm by the

operating environment, stated in linear relationships of the
decision variables.

• Parameters - numerical coefficients and constants used in the

objective function and constraints.
Summary of Model Formulation Steps 5

Step 1 : Clearly define the decision variables

Step 2 : Construct the objective function

Step 3 : Formulate the constraints

 Characteristics of LP Problems 6

• A decision amongst alternative courses of action is required.

• The decision is represented in the model by decision variables.
• The problem encompasses a goal, expressed as an objective
function, that the decision maker wants to achieve.
• Restrictions (represented by constraints) exist that limit the extent
of achievement of the objective.
• The objective and constraints must be definable by linear
mathematical functional relationships.
 Assumptions of LP Model 7

• Proportionality - The rate of change (slope) of the objective

function and constraint equations is constant.
• Additivity - Terms in the objective function and constraint
equations must be additive.
• Divisibility -Decision variables can take on any fractional value and
are therefore continuous as opposed to integer in nature.
• Certainty - Values of all the model parameters are assumed to be
known with certainty (non-probabilistic).
 Advantages of LP Model 8

• It helps decision - makers to use their productive resource

effectively.

• The decision-making approach of the user becomes more objective

and less subjective.

• In a production process, bottle necks may occur. For example, in a

factory some machines may be in great demand while others may
lie idle for some time. A significant advantage of linear
programming is highlighting of such bottle necks.
 Limitations of LP Model 9

• Linear programming is applicable only to problems where the

constraints and objective function are linear i.e., where they can be
expressed as equations which represent straight lines. In real life
situations, when constraints or objective functions are not linear, this
technique cannot be used.
• Factors such as uncertainty, and time are not taken into consideration.
• Parameters in the model are assumed to be constant but in real life
situations they are not constants.
• Linear programming deals with only single objective , whereas in real
life situations may have multiple and conflicting objectives.
• In solving a LP model there is no guarantee that we get an integer
value. In some cases of no of men/machine a non-integer value is
meaningless.
 LP Model Formulation 10
A Maximization Example (1 of 4)
• Product mix problem of a Ceramic Company
• How many bowls and mugs should be produced to maximize profits
given labor and materials constraints?
• Product resource requirements and unit profit:

Resource Requirements

Labor Clay Profit

Product
(Hr./Unit) (Lb./Unit) ($/Unit)

Bowl 1 4 40
Mug 2 3 50
LP Model Formulation 11
A Maximization Example (2 of 4)

Limitations/
Constraints:
LP Model Formulation 12
A Maximization Example (3 of 4)
Resource : 40 hrs of labor per day
Availability : 120 lbs of clay
Decision : x1 = number of bowls to produce per day
Variables : x2 = number of mugs to produce per day
Objective : Maximize, z = 40x1 + 50x2
Function Where, z = profit per day
Resource : 1x1 + 2x2  40 hours of labor
Constraints : 4x1 + 3x2  120 pounds of clay
Non-Negativity : x1  0; x2  0
Constraints
LP Model Formulation 13
A Maximization Example (4 of 4)

Complete Linear Programming Model:

Maximize, z = 40x1 + 50x2

subject to: 1x1 + 2x2  40

4x2 + 3x2  120
x1, x2  0
Feasible Solutions 14
A feasible solution does not violate any of the
constraints:

Example: x1 = 5 bowls
x2 = 10 mugs
z = 40x1 + 50x2 = 700

Labor constraint check: 1(5) + 2(10) = 25 < 40 hours

Clay constraint check:4(5) + 3(10) = 70 < 120 pounds
Agrees with all the constraints:
1x1 + 2x2  40
4x2 + 3x2  120
x,x  0
Infeasible Solutions 15

An infeasible solution violates at least one of the

constraints:

Example: x1 = 10 bowls
x2 = 20 mugs
Z = 40x1 + 50x2 = 1400

Labor constraint check: 1(10) + 2(20) = 50 > 40

hours
Doesn’t agree with 1x1 + 2x2  40
 Graphical Solution of LP Models 16

• Graphical solution is limited to linear programming models

containing only two decision variables (can be used with three
variables but only with great difficulty).
• Graphical methods provide visualization of how a solution for a
linear programming problem is obtained.
• Graphical methods can be classified under two categories:
1. Iso-Profit(Cost) Line Method
2. Extreme-point evaluation Method.
Coordinate Axes 17
Graphical Solution of Maximization Model (1 of 12)

X2 is mugs

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

X1 is bowls
Figure 2.1 Coordinates for Graphical Analysis
Labor Constraint 18
Graphical Solution of Maximization Model (2 of 12)

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.2 Graph of Labor Constraint

Labor Constraint Area 19
Graphical Solution of Maximization Model (3 of 12)

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.3 Labor Constraint Area

Clay Constraint Area 20
Graphical Solution of Maximization Model (4 of 12)

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.4 Clay Constraint Area

Both Constraints 21
Graphical Solution of Maximization Model (5 of 12)

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.5 Graph of Both Model Constraints

Feasible Solution Area 22
Graphical Solution of Maximization Model (6 of 12)

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.6 Feasible Solution Area

Objective Function Solution = $800 23
Graphical Solution of Maximization Model (7 of 12)

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.7 Objection Function Line for Z = $800

Alternative Objective Function Solution Lines (Iso-Profit Line)
Graphical Solution of Maximization Model (8 of 12) 24

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.8 Alternative Objective Function Lines

Optimal Solution
Graphical Solution of Maximization Model (9 of 12) 25

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.9 Identification of Optimal Solution Point

Optimal Solution Coordinates
Graphical Solution of Maximization Model (10 of 12) 26

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.10 Optimal Solution Coordinates

Extreme (Corner) Point Solutions
Graphical Solution of Maximization Model (11 of 12) 27

Maximize Z = 40x1 + 50x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.11 Solutions at All Corner Points

 Optimal Solution for New Objective Function
Graphical Solution of Maximization Model (12 of 12) 28

Maximize Z = 70x1 + 20x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0

Figure 2.12 Optimal Solution with Z = 70x1 + 20x2

Slack Variables 29

 Standard form requires that all constraints be in the

form of equations (equalities).
 A slack variable is added to a  constraint (weak
inequality) to convert it to an equation (=).
 A slack variable typically represents an unused
resource.
 A slack variable contributes nothing to the
objective function value.
Linear Programming Model: Standard Form 30

Max Z = 40x1 + 50x2 + s1 + s2

subject to:1x1 + 2x2 + s1 = 40
4x2 + 3x2 + s2 = 120
x1, x2, s1, s2  0
Where:
x1 = number of bowls
x2 = number of mugs
s1, s2 are slack variables

Figure 2.13 Solution Points A, B, and C with Slack

LP Model Formulation – Minimization (1 of 8)
31
 Two brands of fertilizer available - Super-gro, Crop-quick.
 Field requires at least 16 pounds of nitrogen and 24
pounds of phosphate.
 Super-gro costs $6 per bag, Crop-quick $3 per bag.
 Problem: How much of each brand to purchase to
minimize total cost of fertilizer given following data ?

Chemical Contribution

Nitrogen Phosphate
Brand
(lb/ bag) (lb/ bag)
Super-gro 2 4
Crop-quick 4 3
 LP Model Formulation – Minimization (2 of 8) 32

Fig.: Fertilizing
farmer’s field
LP Model Formulation – Minimization (3 of 8) 33

Decision Variables:
x1 = bags of Super-gro
x2 = bags of Crop-quick

The Objective Function:

Minimize Z = $6x1 + 3x2
Where: $6x1 = cost of bags of Super-Gro
$3x2 = cost of bags of Crop-Quick

Model Constraints:
2x1 + 4x2  16 lb (nitrogen constraint)
4x1 + 3x2  24 lb (phosphate constraint)
x1, x2  0 (non-negativity constraint)
 Constraint Graph – Minimization (4 of 8) 34

Minimize Z = $6x1 + $3x2

subject to: 2x1 + 4x2  16
4x2 + 3x2  24
x1, x2  0

Figure 2.15 Graph of Both Model

Constraints
 Feasible Region– Minimization (5 of 8) 35

Minimize Z = $6x1 + $3x2

subject to: 2x1 + 4x2  16
4x2 + 3x2  24
x1, x2  0

Figure 2.16 Feasible Solution Area

 Optimal Solution Point – Minimization (6 of 8) 36

Minimize Z = $6x1 + $3x2

subject to: 2x1 + 4x2  16
4x2 + 3x2  24
x1, x2  0

Figure 2.17 Optimum Solution

Point
Surplus Variables – Minimization (7 of 8) 37
 A surplus variable is subtracted from a 
constraint to convert it to an equation (=).
 A surplus variable represents an excess above a
constraint requirement level.
 A surplus variable contributes nothing to the
calculated value of the objective function.
 Subtracting surplus variables in the farmer
problem constraints:
2x1 + 4x2 - s1 = 16 (nitrogen)
4x1 + 3x2 - s2 = 24 (phosphate)
 Graphical Solutions – Minimization (8 of 8) 38

Minimize Z = $6x1 + $3x2 + 0s1 + 0s2

subject to: 2x1 + 4x2 – s1 = 16
4x2 + 3x2 – s2 = 24
x1 , x 2 , s 1 , s 2  0

Fig.: Graph of Fertilizer Example

 Irregular Types of Linear Programming Problems 39

• Special types of LP problems include those with:

 Multiple optimal solutions
 Infeasible solutions
 Unbounded solutions
Multiple Optimal Solutions Beaver Creek Pottery 40

The objective function is

parallel to a constraint line.

Maximize Z=$40x1 + 30x2

subject to: 1x1 + 2x2  40
4x2 + 3x2  120
x1, x2  0
Where:
x1 = number of bowls
x2 = number of mugs
Figure 2.19 Example with Multiple
Optimal Solutions
 An Infeasible Problem 41

Every possible solution

violates at least one
constraint:
Maximize Z = 5x1 + 3x2
subject to: 4x1 + 2x2  8
x1  4
x2  6
x1, x2  0

Fig.: Graph of an Infeasible Problem

 An Unbounded Problem 42

Value of the objective

function increases
indefinitely:
Maximize Z = 4x1 + 2x2
subject to: x1  4
x2  2
x1, x2  0

Figure 2.21 Graph of an Unbounded

Problem
Problem Statement 43
Example Problem No. 1 (1 of 3)
■ Hot dog mixture in 1000-pound batches.
■ Two ingredients, chicken ($3/lb) and beef
($5/lb).
■ Recipe requirements:
at least 500 pounds of “chicken”
at least 200 pounds of “beef”
■ Ratio of chicken to beef must be at least 2 to 1.
■ Determine optimal mixture of ingredients that
will minimize costs.
Solution 44
Example Problem No. 1 (2 of 3)
Step 1:
Identify decision variables.
x1 = lb of chicken in mixture
x2 = lb of beef in mixture
Step 2:
Formulate the objective function.
Minimize Z = $3x1 + $5x2
where Z = cost per 1,000-lb batch
$3x1 = cost of chicken
$5x2 = cost of beef
Solution 45
Example Problem No. 1 (3 of 3)
Step 3:
Establish Model Constraints
x1 + x2 = 1,000 lb
x1  500 lb of chicken
x2  200 lb of beef
x1/x2  2/1 or x1 - 2x2  0
x1, x2  0
The Model: Minimize Z = $3x1 + 5x2
subject to: x1 + x2 = 1,000 lb
x1  50
x2  200
x1 - 2x2  0
Example Problem No. 2 (1 of 3) 46
Solve the following model
graphically:
Maximize Z = 4x1 + 5x2
subject to: x1 + 2x2  10
6x1 + 6x2  36
x1  4
x1, x2  0

Step 1: Plot the

constraints as equations

Fig.: Constraint Equations

Example Problem No. 2 (2 of 3)
47

Maximize Z = 4x1 + 5x2

subject to: x1 + 2x2  10
6x1 + 6x2  36
x1  4
x1, x2  0
Step 2: Determine the
feasible solution space

Figure 2.23 Feasible Solution Space

and Extreme Points
Example Problem No. 2 (3 of 3) 48

Maximize Z = 4x1 + 5x2

subject to: x1 + 2x2  10
6x1 + 6x2  36
x1  4
x1, x2  0
Step 3 and 4: Determine
the solution points and
optimal solution

Fig. : Optimal Solution Point

 Any
Question?