MJNV1W03 – Business Mathematics

Class Branding 1A

Session 5
October 4, 2019
 Content
Linear Programming (LP)
Chapter 9

• LP introduction
• LP Model Formulation
• Finding solution for LP model with 2 decision
variables
• Irregular LP problems
 LP Introduction
• Linear programming is a tool for solving optimization
problem
• Finding the best or optimal solution to a problem that
requires a decision or set of decisions about how best to use
a set of limited resources to achieve a state goal of
objectives.

• Example:
A furniture manufacturer wants to maximize its profits. It
has definite limits on production time available in its three
departments as well as commitments to customers
 LP Introduction
• Type of objectives:
– Minimum cost
– Maximizing profit
– Maximizing revenue
• Linear programming requires that all the mathematical
functions in the model be linear functions
• It was conceptually developed during World War II by
Soviet mathematician Leonid Kantorovich
• LP is a math model under certainty + complex relationship
Components: LP Model Formulation
• Decision Variables
Mathematical symbols representing levels of activity,
completely describe the decisions to be made.
• Objective Function
A linear mathematical relationship that describes the
objectives of the firm in terms of the decision variables, for
example: Min Cost or Max Profit or Max Revenue
• Constraint
Linear relationships of the decision variables that represent
the restrictions placed on the firm by the operating
environment
 LP Model Characteristics

1. Problems seek to maximize or minimize an

objective: Objective Function
2. Constraints limit the degree to which objective
can be obtained
3. Mathematical relationships are linear
 Worked Example 9.1 (page 478)
A daily diet requires a minimum of: 600mg vit. C, 360mg vit. D & 40mg vit. E

Vit C (mg) Vit D (mg) Vit E (mg) Cost/portion

One portion of X 20 10 4 5
One portion of Y 30 20 1 4
Minimum requirement 600 360 40

• Decision Variables: • Objective Function:

x = optimum number of portion X Min 5x + 4y
y = optimum number of portion Y
• Subject to constraints:
– 20x + 30y  600 (minimum vitamin C)
– 10x + 20y  360 (minimum vitamin D)
– 4x + 1y  40 (minimum vitamin E)
– x, y  0 (non negativity)
 Finding Solution (2- decision variables)

1) Graph the constraints and feasible area

2) Graph the iso-cost line
3) Find the minimum cost graphically
4) And / or calculate the costs of each corner
points and select the corner points with
minimum cost
 1) Graph the constraints & feasible area
y
constraints:
40 – 20x + 30y  600 (vitamin C)
– 10x + 20y  360 (vitamin D)
– 4x + 1y  40 (vitamin E)
4x + y = 40 (Vit. E)
– x, y  0 (non negativity)

20
18

10x + 20y = 360 (Vit. D)

20x + 30y = 600 (Vit. C)
x
10 30 36
 1) Graph the constraints & feasible area
y 20x + 30y  600
10x + 20y  360
40
T 4x + 1y  40
x, y  0

4x + y = 40

20
10x + 20y = 360
18 V
W
20x + 30y = 600
Z
x
10 30 36
 2) Graph the iso-cost line
y Objective Function:
40
T Min 5x + 4y

4x + y = 40
5x + 4y = 200 (example)

20 10x + 20y = 360

18 V
W
20x + 30y = 600

Z
x
10 30 36
 3) Find the optimum solution
y (graphically)
40
5x + 4y = 200 • Point V is the optimum solution
T
• Calculate the intersection (x,y)
4x + y = 40 • Calculate the minimum cost

20 10x + 20y = 360

18 V
W
20x + 30y = 600

Z
x
10 30 36
 4) Find the optimum solution
y (corner points)
5x + 4y = 200
40
T • Calculate costs for each corner
T  0,40   cost  0  4  40   160
4x + y = 40 V  ...,... 
W  ...,... 
Z  ...,... 
10x + 20y = 360
20 • Select the minimum cost
18 V • Write the optimum (x,y)
W
20x + 30y = 600

Z
x
10 30 36
 Profit Maximization subject to constraints

Worked example 9.2 (page 483)

A company manufactures two types of iron gates

Sell
Welding Finishing Admin Profit
Price
Type I 6 2 1 120 55
Type II 2 1 1 95 25
Max 840 300 250
hours
Available
 Example: A Maximization Model
PROTRAC - case
PROTRAC Inc. produces two lines of heavy
equipment, E-9 and F-9. Using economic forecasts
for next month, PROTRAC’s marketing manager has
judged that during that period it will be possible to
sell as many E-9s of F-9s as the firm can produce.

Management must now recommend a production

target for next month. That is, how many E-9s and F-
9s should be produced?
 PROTRAC - case
PROTRAC Data
1. PROTRAC will make a profit of $5000 on each E-9 that is
sold and $4000 on each F-9.

2. Each product is put through machining operations in both

department A and department B.

3. For next month’s production, these two department have

150 and 160 hours of available time, respectively. Each E-
9 uses 10 hours of machining in department A and 20
hours of machining in department B, whereas each F-9
uses 15 hours in department A and 10 Hours in
department B.
 PROTRAC - case
PROTRAC Data
4. Testing of finished products is performed in a third
department. Each E-9 is given 30 hours of testing and
each F-9 is given 10. The total testing hours cannot fall
below 135.
5. In order to maintain the current market position, top
management has decreed the operating policy that it
is necessary to build at least one F-9 for every three E-
9s produced.
6. A major customer has ordered a total of at least five E-
9s and F-9s (in any combination whatever) for next
month, and so at least that many must be produced
• Machining data PROTRAC - case
Hours
Department Per Per Total available
E-9 F-9 • Produces:
A 10 15 150 1. Earthmoving
B 20 10 160
equipment (E-9)
2. Forestry equipment
(F-9)
• Testing Data
Requirement on
1 E-9 1 F-9 • Contribution margin:
total hours
Hours for 30 10 135 E-9: $5000/unit sold
testing F-9: $4000/unit sold
• Operating policy: one F-9 for three E-9s
• Minimal order: Five E-9s and F-9s (combination)
• Decision variables
PROTRAC - case
E = number of E9s to produce Model Formulation
F = number of F9s to produce
• Objective Function
Maximize Z = 5000 E + 4000 F
• Constraints
• Total hours Dept A = 10 x (E) + 15 x (F)

10E + 15F  150 : inequality constraint

• Dept B: 20E + 10F  160

• Labor hours in testing: 30E + 10F  135

• One F-9 for three E-9: E/3  F (E  3F)

• At least five unit produced: E + F  5

• Nonnegative conditions: E  0, F  0
 PROTRAC - case
Graphical Solution
• Max Z=5000E + 4000F (max profit contribution)

Subject to (constraint):

• 10E + 15F  150 (capacity in department A)

• 20E + 10F  160 (capacity in department B)
• E–3F 0 (market position balance)
• 30E + 10F  135 (labor hours used in testing)
• E+F 5 (min prod. requirement)
• E  0 and F 0 (non-negativity conditions)
F 16
PROTRAC - case
Plotting The Constraints
15
20E + 10F = 160
14

13
E  0 and F  0
12 30E + 10F = 135
E+F 5
11

10
E–3F 0
9 10E + 15F  150
Feasible region
8 20E + 10F  160
7
30E + 10F  135
6

5
E-3F=0
4

2 E+F=5 10E + 15F = 150

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
E
F 16

15 The Optimal Solution Point PROTRAC - case

14

13 The Objective Function:

12 Profit = 5000E + 4000F
11

10
Optimal Value = 5000(4.5) + 4000(7)
9
= 50,500
8

7 Optimal solution
6 E*=4.5, F*=7
5

3 Maximum profit line

2

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
E
 Irregular LP Problems

(1) Multiple optimal solutions

(2) Infeasible solutions

(3) Unbounded solutions

F 16

15 Irregular LP Problems
14

13
(1) Multiple Optimal Solutions
12
Objective Function: Max Z = 5000E + 7500F
11

10

9 Alternate Optimal Solutions

8

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
E
 Irregular LP Problems
(2) Infeasible Problem
maximize Z = 5x1 + 3x2

subject to
4x1 + 2x2  8
x1  4
x2  6
x1, x2  0
 Irregular LP Problems
(3) Unbounded Solutions
30E + 10F = 135

F Unbounded model
10

8 E  0 and F  0
7
E+F 5
6
E–3F 0
5 E+F=5
4
30E + 10F  135
E-3F=0
3

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
E