Dr.

Md Nusrate Aziz Graduate School of Management Multimedia University

October 2013
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Quantitative Analysis for Management, by Barry Render and Ralph M. Stair, JR. - Pearson International Edition. Fundamental Methods of Mathematical Economics, by Alpha C. Chiang (3rd Edition), McGraw-Hill International Editions.

Linear Programming (LP) is a widely used mathematical technique designed to help managers in planning and decision making relative to resource allocation. LP Properties: First: Problems seek to maximize or minimize an objective (profit, production or cost). Second: Restriction or constraints limit the degree to which the objective can be obtained. We want to maximize or minimize the objective function subject to limited resources (the constraints). Third: There must be alternatives (combinations of resources) available. Fourth: The objective and constraints in linear programming problems must be expressed in terms of linear equations or inequalities.

Problem: The Flair Furniture Company produces inexpensive tables and chairs. The production process for each is similar in that both require a certain number of hours of carpentry work and a certain number of labour hours in the painting and varnishing. Each table takes 4 hours of carpentry and 2 hours in the painting and varnishing. Each chair requires 3 hours in carpentry and 1 hours in painting and varnishing. During the current production period, 240 hours of carpentry time and 100 hours in painting and varnishing time are available. Each table sold yields a profit of $7; each chair produced is sold for a $5 profit. Flair Furnitures problem is to determine the best possible combination of tables and chairs to manufacture in order to reach the maximum profit.

Formulating a linear program involves developing a mathematical model to represent the managerial problem The steps in formulating a linear program are 1. Completely understand the managerial problem being faced 2. Identify the objective and constraints 3. Define the decision variables 4. Use the decision variables to write mathematical expressions for the objective function and the constraints

Suppose,

X1 = number of tables to be produced X2 = number of chairs to be produced

We can covert the above information to formulate the problem which is as follows:

 The objective is to

Maximize profit
The constraints are

1. The hours of carpentry time used cannot exceed 240 hours per week 2. The hours of painting and varnishing time used cannot exceed 100 hours per week The decision variables representing the actual decisions we will make are X1 = number of tables to be produced per week X2 = number of chairs to be produced per week

The easiest way to solve a small LP problem such as that of Flair Furniture Company is with the graphical solution approach. The graphical procedure is useful only when there are two decision variables (X1 and X2 in this case) in the problem. When there are more than two variables it is not possible to plot and solve the problem in two dimensional graph. We look at the constraints and plot them. Feasible Region: In an LP problem we need to find a set of solutions that satisfies all of the constraints simultaneously. It is known by the term area of feasible solution or simply feasible solution. So, the feasible region is the overlapping area of constraints that satisfies all of the restrictions on resources. Now we solve the problem in the white board -

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We suppose profit equal to some arbitrary but small dollar amount. For the Flair Furniture problem we may choose a profit of $210. $210 = 7X1+5X2 We then find (X1, X2) ={(0, 42); (30, 0)} $280=7X1+5X2 We find (X1, X2) = {(0, 56); (40,0)} Following the same way we draw a series of parallel isoprofit lines (iso-profit map) until we find the highest isoprofit line, that is, the one with the optimal solution.

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Alternatively, we can solve the LP problem by using corner point method. It involves looking at every corner point of the feasible region. Optimal solution will lie at one (or more) of them.

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In point (4), we need to find the value in the intersection point of two constraints. 4X1 + 3X2 = 240 [Carpentry equation] 2X1 + 1X2 = 100 [Painting equation] Solving them gives the values of X1 and X2, which is (X1, X2) = (30, 40) So, the total profit is, = 7 (30) + 5 (40) = $ 410 Because point (4) produces the highest profit of any corner point, the product mix of X1=30 tables and X2=40 chairs is the optimal solution to Flair Furnitures problem.

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ISOPROFIT METHOD 1. Graph all constraints and find the feasible region. 2. Select a specific profit (or cost) line and graph it to find the slope. 3. Move the objective function line in the direction of increasing profit (or decreasing cost) while maintaining the slope. The last point it touches in the feasible region is the optimal solution.

4. Find the values of the decision variables at this last point and compute the profit (or cost).
CORNER POINT METHOD 1. Graph all constraints and find the feasible region. 2. Find the corner points of the feasible reason. 3. Compute the profit (or cost) at each of the feasible corner points. 4. select the corner point with the best value of the objective function found in Step 3. This is the optimal solution.

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See Excel Sheet [Computer Exercise]. We solve the Flair Furniture Problem using xls tool. The findings are as follows:

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Suppose, 240 acres of land available. Profit: $40/acres corn; $30/acre oats. Have 320 hours of labour available. Corn takes 2 hours of labour per acre of land; however, Oats requires 1 hour of labour per acre of land. Problem: How many acres of each should be planted to maximize profit? (1) Formulate the problem. (2) Solve the problem using graphical method (corner solution).

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Many LP problems involve minimizing as objective such as cost. For example: (a) A manufacturer may seek to distribute its products from several factories to its many regional warehouses in such a way as to minimize total shipping cost. (b) A hospital may want to provide a daily meal plan for its patients that meets certain nutritional standards while minimizing food purchase costs. Minimization problems can be solved graphically by first setting up the feasible solution region and then using either the corner point method or an iso-cost line approach (which is analogous to the iso-profit approach in maximization problems) to find the values of the decision variables (e.g., X1 and X2) that yield the minimum cost.

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The Holiday Meal Turkey Ranch is considering buying two different brands of turkey feed and blending them to provide a good, low-cost diet for its turkeys. Each feed contains, in varying proportions, some or all of the three nutritional ingredients essential for fattening turkeys. Each pound of brand 1 purchased, for example, contains 5 ounces of ingredient A, 4 ounces of ingredient B, and ounces of ingredient C. Each pound of brand 2 contains 10 ounces of ingredient A, 3 ounces of ingredient B, but no ingredient C. The brand 1 feed costs the ranch 2 cents a pound, while the brand 2 feed costs 3 cents a pound. The minimum monthly requirement per turkey are 90 ounce of A, 48 ounce of B and 1 of C. The owner of the ranch would like to use LP to determine the lowest-cost diet that meets the minimum monthly intake requirement for each nutritional ingredient. We summarize the problem as follows -

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COMPOSITION OF EACH POUND OF FEED (OZ.) INGREDIENT BRAND 1 FEED BRAND 2 FEED

MINIMUM MONTHLY REQUIREMENT PER TURKEY (OZ.)

A B

5 4

10 3

90 48

C
Cost per pound

0.5 2 cents

0 3 cents

1.5

Now, formulate the problem and solve it using graphical method.

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The Holiday Meal Turkey Ranch is considering buying two different brands of turkey feed and blending them to provide a good, low-cost diet for its turkeys. Let, X1 = number of pounds of brand 1 feed purchased. X2 = number of pounds of brand 2 feed purchased. Minimize cost (in cents) = subject to: 5X1+ 10X2 90 ounces 4X1 + 3X2 48 ounces 0.5X1 1.5 ounces X1 0 X2 0 2X1 + 3X2 (ingredient constraint A) (ingredient constraint B) (ingredient constraint C) (non-negativity constraint) (non-negativity constraint)

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Using the corner point method. First we construct the feasible solution region. The optimal solution will lie at on of the corners as it would in a maximization problem.

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We solve for the values of the three corner points (a, b and c). Point a is the intersection of ingredient constraints C and B 4X1 + 3X2 = 48 X1 = 3 Substituting 3 in the first equation, we find X2 = 12 Solving for point b with basic algebra we find X1 = 8.4 and X2 = 4.8 Solving for point c we find X1 = 18 and X2 = 0 Substituting these value back into the objective function we find:

The lowest cost solution is to purchase 8.4 pounds of brand 1 feed and 4.8 pounds of brand 2 feed for a total cost of 31.2 cents per turkey.
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Using the isocost approach.

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Four special cases and difficulties arise at times when using the graphical approach to solving LP problems: Infeasibility Unboundedness Redundancy Alternate Optimal Solutions.

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No feasible solution
Exists when there is no solution to the problem that satisfies all the constraints. No feasible solution region exists. This is a common occurrence in the real world. Generally one or more constraints are relaxed until a solution is found.

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The Problem with no feasible solution

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Unboundedness Sometimes a linear program will not have a finite solution. In a maximization problem, one or more solution variables, and the profit, can be made infinitely large without violating any constraints. In a graphical solution, the feasible region will be open ended. This usually means the problem has been formulated improperly.

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A solution region unbounded to the right

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Redundancy A redundant constraint is one that does not affect the feasible solution region. One or more constraints may be more binding. This is a very common occurrence in the real world. It causes no particular problems, but eliminating redundant constraints simplifies the model.

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A problem with Redundant constraint

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Alternate Optimal Solutions Occasionally two or more optimal solutions may exist. Graphically this occurs when the objective functions iso-profit or iso-cost line runs perfectly parallel to one of the constraints. This actually allows management great flexibility in deciding which combination to select as the profit is the same at each alternate solution.

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A problem with un-unique solution

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Simplex Method

LP solutions by using

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