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Applications of Linear Programming For Solving Business Problems

This document discusses various business applications of linear programming, including production management to determine optimal resource allocation and product mix; personnel management to optimize staffing levels; inventory management to minimize costs; marketing management to analyze advertising coverage and optimize distribution; financial management to select optimal investment portfolios; and blending problems to minimize costs of final blended products given raw material constraints.

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Saurabh Shukla
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Download as PDF, TXT or read online on Scribd
102 views

Applications of Linear Programming For Solving Business Problems

This document discusses various business applications of linear programming, including production management to determine optimal resource allocation and product mix; personnel management to optimize staffing levels; inventory management to minimize costs; marketing management to analyze advertising coverage and optimize distribution; financial management to select optimal investment portfolios; and blending problems to minimize costs of final blended products given raw material constraints.

Uploaded by

Saurabh Shukla
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Applications of linear programming for solving business problems:

1. Production Management:

LP is applied for determining the optimal allocation of such resources as materials, machines,
manpower, etc. by a firm. It is used to determine the optimal product- mix of the firm to
maximize its revenue. It is also used for product smoothing and assembly line balancing.

2. Personnel Management:

LP technique enables the personnel manager to solve problems relating to recruitment, selection,
training, and deployment of manpower to different departments of the firm. It is also used to
determine the minimum number of employees required in various shifts to meet production
schedule within a time schedule.

3. Inventory Management:

A firm is faced with the problem of inventory management of raw materials and finished
products. The objective function in inventory management is to minimize inventory cost and the
constraints are space and demand for the product. LP technique is used to solve this problem.

4. Marketing Management:

LP technique enables the marketing manager in analyzing the audience coverage of advertising
based on the available media, given the advertising budget as the constraint. It also helps the
sales executive of a firm in finding the shortest route for his tour. With its use, the marketing
manager determines the optimal distribution schedule for transporting the product from different
warehouses to various market locations in such a manner that the total transport cost is the
minimum.

5. Financial Management:

The financial manager of a firm, mutual fund, insurance company, bank, etc. uses the LP
technique for the selection of investment portfolio of shares, bonds, etc. so as to maximize return
on investment.

6. Blending Problem:

LP technique is also applicable to blending problem when a final product is produced by mixing
a variety of raw materials. The blending problems arise in animal feed, diet problems, petroleum
products, chemical products, etc. In all such cases, with raw materials and other inputs as
constraints, the objective function is to minimize the cost of final product.

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