QUANTITATIVE TECHNIQUES FOR MANAGERS KMB-206

UNIT 2
Linear Programming Problem

The term ‘linear’ means that all the relations is the particular problem are linear and the term
‘programming’ refers to the process determining a particular programmed or plan or plan of action.
Linear Programming is one of the most popular and widely used quantitative techniques. Linear
programming model provide efficient method for determining optimal decision a large number of
possible decision. The optimal decision is that need a satisfied objective of management subject to
various constraints and restriction.
The size of complexity of linear programming problem takes the same form, allocating, scare
resources among different competing alternatives. The resources may be time and money.
The linear function which is to be optimized is called the objective function (Z) and the conditions of
the problem expressed as simultaneous linear equations are referred as constraints.

Requirement or applications of linear programming:-

1) Aim or object should be clearly, identifiable and in mathematical term.
2) The activity involved should be distinct & measurable in quantitative term.
3) The resource to be allocated also should be measurable and quantitatively.
4) The relationship representing the objective function, also the resources consideration must be
linear in nature.
5) There should be a series of visible alternative, course of action available to the decision
makers that are determine by the resource constraint.

Advantages of linear programming:-

1) Linear programming helps the management effective utilization of limited resources.
2) Linear programming improves the quality of decision making by replacing rule of thumb.
3) Provide feasibility in analyzing of variety of multidimensional problems.
4) It helps in reevaluation of the basic plan to meet changing condition in business.

Limitation of linear programming:-

1) The assumption that all relations are may not hold good in many situations.
2) In linear programming all co-efficient and constraint are stated with certainty.
3) The solution many times is in fraction which may not remain optimal.
Mathematical Formulation of L.P.P. - It is important to recognize a problem which can be handled
by linear programming and then to formulate its mathematical model.

Example 17: A firm can produce three types of cloth A, B and C. Three kinds of wool are required
for it, say red wool, green wool and blue wool. One unit length of type A cloth needs 2 yards of red
wool and 3 yards of blue wool; one unit length of type B cloth needs 3 yards of red wool, 2 yards of
green wool and 2 yards of blue wool; and one unit of type C cloth needs 5 yards of green wool and 4
yards of blue wool. The firm has only a stock of 8 yards of red wool, 10 yards of green wool and 15
yards of blue wool. It is assume that the income obtained from one unit length of type A cloth is Rs.
3.00, of type B cloth is Rs. 5.00 and of type C cloth is Rs. 4.00.
Formulate the problem as L.P.P.
Solution 17:
Types of cloth
Kinds of wool stock
A(x1) B(x2) C(x3)
Red 2 3 0 8
Green 0 2 5 10
Blue 3 2 4 15
income 3 5 4

Total profit in Rs. Of the firm is given by

Objective function Z (max) = 3x1 + 5x2 + 4x3
Subject to constraints (s to c):
2x1 + 3x2 + 0x3 ≤ 8
0x1 + 2x2 + 5x3 ≤ 10
3x1 + 2x2 + 4x3 ≤ 15
(x1 ≥ 0, x2 ≥ 0, x3 ≥ 0)

Example 18: A toy company manufactures two types of dolls, A and B. Each doll of type B takes
twice as long to produce as one of type A, and the company would have time to make a maximum of
2000 per day. The supply of plastic is sufficient to produce 1500 dolls per day of A and B combined.
Each B type doll requires fancy dress of which there are only 600 per day available. If the company
makes a profit of Rs 3 and Rs 5 on doll A and B respectively, then how many dolls of A and B should
be produced per day in order to maximize the total profit. Formulate this problem.

Solution 18: In this problem (and these types of problems) starts from last. We are to maximize the
profit. So the objective function z will be Maximize z then two products are dolls of A and B types.
So decision variables will be x1 and
X2. Now let x2 denotes the number of dolls of type A required for maximize profit z and x2 be dolls
for B type. Profit on each doll of A is Rs 3 and that for each doll B is Rs 5 so
Max z= 3x1 + 5x2
As x2 takes twice time than x1 and total time allowed per day can produce 2000 dolls so x1 + 2x2
<=2000
Fancy dress material is available for B type 600 dolls so X2<=600
Also plastics availability is enough to produce 1500 dolls for A and B both so
X1+x<=1500
As x1, x2 are numbers of dolls to be produced per day so x1, x2 >=0
Writing all steps together
Max z= 3x1 + 5x2 (Objective Function)
S. t.
x1 + 2x2 <=2000 (Time constraint)
x1+ x2 <=1500 (Plastics availability constraint)
X2<=600 (Fancy dress material constraint)
And x1, x2 >=0 (non negativity problem)
 Solution of L.P.P.
L.P.P. can be solved by two methods-
1) By Graphical Method
2) By Algebraic (Simplex) Method
Example 19: A workshop has three (3) types of machines A, B and C; it can manufacture two (2)
products 1 and 2, and all products have to go to each machine and each one goes in the same order;
First to the machine A, then to B and then to C. The following table shows:
 The hours needed at each machine, per product unit
 The total available hours for each machine, per week
 The profit of each product per unit sold

Formulate and solve using the graphical method a Linear Programming model for the previous
situation that allows the workshop to obtain maximum gains.
Decision Variables:
 : Product 1 Units to be produced weekly
 : Product 2 Units to be produced weekly
Objective Function:
Maximize (Z) x1 + 1.5x2
Constraints:
 2x1 + 2x2 = 16 ……(1)
 X1 + 2x2 =12………(2)
 4x1 + 2x2 = 28…….(3)
 X1, X2≥ 0
In eq. (1)-
2x1 + 2x2 = 16
If x1 = 0, x2 = 8 Coordinants (0, 8)
If x2 = 0, x1 =8 Coordinants (8, 0)
In eq. (2)-
x1 + 2x2 = 12
If x1 = 0, x2 = 6 Coordinants (0, 6)
If x2 = 0, x1 =12 Coordinants (12, 0)
In eq. (3)-
4x1 + 2x2 = 28
If x1 = 0, x2 = 14 Coordinants (0, 14)
If x2 = 0, x1 =7 Coordinants (0, 7)

For the graphical solution we plot the above co-ordinates in graph.

The intersect point (equations are 2 and 3) the green colored area corresponds to the set of feasible
solutions and the level curve of the objective function that passes by the optimal vertex is shown with
a red dotted line co-ordinates are (x1 =4, x2 = 4) and (x1= 6, x2 = 2).
We put this value in the objective function-
Maximize (Z) x1 + 1.5x2
4 + 1.5*4 = 10 (Max)

6 + 1.5*2 = 9

The optimal solution is and with an optimal value

that represents the workshop’s profit.
L.P.P. by Simplex Method:-
Example 20: Solve the following problem:
Max (z) = 30x1 + 25x2
3x1 + 4x2 ≤ 30
5x1 + 42 ≤ 56
X1, x2 ≥ 0
Solution 20: We convert the model into standard form by adding two slack variables s1, s2:
Max z = 30x1 + 25x2 +0s1 +0s2
S to C- 3x1 + 4x2 + 1S1 + 0S2 = 30
5x1 + 4x2 +0S1 + 1S2 = 56
Table: 1
SOLUTION(
BV CBV X1 X2 S1 S2 BJ) RATIO
30/3=10(min)key
S1 0 3 4 1 0 30 column
S2 0 5 4 0 1 56 56/5=11.2
Cj 30 25 0 0
Zj 0 0 0 0
Cj-Zj 30(max) 25 0 0
Key column

Change the value of key row S1-

x1 x2 S1 S2 Bj
3/3=1 4/3 1/3 0/3=0 30/3=10
Change the value for S2-

New row element is = old row element- [row element in the key column * corresponding replaced
element]

x1 x2 S1 S2 Bj
5-[5*1]=0 4-[5*4/3]= -8/3 0-[5*1/3]= -5/3 1-[5*0]=1 56-[5*10] = 6

Table 2-

SOLUTION(
BV CBV X1 X2 S1 S2 BJ)
X1 30 1 4/3 1/3 0 10 X1
S2 0 0 -8/3 -5/3 1 6 X2
Cj 30 25 0 0
Zj 30 40 10 0
Cj-
Zj 0 -15 -10 0

Here all the values of Δj is negative or 0, so it is our optimal table.

The value of x1=10, x2= 6 put it in objective function.
Max (z) = 30x1 + 25x2
30*10 + 25*6 =300+150=450.

Example 21: Solve the following problem using the simplex algorithm:
Max z = 2x1 + x2 + x3
3x1 + x2 + x3 ≤ 60
x1 – x2 + 2x3 ≤ 10
x1 + x2 – x3 ≤ 20
x1, x2, x3 ≥ 0

Dual Problem (Duality) in L.P.P.

There is another linear problem, called the dual problem (Dual in short). Now we explain how to find
the dual problem to a given LPP, we discuss the economic interpretation of the dual problem and the
relation that exists between an LPP (called the Primal) and its dual problem. We consider the LPP in
normal (canonical) form:
Max Z = c1 x1 + c2 x2 + · · · + cn xn
a11 x1 + a12 x2 + · · · + a1n xn ≤ b1
a21 x2 + a22 x2 + · · · + a2nxn ≤ b2
.........
a m1 x1 + am2 x2 + · · · + amn xn ≤ bm
xj ≥ 0 (j = 1, 2, . . . , n)
The original problem is called the primal.
The dual problem is defined as follows:
Min W = b1 y1 + b2 y2 + · · · + bm ym
a11 y1 + a21 y2 + · · · + am1 ym ≥ c1
a12 y1 + a22 y2 + · · · + am2 ym ≥ c2
.........
a1n y1 + a2n y2 + · · · + amn ym ≥ cn
yi ≥ 0 (i = 1, 2, . . . , m)

Example 21: The Company FURNITURE manufactures tables and chairs. A table sells for Rs.160,
and a chair sells for Rs.200. The demand for tables and chairs is unlimited. The manufacture of each
type of furniture requires labor, lumber, and inventory space. The amount of each resource needed to
make tables and chairs and the daily limits of available resources is given in the following table:

Resources
Resource
Resources needed
available
Table chair
Labor 2 4 40
Lumber 18 18 216
Inventory 24 12 240

FURNITURE wants to maximize total revenue.

Primal problem:
max z = 160x1 + 200x2
2x1 + 4x2 ≤ 40
18x1 + 18x2 ≤ 216
24x1 + 12x2 ≤ 240
x1, x2 ≥ 0.
Dual problem
Min w = 40y1 + 216y2 + 240y3
2y1 + 18y2 + 24y3 ≥ 160
4y1 + 18y2 + 12y3 ≥ 200
y1, y2, y3 ≥ 0.

The Transportation Problem (TP)

The general transportation problem is concerned with distributing any commodity from a group of
supply centers, called sources, to any group of receiving centers, called destinations, in such a way as
to minimize the total cost of distribution. Each source has a fixed supply of units, and this entire
supply must be distributed to the destinations.
Types of Transportation Problem-
a) Balanced Transportation problem- when total of demand and total of supply is equal
b) Unbalanced Transportation problem- when total of demand and total of supply is not equal
c) Minimization Transportation Problem
d) Maximization Transportation problem-When find profit, maximum sales etc (regarding
increase)

Feasible solution- Any set of non-negative allocation which satisfy the row and column sum
restrictions.
Basic Feasible solution (B.F.S.) - A feasible solution is called basic feasible solution if the total
number of positive allocations is exactly equal to m+n-1.
B.F.S. – m+n-1 = No. of allocation
M= No. of rows
N= No. of column
Degeneracy in Transportation Problem- If the total number of positive allocations is not equal to
m+n-1is known as degeneracy.
B.F.S. m+n-1 ҂ No. of allocation
M= No. of rows
N= No. of column

There are three different methods in used in transportation problem.

1) North-West Corner Method (NWCM)
2) Least Cost Method (LCM)
3) Vogel’s Approximation Method (VAM)

North-West Corner Method (NWCM) - This is one of the simplest methods to find initial feasible
solution. It is also known as Upper Left Corner Method.
Steps of NWCM-
a) Start with North West corner cell and allocate it maximum possible amount or value.
b) Then move to the right hand cell if there is still any available quantity left other wise move to
the down cell and allocate it maximum possible value.
c) Repeat step 2 again and continue until all the available quantity is adjusted.

Example 22: Solve the following Transportation Problem by NWCM:

Plant
Market demand
P1 P2 P3 P4
M1 19 14 23 11 11
M2 15 16 12 21 13
M3 30 25 16 39 19
Supply 6 10 12 15 43
Solution 22: By NWCM
Plant
Market demand
P1 P2 P3 P4
M1 19(6) 14(5) 23 x 11x 11(5,0)
M2 15 x 16(5) 12(8) 21x 13(8,0)
M3 30 x 25x 16(4) 39(15) 19(15,0))
Supply 6(0) 10(5,0) 12(4,0) 15(0) 43

Total transportation cost = Rs. (19*6+14*5+16*5+12*8+16*4+39*15) = Rs. 1009.

Least Cost Method (LCM) - In this method we select the minimum cost from the given matrix and
allocate maximum possible value until all the available quantity is adjusted.

Example 23: Solve the following Transportation Problem by LCM:

Plant
Market demand
P1 P2 P3 P4
M1 19 14 23 11 11
M2 15 16 12 21 13
M3 30 25 16 39 19
Supply 6 10 12 15 43

Solution 23: By LCM

Plant
Market demand
P1 P2 P3 P4
M1 19x 14x 23x 11(11) 11(0)
M2 15(1) 16x 12(12) 21x 13(1,0)
M3 30(5) 25(10) 16x 39(4) 19(9,4,0)
Supply 6(5,0) 10(0) 12(0) 15(4,0) 43

Total transportation cost = Rs. (11*11+15*1+12*12+30*5+25*10+39*4) = Rs. 836

Vogel’s Approximation Method (VAM) – It is also known as penalty corner method.

Steps- 1) In this method we write the differences of the smallest and the second smallest costs in each
row and column.
1) Then we select the roe or column for which the penalty is the largest and allocate the
maximum possible amount to the cell with lowest cost in that particular row and column. If
there is more than one largest penalty row or columns, then we select that row or column in
which we can allocate more amount in the lowest cost cell.
2) We continue above steps on the reduced matrix till all allocations have been made.
Example 24: Solve the following Transportation Problem by VAM:

Plant
Market demand
A B C D
M1 19 14 23 11 11
M2 15 16 12 21 13
M3 30 25 16 39 19
Supply 6 10 12 15 43

Example 24: by VAM:

Plant Penalty
Market demand
A B C D p1 p2 p3 p4 p5
M1 19x 14x 23x 11(11) 11(0) 3 - - - -
M2 15(6) 16(3) 12x 21(4) 13(9,3,0) 3 3 3 4 16
M3 30x 25(7) 16(12) 39x 19 9 9 9 9 25
Supply 6(0) 10(3,0) 12(0) 15(4,0) 43
p1 4 2 4 10
p2 15 9 4 18
p3 15 9 4 -
p4 - 9 4 -
p5 - 9 - -

Total transportation cost = Rs. (11*11+15*6+16*3+21*4+25*7+16*12) = Rs. 710

Optimality Test- After getting the B.F.S. Of transportation problem, we test this solution for
optimality, we check the feasible solution obtained, minimize the total transportation cost or not.
There we start the optimality test to a B.F.S. consisting of (m+n-1) allocations in independent
positions. For this test we use Modified Distribution (MODI) Method or u-v Method.
Steps- 1) Determine the basic feasible solution by any three method (NWCM, LCM and VAM)
2) Find out set of variable ui and vj for each row and column and to start with assign the value 0 to
any row and column having maximum no. of allocation.
3) Find the other sub-set value of ui and vj from this formula- Cij = ui + vj, [Cij = Cost of allocated
cell ]
4) Calculate the cost of unallocated cell with the help of ui & vj and using this formula- Δij = Cij - ui -
vj, [Cij = Cost of unallocated cell ]
5) If the value of unallocated cell is positive or 0 than it is our optimal solution otherwise any value of
unallocated cell is negative than it is not an optimal solution.
6) If the value is negative we start to make a loop from negative cell and make new allocation (cost
change) without changes in demand and supply.
7) Repeat step two (2).
Example 25: Solve the following Transportation Problem by VAM and find optimal solution-

Plant
Market demand
A B C D
M1 19 14 23 11 11
M2 15 16 12 21 13
M3 30 25 16 39 19
Supply 6 10 12 15 43

Solution 25: by VAM:

Plant Penalty
Market demand
A B C D p1 p2 p3 p4 p5
M1 19x 14x 23x 11(11) 11(0) 3 - - - -
M2 15(6) 16(3) 12x 21(4) 13(9,3,0) 3 3 3 4 16
M3 30x 25(7) 16(12) 39x 19 9 9 9 9 25
Supply 6(0) 10(3,0) 12(0) 15(4,0) 43
p1 4 2 4 10
p2 15 9 4 18
p3 15 9 4 -
p4 - 9 4 -
p5 - 9 - -

Total transportation cost = Rs. (11*11+15*6+16*3+21*4+25*7+16*12) = Rs. 710.

Optimality Test (MODI Method)-
The above solution is basic feasible solution. m+n-1 = no. of allocation
4+3-1=6, 7-1=6, 6=6 [B.F.S.]
Find the value of ui and vj from this formula- Cij = ui + vj, [Cij = Cost of allocated cell]
For this we select u2 =0 (since row 2 contains maximum no. of allocations).
Since M2A= Cij = u2 + v1, 15=0+ v1, v1=15, M2B= Cij = u2 + v2, 16=0+ v2, v2=16, M2D= Cij = u2 +
v4, 21=0+ v4, v4=21,
M1D= Cij = u1 + v4, 11= u1+ 21, u1= -10, M3B= Cij = u3 + v2, 25= u3+ 16, u3= 9, M3C= Cij = u3 +
v3, 16= 9+ v3, v3 = 7,
Plant
Market demand
A B C D ui
M1 19[14] 14[8] 23[26] 11(11) 11 u1= -10
M2 15(6) 16(3) 12[5] 21(4) 13 u2=0
M3 30[6] 25(7) 16(12) 39[9] 19 u3=9
Supply 6 10 12 15 43
vj v1=15 v2=16 v3=7 v4=21
Find the value of unallocated cells by using this formula- Δij = Cij - ui - vj, [Cij = Cost of unallocated
cell ]
Since M1A = Δij = Cij - ui - vj, =19-u1 - v1, =19-(-10)-15, =19+10-15 =14,
M1B = Δij = Cij - ui - vj, =14-u1 – v2, =14-(-10)-16, =14+10-16 =8
M1C = Δij = Cij - ui - vj, =23-u1 – v3, =23-(-10)-7, =23+10-7 =26
M2C = Δij = Cij - ui - vj, =12-u2 – v3, =12-0-7, =12-7 =5
M3A = Δij = Cij - ui - vj, =30-u3 – v1, =30-9-15, =30-24 =6
M3D = Δij = Cij - ui - vj, =39-u3 – v4, =39-9-21, =39-30 =9
Here all the values of unallocated are positive which is shown in [ ], so it is our optimal solution our
minimum cost is Rs. 710.

Maximization Transportation problem- In some cases in the transportation matrix, the profits are
given in the place of costs and we are required to find the allocations to maximize the profit. Such
problems can be termed as profit maximization problem. In such problem can be solved by select
maximum value from the matrix and subtract it all the cost element then make new matrix as
minimize then after use same as minimize problem.