UNIVERSITY OF MINDANAO

College of Arts and Sciences Education

General Education - Mathematics

Physically Distanced but Academically Engaged

Self-Instructional Manual (SIM) for Self-Directed Learning (SDL)

Course/Subject: ACC 421 – Management Science

Name of Teacher: Christle Mae B. Ochigue

Prepared by: Prof. Ronnie O. Alejan

THIS SIM/SDL MANUAL IS A DRAFT VERSION ONLY.

THIS IS INTENDED ONLY FOR THE USE OF THE
STUDENTS WHO ARE OFFICIALLY ENROLLED IN THE
COURSE/SUBJECT.
NOT FOR REPRODUCTION, COMMERCIAL USE, AND
DISTRIBUTION OUTSIDE OF ITS INTENDED USE.
EXPECT REVISIONS OF THE MANUAL.
 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Course Outline: ACC 421 – Management Science

Course Coordinator: Cymber Orvie G. Quevedo

Email: [email protected]
Student Consultation: Thru text message, BB chatroom, and email
Mobile 0946-486-2514
Phone: (082)300-5456 / 305-0647 Local 149
Effectivity Date: August 2020
Mode of Delivery: Blended (On-line with face-to-face or virtual sessions)
Time Frame: 54 Hours
Student Workload: Expected Self-Directing Learning
Requisites: None
Credit: 3 units
Attendance Requirement: A minimum of 95% attendance is required at all
scheduled Virtual sessions.

Course Outline Policy

Areas of Concern Details

Contact and Non-contact Hours This 3-unit course self-instructional manual is designed
for blended learning mode of instructional delivery with
scheduled face to face or virtual sessions. The
expected number of hours will be 54, including the face
to face or virtual sessions. The face to face sessions
shall include the summative assessment tasks (exams)
if warranted.
Assessment Task Submission Submission of assessment tasks shall be on the 3rd, 5th,
7th, and 9th weeks of the term. The assessment paper
shall be attached with a cover page indicating the title
of the assessment task (if the task is a performance),
the name of the course coordinator, date of submission,
and the name of the student. The document should be
emailed to the course coordinator. It is also expected
that you already paid your tuition and other fees before
the submission of the assessment task.
If the assessment task is done in real-time through the
features in the Blackboard Learning Management
System, the schedule shall be arranged ahead of time
by the course coordinator.

Turnitin Submission To ensure honesty and authenticity, all assessment

(if necessary) tasks are required to be submitted through Turnitin with
a maximum similarity index of 30% allowed. This means
that if your paper goes beyond 30%, the students will
either opt to redo her/his paper or explain in writing
addressed to the course coordinator the reasons for the
similarity. In addition, if the paper has reached more
than 30% similarity index, the student may be called for

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

disciplinary action following with the University’s OPM

on Intellectual and Academic
Honesty.

Please note that academic dishonesty such as cheating

and commissioning other students or people to
complete the task for you have severe punishments
(reprimand, warning, expulsion).
Penalties for Late Assignments/ The score for an assessment item submitted after the
Assessments designated time on the due date, without an approved
extension of time, will be reduced by 5% of the possible
maximum score for that assessment item for each day
or part-day that the assessment item is late.

However, if the late submission of the assessment

paper has a valid reason, a letter of explanation should
be submitted and approved by the course coordinator.
If necessary, you will also be required to present/attach
pieces of evidence.
Return of Assignments/ Assessment tasks will be returned to you two (2) weeks
Assessments after the submission. This will be returned by email or
via the Blackboard portal.
For group assessment tasks, the course coordinator will
require some or few of the students for online or virtual
sessions to ask clarificatory questions to validate the
originality of the assessment task submitted and to
ensure that all the group members are involved.
Assignment Resubmission You should request in writing addressed to the course
coordinator his/her intention to resubmit an assessment
task. The resubmission is premised on the student’s
failure to comply with the similarity index and other
reasonable grounds such as academic literacy
standards or other reasonable circumstances e.g.,
illness, accident, or financial constraints.
Re-marking of Assessment You should request in writing addressed to the program
Papers and Appeal coordinator your intention to appeal or contest the score
given to an assessment task. The letter should explicitly
explain the reasons/points to contest the grade. The
program coordinator shall communicate with the
students on the approval and disapproval of the
request.
If disapproved by the course coordinator, you can
elevate your case to the program head or the dean with
the original letter of request. The final decision will come
from the dean of the college.
Grading System All culled from BlackBoard sessions and traditional
contact
Course discussions/exercises – 40%
1st formative assessment – 15%
2nd formative assessment – 15%
All culled from off-campus/online sessions:
Final exam – 30%
Submission of the final grades shall follow the usual

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

University system and procedures.

Preferred Referencing Style Use the 7th Edition of the APA Publication Manual
Student Communication You are required to create a umindanao email account,
which is a requirement to access the BlackBoard
portal. Then, the course coordinator shall enroll the
students to have access to the materials and resources
of the course. All communication formats: chat,
submission of assessment tasks, requests, etc. shall be
through the portal and other university recognized
platforms.

You can also meet the course coordinator in person

through the scheduled face to face sessions to raise
your issues and concerns.
For students who have not created their student email,
please contact the course coordinator or program head.
Contact Details of the Dean Dr. Khristine Marie D. Concepcion
Email: [email protected]
Phone: (082)305-0647 Local 118
Contact Details of the Program Ronnie O. Alejan
Head Email: [email protected]
Phone: (082)305-0647 Local 149
Students with Special Needs Students with special needs shall communicate with the
course coordinator about the nature of his or her special
needs. Depending on the nature of the need, the course
coordinator, with the approval of the program
coordinator, may provide alternative assessment tasks
or extension of the deadline for submission of
assessment tasks. However, the alternative
assessment tasks should still be in the service of
achieving the desired course learning outcomes.
Instructional Help Desk Dr. Khristine Marie D. Concepcion
Contact Details Email: [email protected]
Phone: (082)305-0647 Local 118
Library Contact Details Brigida E. Bacani
Email: [email protected]
Phone: 09513766681
Well-being Welfare Support Held Zerdszen P. Raňises
Desk Contact Details Email: [email protected]
Phone: 09504665431

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Course Information: see/download course syllabus in the Blackboard LMS

CC’s Voice: Welcome to the course ACC 421: Management Science.

Standard mathematical techniques and problem structuring
methods are essential in managerial decision-making. As an
accounting student, you must master the use of these techniques to
help you in your future role as business leader. This course equips
you with skills on linear programming applications, solution and
sensitivity analysis using spreadsheets, distribution and network
models, project scheduling, integer linear programming, forecasting,
decision analysis, queuing models, and simulations.

CO You as a future financial specialist, are expected to discuss and

apply the main techniques and problem structuring methods used
within management science, identify the proper modeling tool for a
business problem, conduct proper analysis using the appropriate
tool, execute solutions manually or using spreadsheets and
spreadsheet add-ins to facilitate learning by doing, and develop
recommendations for the business problem. These are the ultimate
outcomes for this course.

Let us begin!

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Table of Content
Week 1 – 3 Page
ULO-a 6
1. Overview of Operations Research 7
2 – Modeling with Linear Programming 12
Let’s Check Activity 1 19
Let’s Analyze Activity 1 20
In the Nutshell Activity 1 21
Week 4 – 5
ULO-a 23
1 – Review of Linear Algebra 24
2 – System of Linear Equations 25
Let’s Check Activity 1 33
Let’s Analyze Activity 1 34
In the Nutshell Activity 1 35
ULO-b 37
1 – The Simplex Method: Maximization Problem 39
2 – The Simplex Method: Minimization Problem 44
3 – The Simplex Method: Mixed Problem 46
4 – Duality and Sensitivity Analysis 49
Let’s Check Activity 1 55
Let’s Analyze Activity 1 57
In the Nutshell Activity 1 59
Week 6 – 7
ULO-a 61
1 – Integer Programming 62
2 – Special-Purpose Algorithm of LP 72
Let’s Check Activity 1 85
Let’s Analyze Activity 1 86
In the Nutshell Activity 1 87
Week 8 – 9
ULO-a 89
1 – Project Management with PERT/CPM 91
2 – Decision Theory 104
3 – Business Forecasting 107
Let’s Check Activity 1 112
Let’s Analyze Activity 1 113
In the Nutshell Activity 1 114
Course Schedules 116

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Week 1-3: Unit Learning Outcomes (ULO):

At the end of the unit, you are expected to
a. Apply the graphical solution of linear programming in solving real-
world problems.

Big Picture in Focus

ULO-a. Apply the graphical solution of linear programming in
solving real-world problems.

Metalanguage

In this section, the essential terms relevant to the study of the nature of
Mathematics and to demonstrate ULO-a will be operationally defined to establish a
common frame of reference as to how the texts work. You will encounter these terms
as we go through the study of the nature of mathematics. Please refer to these
definitions in case you will encounter difficulty in understanding some concepts.

1. Definitions of Operations Research

Operations research (OR) is an analytical method of problem-solving and
decision-making that is useful in the management of organizations. In
operations research, problems are broken down into basic components and
then solved in defined steps by mathematical analysis.

2. The Process of Operations Research

The process of operations research can be broadly broken down into the
following steps:
1) Identifying a problem that needs to be solved.
2) Constructing a model around the problem that resembles the real world
and variables.
3) Using the model to derive solutions to the problem.
4) Testing each solution on the model and analyzing its success.
5) Implementing the solution to the actual problem.

3. Characteristics of Operations Research

There are three primary characteristics of all operations research efforts:
a) Optimization - The purpose of operations research is to achieve the best
performance under the given circumstances. Optimization also involves
comparing and narrowing down potential options.

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

b) Simulation - This involves building models or replications in order to try

out and test solutions before applying them.
c) Probability and statistics- This includes using mathematical algorithms
and data to uncover helpful insights and risks, make reliable predictions and
test possible solutions.

4. Uses of Operations Research

Operations research can be applied to a variety of use cases, including:
• Scheduling and time management
• Urban and agricultural planning
• Enterprise resource planning (ERP) and supply chain management
(SCM)
• Inventory management
• Network optimization and engineering
• Packet routing optimization
• Risk management

5. Linear Programming
Linear programming is an optimization technique for a system of linear
constraints and a linear objective function. An objective function defines the
quantity to be optimized, and the goal of linear programming is to find the
values of the variables that maximize or minimize the objective function.

Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the first three
(3) weeks of the course, you need to fully understand the following essential
knowledge that will be laid down in the succeeding pages. Please note that you are
not limited to refer to these resources exclusively. Thus, you are expected to utilize
other books, research articles, and other resources that are available in the
university’s library e.g., ebrary, search.proquest.com, etc.

1. Overview of Operations Research

The first formal activities of Operations Research (OR) were initiated in
England during World War II, when a team of British scientists set out to make
scientifically based decisions regarding the best utilization of war materiel. After the
war, the ideas advanced in military operations were adapted to improve efficiency
and productivity in the civilian sector.
This unit will familiarize you with the basic terminology of operations research,
including mathematical modeling, feasible solutions, optimization, and iterative
computations. You will learn that defining the problem correctly is the most important

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

(and most difficult) phase of practicing OR. It also emphasizes that, while
mathematical modeling is a cornerstone of OR, intangible (unquantifiable) factors
(such as human behavior) must be accounted for in the final decision.

1.1 Operations Research Models

Imagine that you have a 5-week business commitment between Manila (MNL)
and Davao (DVO). You fly out of Manila on Mondays and return on Wednesdays. A
regular round-trip ticket costs P4000, but a 20% discount is granted if the dates of
the ticket span a weekend. A one-way ticket in either direction costs 75% of the
regular price. How should you buy the tickets for the 5-week period?
We can look at the situation as a decision-making problem whose solution
requires answering three questions:
1. What are the decision alternatives?
2. Under what restrictions is the decision made?
3. What is an appropriate objective criterion for evaluating the alternatives?

Three alternatives are considered:

1. Buy five regular MNL-DVO-MNL for departure on Monday and return on
Wednesday of the same week.
2. Buy one MNL-DVO, four DVO-MNL-DVO that span weekends, and one
DVO-MNL.
3. Buy one MNL-DVO-MNL to cover Monday of the first week and
Wednesday of the last week and four DVO-MNL-DVO to cover the remaining legs.
All tickets in this alternative span at least one weekend.
The restriction on these options is that you should be able to leave FYV on
Monday and return on Wednesday of the same week.
An obvious objective criterion for evaluating the proposed alternative is the
price of the tickets. The alternative that yields the smallest cost is the best.
Specifically, we have
Alternative 1 cost = 5 X 4000 = P20,000
Alternative 2 cost = .75 X 4000 + 4 X (.8 X 4000) + .75 X 4000 = P18,800
Alternative 3 cost = 5 X (.8 X 4000) = P16,000
Thus, you should choose alternative 3.

Based on the preceding two examples, the general OR model can be

organized in the following general format:

Maximize or Minimize Objective Function

subject to
Constraints

A solution of the mode is feasible if it satisfies all the constraints. It is optimal

if, in addition to being feasible, it yields the best (maximum or minimum) value of the

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

objective function. In the tickets example, the problem presents three feasible
alternatives, with the third alternative yielding the optimal solution.
Though OR models are designed to "optimize" a specific objective criterion
subject to a set of constraints, the quality of the resulting solution depends on the
completeness of the model in representing the real system. Take, for example, the
tickets model. If one is not able to identify all the dominant alternatives for purchasing
the tickets, then the resulting solution is optimum only relative to the choices
represented in the model. To be specific, if alternative 3 is left out of the model, then
the resulting "optimum" solution would call for purchasing the tickets for P1880,
which is a suboptimal solution. The conclusion is that "the" optimum solution of a
model is best only for that model. If the model happens to represent the real system
reasonably well, then its solution is optimum also for the real situation.

1.2 Solving the OR Model

In OR, we do not have a single general technique to solve all mathematical
models that can arise in practice. Instead, the type and complexity of the
mathematical model dictate the nature of the solution method. For example, the
solution of the tickets problem requires simple ranking of alternatives based on the
total purchasing price.
The most prominent OR technique is linear programming. It is designed for
models with linear objective and constraint functions. Other techniques include
integer programming (in which the variables assume integer values), dynamic
programming (in which the original model can be decomposed into more
manageable subproblems), network programming (in which the problem can be
modeled as a network), and nonlinear programming (in which functions of the model
are nonlinear). These are only a few among many available OR tools.
A peculiarity of most OR techniques is that solutions are not generally
obtained in (formula-like) closed forms. Instead, they are determined by algorithms.
An algorithm provides fixed computational rules that are applied repetitively to the
problem, with each repetition (called iteration) moving the solution closer to the
optimum. Because the computations associated with each iteration are typically
tedious and voluminous, it is imperative that these algorithms be executed on the
computer.
Some mathematical models may be so complex that it is impossible to solve
them by any of the available optimization algorithms. In such cases, it may be
necessary to abandon the search for the optimal solution and simply seek a good
solution using heuristics or rules of thumb.

1.3 Queuing and Simulation Models

Queuing and simulation deal with the study of waiting lines. They are not
optimization techniques; rather, they determine measures of performance of the
waiting lines, such as average waiting time in queue, average waiting time for
service, and utilization of service facilities.
Queuing models utilize probability and stochastic models to analyze waiting
lines, and simulation estimates the measures of performance by imitating the

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

behavior of the real system. In a way, simulation may be regarded as the next best
thing to observing a real system. The main difference between queuing and
simulation is that queuing models are purely mathematical, and hence are subject
to specific assumptions that limit their scope of application. Simulation, on the other
hand, is flexible and can be used to analyze practically any queuing situation.
The use of simulation is not without drawbacks. The process of developing
simulation models is costly in both time and resources. Moreover, the execution of
simulation models, even on the fastest computer, is usually slow.

1.4 Art of Modeling

To illustrate levels of abstraction in modeling, consider the Orobox
Manufacturing Company, where a variety of plastic containers are produced. When
a production order is issued to the production department, necessary raw materials
are acquired from the company's stocks or purchased from outside sources. Once
the production batch is completed, the sales department takes charge of distributing
the product to customers.
A logical question in the analysis of Orobox’s situation is the determination of
the size of a production batch. How can this situation be represented by a model?
Looking at the overall system, a number of variables can bear directly on the
level of production, including the following (partial) list categorized by departments.
1. Production Department: Production capacity expressed in terms of
available machine and labor hours, in-process inventory, and quality control
standards.
2. Materials Department: Available stock of raw materials, delivery
schedules from outside sources, and storage limitations.
3. Sales Department: Sales forecast, capacity of distribution facilities,
effectiveness of the advertising campaign, and effect of competition.

Each of these variables affects the level of production at Orobox. Trying to

establish explicit functional relationships between them and the level of production
is a difficult task indeed.
A first level of abstraction requires defining the boundaries of the assumed
real world. With some reflection, we can approximate the real system by two
dominant variables:
1. Production rate
2. Consumption rate
Determination of the production rate involves such variables as production capacity,
quality control standards, and availability of raw materials. The consumption rate is
determined from the variables associated with the sales department. In essence,
simplification from the real world to the assumed real world is achieved by "lumping"
several real-world variables into a single assumed-real-world variable.
It is easier now to abstract a model from the assumed real world. From the
production and consumption rates, measures of excess or shortage inventory can
be established. The abstracted model may then be constructed to balance the
conflicting costs of excess and shortage inventory-i.e., to minimize the total cost of
inventory.

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

1.5 Phases of an OR Study

An OR study is rooted in teamwork, where the OR analysts and the client
work side by side. The OR analysts' expertise in modeling must be complemented
by the experience and cooperation of the client for whom the study is being carried
out.
As a decision-making tool, OR is both a science and an art. It is a science by
virtue of the mathematical techniques it embodies, and it is an art because the
success of the phases leading to the solution of the mathematical model depends
largely on the creativity and experience of the operations research team. Willemain
(1994) advises that "effective [OR] practice requires more than analytical
competence: It also requires, among other attributes, technical judgement (e.g.,
when and how to use a given technique) and skills in communication and
organizational survival."
It is difficult to prescribe specific courses of action (similar to those dictated
by the precise theory of mathematical models) for these intangible factors. We can,
however, offer general guidelines for the implementation of OR in practice.
The principal phases for implementing OR in practice include
1. Definition of the problem
2. Construction of the model
3. Solution of the model
4. Validation of the model
5. Implementation of the solution.

Phase 3, dealing with model solution, is the best defined and generally the
easiest to implement in an OR study, because it deals mostly with precise
mathematical models. Implementation of the remaining phases is more an art than
a theory.
Problem definition involves defining the scope of the problem under
investigation. This function should be carried out by the entire OR team. The aim is
to identify three principal elements of the decision problem: (1) description of the
decision alternatives, (2) determination of the objective of the study, and (3)
specification of the limitations under which the modeled system operates.
Model construction entails an attempt to translate the problem definition into
mathematical relationships. If the resulting model fits one of the standard
mathematical models, such as linear programming, we can usually reach a solution
by using available algorithms. Alternatively, if the mathematical relationships are too
complex to allow the determination of an analytic solution, the OR team may opt to
simplify the model and use a heuristic approach, or they may consider the use of
simulation, if appropriate. In some cases, mathematical, simulation, and heuristic
models may be combined to solve the decision problem.
Model solution is by far the simplest of all OR phases because it entails the
use of well-defined optimization algorithms. An important aspect of the model

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

solution phase is sensitivity analysis. It deals with obtaining additional information

about the behavior of the optimum solution when the model undergoes some
parameter changes. Sensitivity analysis is particularly needed when the parameters
of the model cannot be estimated accurately. In these cases, it is important to study
the behavior of the optimum solution in the neighborhood of the estimated
parameters.
Model Validity checks whether or not the proposed model does what it
purports to do-that is, does it predict adequately the behavior of the system under
study? Initially, the OR team should be convinced that the model's output does not
include "surprises." In other words, does the solution make sense? Are the results
intuitively acceptable? On the formal side, a common method for checking the
validity of a model is to compare its output with historical output data. The model is
valid if, under similar input conditions, it reasonably duplicates past performance.
Generally, however, there is no assurance that future performance will continue to
duplicate past behavior. Also, because the model is usually based on careful
examination of past data, the proposed comparison is usually favorable. If the
proposed model represents a new (non-existing) system, no historical data would
be available. In such cases, we may use simulation as an independent tool for
verifying the output of the mathematical model.
Implementation of the solution of a validated model involves the translation of
the results into understandable operating instructions to be issued to the people who
will administer the recommended system. The burden of this task lies primarily with
the OR team.

2. Modeling with Linear Programming

Linear programming (LP) is an application of matrix algebra used to solve a
broad class of problems that can be represented by a system of linear equations. A
linear equation is an algebraic equation whose variable quantity or quantities are in
the first power only and whose graph is a straight line. LP problems are
characterized by an objective function that is to be maximized or minimized, subject
to a number of constraints. Both the objective functions and the constraints must be
formulated in terms of a linear equality or inequality. Typically, the objective function
will be to maximize profits or to minimize costs.

Properties of the LP Models

The following assumptions must be satisfied to justify the use of linear
programming:
Linearity – all functions, such as costs, prices, and technological
requirements, must be linear in nature.
Certainty – all parameters are assumed to be known with certainty.
Nonnegativity – negative values of decision variables are unacceptable.

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Proportionality – This property requires the contribution of each decision

variable in both the objective function and the constraints to be directly proportional
to the value of the variable.
Additivity – This property requires the total contribution of all the variables in
the objective function and in the constraints to be the direct sum of the individual
contributions of each variable

The LP model, as in any OR model, has three basic components.

1. Decision variables that we seek to determine.
2. Objective (goal) that we need to optimize (maximize or minimize).
3. Constraints that the solution must satisfy.

2.1 Graphical LP Solution

The steps in solving an LP problem graphically are introduced briefly below.

Step 1. Formulate the LP problem.

Formulation refers to translating the real-world problem into a format of
mathematical equations that represent the objective function and the constraint set.
Often, data gathering, problem definition, and problem formulation are the most
important (and the most difficult, time consuming, and expensive) steps when using
any OR tool.
A thorough understanding of the problem is necessary in order to formulate it
correctly. During the formulation stage, an OR specialist may discover new insights
into the problem that may change the scope of the original problem. For this reason,
it’s very important to obtain the help of those who work most closely with the system
being studied. They can help the OR specialist collect the necessary data and
correctly define the problem so that he or she can create a valid model. In formulating
an LP problem, it often helps to put all of the relevant information into a table.
Step 2. Construct a graph and plot the constraint lines.
Constraint lines represent the limitations on available resources. Usually,
constraint lines are drawn by connecting the horizontal and vertical intercepts found
from each constraint equation.
Step 3. Determine the valid side of each constraint line.
The simplest way to start is to plug in the coordinates of the origin (0,0) and
see whether this point satisfies the constraint. If it does, then all points on the origin
side of the line are feasible (valid), and all points on the other side of the line are
infeasible (invalid). If (0,0) does not satisfy the constraint, then all points on the other
side and away from the origin are feasible (valid), and all points on the origin side of
the constraint line are infeasible (invalid).
Step 4. Identify the feasible solution region.
The feasible solution region represents the area on the graph that is valid for
all constraints. Choosing any point in this area will result in a valid solution.

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Step 5. Plot two objective function lines to determine the direction of

improvement.
Improvement is in the direction of greater value when the objective is to
maximize the objective function, and is in the direction of lesser value when the
objective is to minimize the objective function. The objective function lines do not
have to include any of the feasible region to determine the desirable direction to
move.
Step 6. Find the most attractive corner.
Optimal solutions always occur at corners. The most attractive corner is the
last point in the feasible solution region touched by a line that is parallel to the two
objective function lines drawn in step 5 above. When more than one corner
corresponds to an optimal solution, each corner and all points along the line
connecting the corners correspond to optimal solutions.
Step 7. Determine the optimal solution by algebraically calculating
coordinates of the most attractive corner.

Step 8. Determine the value of the objective function for the optimal
solution.

Example.
The company uses wood and labor to produce tables and chairs. Recall that
unit profit for tables is ₱6, and unit profit for chairs is ₱8. There are 300 board feet
(bf) of wood available, and 110 hours of labor available. It takes 30 bf and 5 hours to
make a table, and 20 bf and 10 hours to make a chair. Table 1 contains the
information for the LP problem. We will go through the step-by-step process of
solving this problem graphically.

Resource Table (X1) Chair (X2) Available

Wood (bf) 30 20 300
Labor (hr) 5 10 110
Unit Profit 6 8

Solution.
Step 1. Formulate the LP problem.
Table 1 will help us formulate the problem. The bottom row is used to formulate
the objective function. Objective functions are developed in such a way as to be
either maximized or minimized. In this case, the company’s management wishes to
maximize unit profit. The wood and labor rows are used to formulate the constraint
set. Finally, the nonnegativity conditions are stated.
Maximize: Z = 6X1 + 8X2 (objective function)
Subject to:
30X1 + 20X2 < 300 (wood constraint: 300 bf available)

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5X1 + 10X2 < 110 (labor constraint: 110 hours available)

X1, X2 > 0 (nonnegativity conditions)
Since only two variables (wood and labor) exist in this problem, it can be solved
graphically. If there were more than two variables, the graph would have to be more
than two dimensions.

Step 2. Construct the graph and plot constraint lines.

Draw the graph with the x axis representing the number of tables and the y axis
representing the number of chairs. Plot the two constraint lines by finding the x and
y intercepts for the two constraint equations in the following manner.
First, rewrite the constraint inequalities as equalities and solve to obtain the
intercepts:
Wood: Labor:
30 X1 + 20 X 2 = 300 5 X1 + 10 X 2 = 110
Set X2 = 0 and solve for X1: Set X2 = 0 and solve for X1:
30 X1 = 300 5 X1 = 110
X1 = 10 tables X1 = 22 tables
Next, set X1 = 0 and solve for X2: Next, set X1 = 0 and solve for X2:
20 X 2 = 300 10 X 2 = 110
X 2 = 15 chairs X 2 = 11 chairs

Now plot the wood constraint line, using the intercepts X1 = 10 and X2 = 15.
Plot the labor constraint line, using the intercepts X1 = 22 and X2 = 11. See Figure
below.

Step 3. Determine the valid side of each constraint line.

We will use the origin (0,0) to check the valid side for both constraint lines.
30(0) + 20(0) < 300 is valid, so we know the side toward the origin (0,0) is the valid
side of the wood constraint line. 5(0) + 10(0) < 110 also is valid, so we know the side
toward the origin (0,0) is the valid side of the labor constraint line. We can draw
arrows indicating the valid side of each constraint line. See figure below.
We could have chosen any point to test for the valid side of the line. For
example, setting X1 = 20 and X2 = 10 (clearly on the other side, away from the origin)

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for the wood constraint line, we get 30(20) + 20(10) < 300, which is not valid. In other
words, there simply isn’t enough wood to make 20 tables and 10 chairs.

Step 4. Identify the feasible region.

The feasible region is the area on the valid side of both constraint lines. Any
point located on the invalid side of a constraint line is infeasible. Because of the
nonnegativity conditions, the feasible region is restricted to the positive quadrant.
See figure above.
Step 5. Plot two objective function lines to determine the direction of
improvement.
First, we’ll arbitrarily set profit, Z = 48, and then set profit, Z = 72. We’ll find the
x and y intercepts when Z = 48 and when Z = 72, and plot the two lines.
Set Z = 48, Set Z = 72,
Set X2 = 0 and solve for X1: Set X2 = 0 and solve for X1:
48 = 6 ( X1 ) 72 = 6 ( X1 )
X1 = 8 X1 = 12
Next, set X1 = 0 and solve for X2: Next, set X1 = 0 and solve for X2:
48 = 8 X 2 72 = 8 X 2
X2 = 6 X2 = 9

Now plot the objective function lines when Z = 48 and Z = 72. See figure below.
We can see from the two objective function lines that as we move away from the
origin (0,0), Z increases.

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Step 6. Find the most attractive corner.

Since we want to maximize Z, we will draw a line parallel to the objective
function lines that touches the last point in the feasible region while moving away
from the origin. This identifies the most attractive corner, which gives us the amounts
of wood and labor that will result in the maximum profit (maximize Z). Thus, it
represents the optimal solution to the problem (see figure below).

Step 7. Determine the optimal solution by algebraically calculating

coordinates of the most attractive corner.
The most attractive corner lies at the intersection of the wood and labor
constraint lines. Therefore, coordinates for the most attractive corner can be found
by simultaneously solving the constraint equations (wood and labor):
30X1 + 20X2 = 300 (wood)
5X1 + 10X2 = 110 (labor)

To do so, multiply the labor equation by -2 and add it to the wood equation so
the X2 variable becomes zero and we can solve for X1.
30 X1 + 20 X 2 = 300 (wood)
−2 ( 5 X1 + 10 X 2 = 110 ) (labor)
20 X1 + 0 = 80
X1 = 4 tables

Next, substitute the number of tables calculated above into either of the
constraint equations to find the number of chairs. For this example, we will substitute
into both equations to illustrate that the same value is found.
Wood constraint: Labor constraint:
30 ( 4 ) + 20 X 2 = 300 5 ( 4 ) + 10 X 2 = 110
120 + 20 X 2 = 300 20 + 10 X 2 = 110
20 X 2 = 300 − 120 10 X 2 = 110 − 20
X 2 = 9 chairs X 2 = 9 chairs

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Thus, the company’s optimal solution is to make four tables and nine chairs. In this
case, you could read this solution off the graph by finding the values on the x and y
axes corresponding to the most attractive corner. However, when the most attractive
corner corresponds to an optimal solution with fractions, it is not possible to read
directly from the graph. For example, the optimal solution to this problem might have
been 3.8 tables and 9.2 chairs, which we probably would not be able to read
accurately from the graph.

Step 8. Determine the value of the objective function for the optimal
solution. Plug in the number of tables and chairs and solve for Z:
Z = ₱6(4) + ₱8(9) = ₱96
Thus, we find that maximum profit of ₱96 can be obtained by producing four tables
and nine chairs.

1) Taha, H. (2012). Operations research: an introduction. Pearson Education.

2) Kolluri, B., Panik, M. J., & Singamsetti, R. N. (2016). Introduction to quantitative

methods in business: With applications using microsoft office excel.
Retrieved from https://ebookcentral.proquest.com

3) Baker, K. R. (2015). Optimization modeling with spreadsheets. Retrieved from

https://ebookcentral.proquest.com

4) Ramamurthy, P. (2000). Operations research. Retrieved from

https://ebookcentral.proquest.com

5) Guiasu, S. (2009). Probablistic models in operations research. Retrieved from

https://ebookcentral.proquest.com

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Activity 1. Now that you know the most essential concepts operations research. Let
us try to check your understanding of these concepts by answering the
following questions.

1. Determine the feasible space for each of the following independent constraints,
given that X1, X2 ≥ 0.

a) –3X1 + X2 ≤ 6
b) X1 – 2X2 ≥ 5
c) 2X1 – 3X2 ≤ 12
d) X1 – X2 ≤ 0
e) –X1 + X2 ≥ 0

2. Identify the direction of increase in z in each of the following cases:

a) Maximize Z = X1 – X2
b) Maximize Z = –5X1 – 6X2
c) Maximize Z = –X1 + 2X2
d) Maximize z = –3X1+ X2

3. Amy, Jim, John, and Kelly are standing on the east bank of a river and wish to
cross to the west side using a canoe. The canoe can hold at most two people at
a time. Amy, being the most athletic, can row across the river in 1 minute. Jim,
John, and Kelly would take 2, 5, and 10 minutes, respectively. If two people are
in the canoe, the slower person dictates the crossing time. The objective is for all
four people to be on the other side of the river in the shortest time possible.
a) Identify at least two feasible plans for crossing the river (remember, the canoe
is the only mode of transportation and it cannot be shuttled empty).
b) Define the criterion for evaluating the alternatives.
c) What is the smallest time for moving all four people to the other side of the
river?

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Activity 1. Getting acquainted with the essential terms and concepts of

operations research, what also matters is you should also be able to
apply these concepts in solving problems. Solve the following
problems graphically.

1. Royal Co. manufactures aluminum sheets and aluminum bars. The maximum
production capacity is estimated at either 800 sheets or 600 bars per day. The
maximum daily demand is 550 sheets and 580 bars. The profit per ton is ₱40 per
sheet and ₱35 per bar. Determine the optimal daily production mix.

2. In the Save Mart grocery store, shelf space is limited and must be used effectively
to increase profit. Two cereal items, Oatie and Wheatie, compete for a total shelf
space of 60 ft2. A box of Oatie occupies 0.2 ft2 and a box of Wheatie needs
0.4 ft2. The maximum daily demands of Oatie and Wheatie are 200 and 120
boxes, respectively. A box of Oatie nets ₱1.00 in profit and a box of Wheatie
₱1.35. Save Mart thinks that because the unit profit of Wheatie is 35% higher
than that of Oatie, Wheatie should be allocated 35% more space than Grano,
which amounts to allocating about 57% to Wheatie and 43% to Oatie. What do
you think?

3. Fuji Motorcycles can advertise its products on local radio and television (TV).
The advertising budget is limited to ₱10,000 a month. Each minute of radio
advertising costs ₱15 and each minute of TV commercials ₱300. Show & Sell
likes to advertise on radio at least twice as much as on TV. In the meantime, it is
not practical to use more than 400 minutes of radio advertising a month. From
past experience, advertising on TV is estimated to be 25 times as effective as on
radio. Determine the optimum allocation of the budget to radio and TV
advertising.

4. A furniture company manufactures desks and chairs. The sawing department

cuts the lumber for both products, which is then sent to separate assembly
departments. Assembled items are sent for finishing to the painting department.
The daily capacity of the sawing department is 200 chairs or 80 desks. The chair
assembly department can produce 120 chairs daily and the desk assembly
department 60 desks daily. The paint department has a daily capacity of either
150 chairs or 110 desks. Given that the profit per chair is ₱50 and that of a desk
is ₱100, determine the optimal production mix for the company.

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Activity 1. Based from the definition of the most essential terms and concepts in
the study of sets and the learning exercises that you have done,
please feel free to write your arguments or lessons learned below.

1.

2.

3.

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Do you have any question for clarification?

Questions / Issues Answers

1.

2.

3.

4.

5.

Operations Research Linear Programming Objective Function

Constraints Maximize Minimize
Graphical solution Feasible region Coordinate axes
Corner points Optimal solution Linearity
Certainty Non-negativity Decision variables

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Week 4-5: Unit Learning Outcomes (ULO):

At the end of the unit, you are expected to
a. Solve system of linear equations using Gauss Elimination.
b. Solve optimization problems using simplex method.

Big Picture in Focus

ULO-a. Solve system of linear equations using Gauss-Jordan
elimination.

Metalanguage

In this section, the essential terms relevant to the study of the nature of
Mathematics and to demonstrate ULO-a will be operationally defined to establish a
common frame of reference as to how the texts work. You will encounter these terms
as we go through the study of the nature of mathematics. Please refer to these
definitions in case you will encounter difficulty in understanding some concepts.

1. Linear Equation
Linear equation is an algebraic equation in which each term has an exponent
of one and the graphing of the equation results in a straight line. An example of
linear equation is y = mx + b.
In other words, an equation in the unknowns x, y, z,... is called linear if both
sides of the equation are a sum of (constant) multiples of x, y, z,..., plus an optional
constant. For instance, 3x + 4y = 2z – x – z = 100 are linear equations, but 3x + yz
= 3sin(x) − cos(y) = 2 are not.

2. System of Linear Equations

A system of linear equations is when we have two or more linear
equations working together.
A system of linear equations is a collection of several linear equations, like
 x + 2y + 3z = 6

2 x − 3 y + 2z = 14
 3 x + y − z = −2

A solution of a system of equations is a list of numbers x, y, z,... that make
all of the equations true simultaneously. The solution set of a system of equations is

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the collection of all solutions. Solving the system means finding all solutions with
formulas involving some number of parameters.
A system of linear equations need not have a solution. For example, there do
not exist numbers x and y making the following two equations true simultaneously:
 x + 2y = 3
 .
 x + 2 y = −3

In this case, the solution set is empty. As this is a rather important property
of a system of equations, it has its own name. A system of equations is
called inconsistent if it has no solutions. It is called consistent otherwise.

3. Gauss-Jordan Elimination
A method of solving a linear system of equations. This is done by
transforming the system’s augmented matrix into reduced row-echelon form by
means of row operations.

Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the fourth
and fifth weeks of the course, you need to fully understand the following essential
knowledge that will be laid down in the succeeding pages. Please note that you are
not limited to refer to these resources exclusively. Thus, you are expected to utilize
other books, research articles, and other resources that are available in the
university’s library e.g., ebrary, search.proquest.com, etc.

1. Review of Linear Algebra

Linear algebra is the study of linear sets of equations and their transformation
properties. Linear algebra allows the analysis of rotations in space, least squares
fitting, solution of coupled differential equations, determination of a circle passing
through three given points, as well as many other problems in mathematics, physics,
and engineering. Confusingly, linear algebra is not actually an algebra in the
technical sense of the word "algebra".
The matrix and determinant are extremely useful tools of linear algebra. One
central problem of linear algebra is the solution of the matrix equation
Ax = b
for x. While this can, in theory, be solved using a matrix inverse
Ax-1 = b,
other techniques such as Gaussian elimination are numerically more robust.
In addition to being used to describe the study of linear sets of equations, the
term "linear algebra" is also used to describe a particular type of algebra. In

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particular, a linear algebra L over a field F has the structure of a ring with all the usual
axioms for an inner addition and an inner multiplication together with distributive
laws, therefore giving it more structure a ring. A linear algebra also admits an outer
operation of multiplication by scalars (that are elements of the underlying field).
example, the set of all linear transformations from a vector space V to itself over a
field F forms a linear algebra over F. Another example of a linear algebra is the set
of all real square matrices over the field  of the real numbers.

2. Systems of Linear Equations

A system of equations is a collection of two or more equations with a same
set of unknowns. In solving a system of equations, we try to find values for each of
the unknowns that will satisfy every equation in the system.
The equations in the system can be linear or non-linear. This tutorial reviews
systems of linear equations.
The problem can be expressed in narrative form or the problem can be
expressed in algebraic form.

Example of a narrative statement of a system of the equations:

The air-mail rate for letters to Europe is 45 cents per half-ounce and to Africa as 65
cents per half-ounce. If Shirley paid ₱18.55 to send 35 half-ounce letters abroad,
how many did she send to Africa?

Example of an algebraic statement of the same system of the equations:

0.45 x + 0.65y = 18.55

x + y = 35

A system of linear equations can be solved four different ways:

• Substitution
• Gaussian Elimination
• Matrices
• Graphing

In this review, we are going to show you how to convert a narrative statement
of the problem to an equivalent algebraic of the problem. In other words, we are
going to show you how to translate word problems into algebraic equations.

a. Systems of Equations in Two Variables

A system of equations is a collection of two or more equations with the same
set of unknowns. In solving a system of equations, we try to find values for each of
the unknowns that will satisfy every equation in the system.
A problem can be expressed in narrative form or the problem can be
expressed in algebraic form.

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Let's start with an example stated in narrative form. We'll convert it to an

equivalent equation in algebraic form, and then we will solve it.
Example.
A total of ₱12,000 is invested in two funds paying 9% and 11% simple interest.
If the yearly interest is ₱1,180, how much of the ₱12,000 is invested at each rate?

Before you work this problem, you must know the definition of simple interest.
Simple interest can be calculated by multiplying the amount invested at the interest
rate.
Solution:
We have two unknowns: the amount of money invested at 9% and the amount
of money invested at 11%. Our objective is to find these two numbers.

Sentence (1) ''A total of ₱12,000 is invested in two funds paying 9% and 11% simple
interest.'' can be restated as (The amount of money invested at 9%) + (The amount
of money invested at 11%) ₱12,000.

Sentence (2) ''If the yearly interest is ₱1,180, how much of the ₱12,000 is invested
at each rate?'' can be restated as (The amount of money invested at 9%) x 9% +
(The amount of money invested at 11% x 11%) total interest of ₱1,180.

It is going to get tiresome writing the two phrases (The amount of money
invested at 9%) and (The amount of money invested at 11%) over and over again.
So let's write them in shortcut form. Call the phrase (The amount of money invested
at 9%) by the symbol x and call the phrase (The amount of money invested at 11%)
by the symbol y.

Let's rewrite sentences (1) and (2) in shortcut form.

x + y = P12,000 (1)
0.09 x + 0.11y = P1,180 (2)
We have converted a narrative statement of the problem to an equivalent
algebraic statement of the problem. Let's solve this system of equations.

The Method of Substitution:

The method of substitution involves five steps:
Step 1: Solve for y in equation (1).
x + y = P12,000
y = P12,000 − x

Step 2: Substitute this value for y in equation (2). This will change equation
(2) to an equation with just one variable, x.

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0.09 x + 0.11y = P1180

0.09 x + 0.11( P12,000 − x ) = P1180
Step 3: Solve for x in the translated equation (2).
0.09 x + 0.11( P12,000 − x ) = P1180
0.09 x + P1,320 − 0.11x = P1180
−0.02x = −P140
x = P 7,000
Step 4: Substitute this value of x in the y equation you obtained in Step 1.
x + y = P12,000
P 7,000 + y = P12,000
y = P 5,000
Step 5: Check your answers by substituting the values of x and y in each of
the original equations. If, after the substitution, the left side of the equation equals
the right side of the equation, you know that your answers are correct.

x + y = P12,000
P 7,000 + P 5,000 = P12,000
and
0.09 x + 0.11y = P1180
0.09 ( P 7,000 ) + 0.11( P 5,000 ) = P1180

The Method of Elimination:

The process of elimination involves five steps:
In a two-variable problem rewrite the equations so that when the equations
are added, one of the variables is eliminated, and then solve for the remaining
variable.
Step 1: Change equation (1) by multiplying equation (1) by –0.09 to obtain a
new and equivalent equation (1).
x + y = P12,000 (1)
0.09 x − 0.09y = −P1,080 new (1)

Step 2: Add new equation (1) to equation (2) to obtain equation (3).
−0.09 x − 0.09 y = −P1,080 new (1)
0.09 x + 0.11y = P1,180 (2)
0.02y = 100 (3)
y = P 5,000
Step 3: Substitute y = P5,000 in equation (1) and solve for x.
x + y = P12,000
x + P 5,000 = P12,000
x = P 7,000

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Step 4: Check your answers in equation (2). Does

0.09 x + 0.11y = P1,180?
0.09 ( P 7,000 ) + 0.11( P 5,000 ) = P1,180

The Method of Matrices:

This method is essentially a shortcut for the method of elimination.
Rewrite equations (1) and (2) without the variables and operators. The left
column contains the coefficients of the x's, the middle column contains the
coefficients of the y's, and the right column contains the constants.
 1 1 12000 (1)
  (2)
0.09 0.11 1180 

The objective is to reorganize the original matrix into one that looks like
1 0 a (1)
  (2)
0 1 b 
where a and b are the solutions to the system.

Step 1. Manipulate the matrix so that the number in cell 11 (row 1-col 1) is 1.
In this case, we don't have to do anything. The number 1 is already in the cell.
Step 2: Manipulate the matrix so that the number in cell 21 is 0. To do this we
rewrite the matrix by keeping row 1 and creating a new row 2 by adding -0.09 x row
1 to row 2.
−0.09 Row 1 + Row 2 = new Row 2
1 1 12000  (1)
  (2)
0 0.02 100 

Step 3: Manipulate the matrix so that the cell 22 is 1. Do this by multiplying

row 2 by 50.
 1 112000  (1)
  (2)
0 1 5000 

Step 4: Manipulate the matrix so that cell 12 is 0. Do this by adding

− Row 2 + Row 1 = new Row 1
 1 0 7000  (1)
  (2)
0 1 5000 

You can read the answers off the matrix as x = P7,000 and y = P5,000.

b. Systems of Equations in Three Variables

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It is often desirable or even necessary to use more than one variable to model
a situation in a field such as business, science, psychology, engineering, education,
and sociology, to name a few. When this is the case, we write and solve a system
of equations in order to answer questions about the situation.
If a system of linear equations has at least one solution, it is consistent. If
the system has no solutions, it is inconsistent. If the system has an infinity number
of solutions, it is dependent. Otherwise it is independent.
A linear equation in three variables is an equation equivalent to the equation
Ax + By + Cz + D = 0
where A, B, C, and D are real numbers and A, B, C, and D are not all 0.

Example.
John inherited ₱25,000 and invested part of it in a money market account,
part in municipal bonds, and part in a mutual fund. After one year, he received a total
of ₱1,620 in simple interest from the three investments. The money market paid 6%
annually, the bonds paid 7% annually, and the mutually fund paid 8% annually. There
was ₱6,000 more invested in the bonds than the mutual funds. Find the amount John
invested in each category.

Solution.
There are three unknowns:
(1) The amount of money invested in the money market account.
(2) The amount of money invested in municipal bonds.
(3) The amount of money invested in a mutual fund.

Let's rewrite the paragraph that asks the question we are to answer.
[The amount of money invested in the money market account + [The amount
of money invested in municipal bonds ] + [The amount of money invested in a mutual
fund = ₱25,000 ].
The 6% interest on [ The amount of money invested in the money market
account ]+ the 7% interest on [ The amount of money invested in municipal bonds ]
+ the 8% interest on [ The amount of money invested in a mutual fund ] = ₱1, 620.
[The amount of money invested in municipal bonds ] - [ The amount of money
invested in a mutual fund ] = ₱6,000.
It is going to get boring if we keep repeating the phrases
(1) The amount of money invested in the money market account.
(2) The amount of money invested in municipal bonds.
(3) The amount of money invested in a mutual fund.
Let's create a shortcut by letting symbols represent these phrases. Let
x = The amount of money invested in the money market account.
y = The amount of money invested in municipal bonds.
z = The amount of money invested in a mutual fund.

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in the three sentences, and then rewrite them.

The sentence [ The amount of money invested in the money market account
] + [ The amount of money invested in municipal bonds ] + [ The amount of money
invested in a mutual fund ] = ₱25,000 can now be written as x + y + z = ₱25,000.
The sentence The 6% interest on [ The amount of money invested in the
money market account ] + the 7% interest on [ The amount of money invested in
municipal bonds ] + the 8% interest on [ The amount of money invested in a mutual
fund ] = ₱1, 620 can now be written as
0.06x + 0.07y + 0.08z = ₱1, 620.
The sentence [ The amount of money invested in municipal bonds ] – [ The
amount of money invested in a mutual fund ] = P6,000 can now be written as y – z
= ₱6,000.
We have converted the problem from one described by words to one that is
described by three equations.
x + y + z = P 25,000 (1)
0.06 x + 0.07 y + 0.08z = P1,620 (2)
y − z = P 6,000 (3)

Matrix Solution
The process of using matrices is essentially a shortcut of the process of
elimination. Each row of the matrix represents an equation and each column
represents coefficients of one of the variables.
Step 1: Create a three-row by four-column matrix using coefficients and the
constant of each equation.
 1 1 1 25,000 
 
0.06 0.07 0.08 1,620 
 0 1 −1 6,000 
The vertical lines in the matrix stands for the equal signs between both sides
of each equation. The first column contains the coefficients of x, the second column
contains the coefficients of y, the third column contains the coefficients of z, and the
last column contains the constants.
We want to convert the original matrix
 1 1 1 25,000 
 
0.06 0.07 0.08 1,620 
 0 1 −1 6,000 
to the following matrix.
1 0 0 a 
 
0 1 0 b 
0 0 1 c 
Because then you can read the matrix as x = a, y = b, and z = c.

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Step 2: We work with column 1 first. The number 1 is already in cell 11(Row 1
– Col 1). Add –0.06 times Row 1 to Row 2 to form a new Row 2.
−0.06 Row 1 + Row 2 = new Row 2
1 1 1 25,000 
 
0 0.01 0.02 120 
0 1 −1 6,000 
Step 3: We will now work with column 1. We want 1 in Cell 22, and we achieve
this by multiply Row 2 by .
100 Row 2 = new Row 2
 1 1 1 25,000 
 
0 1 2 12,000 
0 1 −1 6,000 
Step 4: Let's now manipulate the matrix so that there are zeros in Cell 12 and
Cell 32. We do this by adding –1 times Row 2 to Row 1 and Row 3 for a new Row 1
and a new Row 3.
− Row 2 + Row 1 = new Row 1
− Row 2 + Row 3 = new Row 3
 1 0 −113,000 
 
0 1 2 12,000 
0 1 −1 2,000 
Step 5: Let's now manipulate the matrix so that there is a 1 in Cell 33. We do
this by multiplying Row 3 by –1.
−1Row 3 = new Row 3
 1 0 −113,000 
 
0 1 2 12,000 
0 1 1 2,000 
Step 6: Let's now manipulate the matrix so that there are zeros in Cell 13 and
Cell 23. We do this by adding Row 3 to Row 1 for a new Row 1 and adding –2 times
Row 3 to Row 2 for a new Row 3.
1Row 3 + Row 1 = new Row 1
−2 Row 3 + Row 2 = new Row 2
 1 0 0 15,000 
 
0 1 0 8,000 
0 1 1 2,000 

You can now read the answers off the matrix:

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x = ₱15,000, y = ₱8,000, and z = ₱2,000.

1) Taha, H. (2012). Operations research: an introduction. Pearson Education.

2) Kolluri, B., Panik, M. J., & Singamsetti, R. N. (2016). Introduction to quantitative methods
in business: With applications using microsoft office excel. Retrieved
from https://ebookcentral.proquest.com

3) Baker, K. R. (2015). Optimization modeling with spreadsheets. Retrieved from

https://ebookcentral.proquest.com

4) Ramamurthy, P. (2000). Operations research. Retrieved from

https://ebookcentral.proquest.com

5) Guiasu, S. (2009). Probablistic models in operations research. Retrieved from

https://ebookcentral.proquest.com

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Activity 1. Now that you know the concepts of the system of linear equations.
Let us try to check your understanding of these concepts by
answering the following questions.

Translate the following word problems into its equivalent system of equations.

1. The sum of two numbers is 79, and their difference is 23. What are the two numbers?

2. A minor league ballpark attracts 88 fans and draws in ₱553 in revenue from ticket
sales. A child's ticket costs ₱4 and an adult's ticket is ₱7. How many of each type of
ticket were sold?
3. A woman owns 21 pets. Each of her pets is either a cat or a bird. If the pets have
a total of 76 legs, and assuming that none of the bird's legs are protruding from
any of the cats' jaws, how many cats and how many birds does the woman own?
4. The Lopez family had a rectangular garden with a 20-foot perimeter. They
enlarged their garden to be twice as long and three feet wider than it was
originally. They had to, since their cherry tomato plants were getting out of control.
The enlarged garden has a 40-foot perimeter. What were the dimensions of the
original garden?
5. Sarah buys 2 pounds of jellybeans and 4 pounds of chocolates for ₱4.00. She
then buys 1 pound of jellybeans and 4 pounds of caramels for ₱3.00. She also
buys 1 pound of jellybeans, 3 pounds of licorice and 1 pound of caramels
for ₱1.50. How much will it cost to buy 1 pound of each of the four candies?
6. The sum of three numbers is 14. The largest is 4 times the smallest, while the
sum of the smallest and twice the largest is 18. Find the numbers.
7. How many gallons of 20% alcohol solution and 50% alcohol solution must be
mixed to get 9 gallons of 30% alcohol solution?
8. An airplane flying with the wind can cover a certain distance in 2 hours. The return
trip against the wind takes 2.5 hours. How fast is the plane and what is the speed
of the air, if the one-way distance is 600 miles?
9. A student has money in three accounts that pay 5%, 7%, and 8%, in annual
interest. She has three times as much invested at 8% as she does at 5%. If the
total amount she has invested is $1600 and her interest for the year comes to
$115, how much money does she have in each account?
10. It takes a boat 2 hours to travel 24 miles downstream and 3 hours to travel 18
miles upstream. What is the speed of the boat in still water and of the current of
the river?

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Activity 1. Getting acquainted with the essential terms and concepts of the
system of linear equations, what also matters is you should also be
able to apply these concepts in solving problems. Solve the following
problems by the different methods.

1. The sum of two numbers is 79, and their difference is 23. What are the two numbers?
2. A minor league ballpark attracts 88 fans and draws in ₱553 in revenue from ticket
sales. A child's ticket costs ₱4 and an adult's ticket is ₱7. How many of each type of
ticket were sold?
3. A woman owns 21 pets. Each of her pets is either a cat or a bird. If the pets have
a total of 76 legs, and assuming that none of the bird's legs are protruding from
any of the cats' jaws, how many cats and how many birds does the woman own?
4. The Lopez family had a rectangular garden with a 20-foot perimeter. They
enlarged their garden to be twice as long and three feet wider than it was
originally. They had to, since their cherry tomato plants were getting out of control.
The enlarged garden has a 40-foot perimeter. What were the dimensions of the
original garden?
5. Sarah buys 2 pounds of jellybeans and 4 pounds of chocolates for ₱4.00. She
then buys 1 pound of jellybeans and 4 pounds of caramels for ₱3.00. She also
buys 1 pound of jellybeans, 3 pounds of licorice and 1 pound of caramels
for ₱1.50. How much will it cost to buy 1 pound of each of the four candies?
6. The sum of three numbers is 14. The largest is 4 times the smallest, while the
sum of the smallest and twice the largest is 18. Find the numbers.
7. How many gallons of 20% alcohol solution and 50% alcohol solution must be
mixed to get 9 gallons of 30% alcohol solution?
8. An airplane flying with the wind can cover a certain distance in 2 hours. The return
trip against the wind takes 2.5 hours. How fast is the plane and what is the speed
of the air, if the one-way distance is 600 miles?
9. A student has money in three accounts that pay 5%, 7%, and 8%, in annual
interest. She has three times as much invested at 8% as she does at 5%. If the
total amount she has invested is ₱1600 and her interest for the year comes to
₱115, how much money does she have in each account?
10. It takes a boat 2 hours to travel 24 miles downstream and 3 hours to travel 18
miles upstream. What is the speed of the boat in still water and of the current of
the river?

34
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Phone No.: (082)300-5456/305-0647 Local 134

Activity 1. Based from the definition of the most essential terms and concepts in
the study of the system of linear equations and the learning exercises
that you have done, please feel free to write your arguments or
lessons learned below.

1.

2.

3.

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Do you have any question for clarification?

Questions / Issues Answers

1.

2.

3.

4.

5.

System of Linear Method of

Linear Algebra
Equations Elimination
Method of
Matrix Solution Augmented Matrix
Substitution
Consistent system Inconsistent system Dependent system
Equation in two Equation in three
Independent system
unknowns unknowns
Roots of the system
Solution set Gaussian Method
of equation

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Big Picture in Focus

ULO-b. Solve optimization problems using simplex method.

Metalanguage

In this section, the essential terms relevant to the study of the nature of
Mathematics and to demonstrate ULO-a will be operationally defined to establish a
common frame of reference as to how the texts work. You will encounter these terms
as we go through the study of the nature of mathematics. Please refer to these
definitions in case you will encounter difficulty in understanding some concepts.

1. Optimization Problem
An optimization problem is the problem of finding the best solution from
all feasible solutions. Optimization problems can be divided into two categories
depending on whether the variables are continuous or discrete. An optimization
problem with discrete variables is known as a discrete optimization. In a discrete
optimization problem, we are looking for an object such as
an integer, permutation or graph from a countable set. Problems with continuous
variables include constrained problems and multimodal problems.
An optimization problem consists in maximizing or minimizing some function
relative to some set, representing a range of choices available in a certain situation.
The function allows comparison of the different choices for determining which might
be best.
More formally we define the optimization problem as
optimize f(x)
x∈S
where optimize stands for min or max f: Rn → R denotes the objective function, that
we assume throughout at least continuously differentiable, and S ⊆ Rn is the feasible
set, namely the set of all admissible choices for x.
In the following we will refer to minimization problems. Indeed the optimal
solution of a maximization problem
max f(x)
x∈S
coincide with the optimal solutions of the minimization problem
min −f(x)
x∈S
and we have: max f(x) = −min (−f(x)).
x∈S x∈S

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The feasible set S is a subset of n and hence x = (x1, x2,..., xn)T is the vector of
variables of dimension n and f is a function of n real values f(x1, x2,..., xn).

2. Simplex Method
The simplex method or simplex algorithm is used for calculating the optimal
solution to the linear programming problem. In other words, the simplex algorithm is
an iterative procedure carried systematically to determine the optimal solution from
the set of feasible solutions.
In this case, the solution set is empty. As this is a rather important property
of a system of equations, it has its own name. A system of equations is
called inconsistent if it has no solutions. It is called consistent otherwise
To apply the simplex method, appropriate variables are introduced in the
linear programming problem, and the primary or the decision variables are equated
to zero. The iterative process begins by assigning values to these defined variables.
The value of decision variables is taken as zero since the evaluation in terms of the
graphical approach begins with the origin. Therefore, x1 and x2 is equal to zero.
The decision maker will enter appropriate values of the variables in the
problem and find out the variable value that contributes maximum to the objective
function and removes those values which give undesirable results. Thus, the value
of the objective function gets improved through this method. This procedure of
substitution of variable value continues until any further improvement in the value of
the objective function is possible.
Following two conditions need to be met before applying the simplex method:
• The right-hand side of each constraint inequality should be non-negative.
In case, any linear programming problem has a negative resource value, then it
should be converted into positive value by multiplying both the sides of constraint
inequality by “-1”.
• The decision variables in the linear programming problem should be non-
negative.
Thus, the simplex algorithm is efficient since it considers few feasible solutions,
provided by the corner points, to determine the optimal solution to the linear
programming problem.

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Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the fourth and
fifth weeks of the course, you need to fully understand the following essential
knowledge that will be laid down in the succeeding pages. Please note that you are
not limited to refer to these resources exclusively. Thus, you are expected to utilize
other books, research articles, and other resources that are available in the
university’s library e.g., ebrary, search.proquest.com, etc.

1. The Simplex Method: Maximization

For linear programming problems involving two variables, the graphical
solution method introduced previously is convenient. However, for problems
involving more than two variables or problems involving a large number of
constraints, it is better to use solution methods that are adaptable to computers. One
such method is called the simplex method, developed by George Dantzig in 1946.
It provides us with a systematic way of examining the vertices of the feasible region
to determine the optimal value of the objective function.
We introduce this method with an example.
Suppose we want to find the maximum value of z = 4x1 + 6x2, where x1 ≥ 0 and
x2 ≥ 0, subject to the following constraints.
− x1 + x2  11
x1 + x2  27
2 x1 + 5 x2  90
Since the left-hand side of each inequality is less than or equal to the right-hand side,
there must exist nonnegative numbers s1, s2, and s3 that can be added to the left
side of each equation to produce the following system of linear equations.
− x1 + x2 + s1 = 11
x1 + x2 + s2 = 27
2x1 + 5 x2 + s3 = 90
The numbers s1, s2, and s3 are called slack variables because they take up the
“slack” in each inequality.
1.1 Standard Form of a Linear Programming Problem
A linear programming problem is in standard form if it seeks to maximize the
objective z = c1x1 + c2x2 + … + cnxn function subject to the constraints
a11x1 + a12 x2 +    + a1n x n  b1
a21x1 + a22 x2 +    + a2n x n  b2

am1x1 + am 2 x2 +    + amn xn  bm
where ai ≥ 0 and bi ≥ 0. After adding slack variables, the corresponding system of
constraint equations is
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a11x1 + a12 x2 +    + a1n x n + s1  b1

a21x1 + a22 x2 +    + a2n x n + s2  b2

am1x1 + am 2 x2 +    + amn xn + sm  bm
where si ≥ 0.
Remark: Note that for a linear programming problem in standard form, the objective
function is to be maximized, not minimized.
A basic solution of a linear programming problem in standard form is a
solution (x1, x2, …, xn, s1, s2, …, sm) of the constraint equations in which at most m
variables are nonzero – the variables that are nonzero are called basic variables.
A basic solution for which all variables are nonnegative is called a basic feasible
solution.

1.2 The Simplex Tableau

The simplex method is carried out by performing elementary row operations on
a matrix that we call the simplex tableau. This tableau consists of the augmented
matrix corresponding to the constraint equations together with the coefficients of the
objective function written in the form
–c1x1 – c2x2 – . . . – cnxn + (0)s1 + (0)s2 + . . . + (0)sm + z = 0.
In the tableau, it is customary to omit the coefficient of z. For instance, the simplex
tableau for the linear programming problem
z = 4 x1 + 6 x2 - Objective Function
− x1 + x2 + s1 = 11 

x1 + x2 + s2 = 27  Contraints
2x1 + 5 x2 + s3 = 90 
is as follows
Basic
x1 x2 s1 s2 s3 b Variables
–1 1 1 0 0 11 s1
1 1 0 1 0 27 s2
2 5 0 0 1 90 s3
–4 -6 0 0 0 0
Current z-value

For this initial simplex tableau, the basic variables are s1, s2, and s3 and the nonbasic
variables (which have a value of zero) are x1 and x2. Hence, from the two columns
that are farthest to the right, we see that the current solution is
x1 = 0, x2 = 0, s1 = 11, s2 = 27, and s3 = 90.

This solution is a basic feasible solution and is often written as

(x1, x2, s1, s2, s3) = (0, 0, 11, 27, 90).

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The entry in the lower–right corner of the simplex tableau is the current value of z.
Note that the bottom–row entries under x1 and x2 are the negatives of the coefficients
of x1 and x2 in the objective function z = 4x1 + 6x2.
To perform an optimality check for a solution represented by a simplex
tableau, we look at the entries in the bottom row of the tableau. If any of these entries
are negative (as above), then the current solution is not optimal.

Pivoting
Once we have set up the initial simplex tableau for a linear programming
problem, the simplex method consists of checking for optimality and then, if the
current solution is not optimal, improving the current solution. (An improved solution
is one that has a larger z-value than the current solution.) To improve the current
solution, we bring a new basic variable into the solution––we call this variable the
entering variable. This implies that one of the current basic variables must leave,
otherwise we would have too many variables for a basic solution––we call this
variable the departing variable. We choose the entering and departing variables as
follows.
1. The entering variable corresponds to the smallest (the most negative) entry
in the bottom row of the tableau.
2. The departing variable corresponds to the smallest nonnegative ratio of
bi/aij in the column determined by the entering variable.
3. The entry in the simplex tableau in the entering variable’s column and the
departing variable’s row is called the pivot. Finally, to form the improved solution,
we apply Gauss-Jordan elimination to the column that contains the pivot, as
illustrated in the following example. (This process is called pivoting.)

Example.
Use the simplex method to find an improved solution for the linear programming
problem represented by the following tableau.

The objective function for this problem is z = 4x1 + 6x2.

Basic
x1 x2 s1 s2 s3 b Variables
–1 1 1 0 0 11 s1
1 1 0 1 0 27 s2
2 5 0 0 1 90 s3
–4 –6 0 0 0 0

Solution.
Note that the current solution x1 = 0, x2 = 0, s1 = 11, s2 = 27, and s3 = 90
corresponds to a z–value of 0. To improve this solution, we determine that x2 is the
entering variable, because –6 is the smallest entry in the bottom row.

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Basic
x1 x2 s1 s2 s3 b Variables
–1 1 1 0 0 11 s1
1 1 0 1 0 27 s2
2 5 0 0 1 90 s3
–4 –6 0 0 0 0
Entering
To see why we choose x2 as the entering variable, remember that z = 4x1 + 6x2.
Hence, it appears that a unit change in x2 produces a change of 6 in z, whereas a
unit change in x1 produces a change of only 4 in z.
To find the departing variable, we locate the bi’s that have corresponding positive
elements in the entering variables column and form the following ratios.
11 27 90
= 11, = 27, = 18
1 1 5
Here the smallest positive ratio is 11, so we choose s1as the departing variable.

Basic
x1 x2 s1 s2 s3 b Variables
–1 1 1 0 0 11 s1 Departing
1 1 0 1 0 27 s2
2 5 0 0 1 90 s3
–4 –6 0 0 0 0
Entering

Note that the pivot is the entry in the first row and second column. Now, we use
Gauss-Jordan elimination to obtain the following improved solution.

Before Pivoting After Pivoting

x1 x2 s1 s2 s3 b x1 x2 s1 s2 s3 b
–1 1 1 0 0 11 –1 1 1 0 0 11
1 1 0 1 0 27 2 0 –1 1 0 16
2 5 0 0 1 90 7 0 –5 0 1 35
–4 –6 0 0 0 0 –10 0 6 0 0 66

The new tableau now appears as follows.

Basic
x1 x2 s1 s2 s3 b Variables
–1 1 1 0 0 11 x2
2 0 –1 1 0 16 s2
7 0 –5 0 1 35 s3
–10 0 6 0 0 66
Note that x2 has replaced s1 in the basis column and the improved solution
(x1, x2, s1, s2, s3) = (0, 11, 0, 16, 35)
has a z-value of z = 4x1 + 6x2 = 4(0) + 6(11) = 66.

The improved solution is not yet optimal since the bottom row still has a negative
entry. Thus, we can apply another iteration of the simplex method to further improve

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our solution as follows. We choose x1 as the entering variable. Moreover, the

11 16 35
smallest nonnegative ratio of = −11, = 8, = 5 is 5, so s3 is the departing
−1 2 7
variable. Gauss-Jordan elimination produces the following.

–1 1 1 0 0 11 –1 1 1 0 0 11
2 0 –1 1 0 16 2 0 –1 1 0 16
7 0 –5 0 1 35 1 0 –5/7 0 1/7 5
–10 0 6 0 0 66 –10 0 6 0 0 66

0 1 2/7 0 1/7 16
0 0 3/7 1 –2/7 6
1 0 –5/7 0 1/7 5
0 0 –8/7 0 10/7 116
Thus, the new simplex tableau is as follows.
Basic
x1 x2 s1 s2 s3 b Variables
0 1 2/7 0 1/7 16 x2
0 0 3/7 1 –2/7 6 s2
1 0 –5/7 0 1/7 5 x1
0 0 –8/7 0 10/7 116

In this tableau, there is still a negative entry in the bottom row. Thus, we choose as
the entering variable and s2 as the departing variable, as shown in the following
tableau.
Basic
x1 x2 s1 s2 s3 b Variables
0 1 2/7 0 1/7 16 s1
0 0 3/7 1 –2/7 6 s2 Departing
1 0 –5/7 0 1/7 5 x1
0 0 –8/7 0 10/7 116
Entering
By performing one more iteration of the simplex method, we obtain the following
tableau.
Basic
x1 x2 s1 s2 s3 b Variables
0 1 0 –2/3 1/3 12 s1
0 0 1 7/3 –2/3 14 s2
1 0 0 5/3 –1/3 15 x1
0 0 0 8/3 2/3 132 Maximum z-value

In this tableau, there are no negative elements in the bottom row. We have therefore
determined the optimal solution to be
(x1, x2, s1, s2, s3) = (15, 12, 14, 0, 0).
with
z = 4x1 + 6x2 = 4(15) + 6(12) = 132.
Remark: Ties may occur in choosing entering and/or departing variables. Should this
happen, any choice among the tied variables may be made.

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2. The Simplex Method: Minimization

In previous section, we applied the simplex method only to linear
programming problems in standard form where the objective function was to be
maximized. In this section, we extend this procedure to linear programming problems
in which the objective function is to be minimized.
A minimization problem is in standard form if the objective function
w = c1x1 + c2x2 + . . . + cnxn
is to be minimized, subject to the constraints
a11x1 + a12 x2 +    + a1n x n  b1
a21x1 + a22 x2 +    + a2n x n  b2

am1x1 + am 2 x2 +    + amn xn  bm
where xi ≥ 0 and bi ≥ 0. The basic procedure used to solve such a problem is to
convert it to a maximization problem in standard form, and then apply the simplex
method as discussed

Example.
Minimization Problem: Find the minimum value of
w = 0.12x1 + 0.15 x2 - Objective Function
60 x1 + x2  300 

12x1 + 6 x2  36  Contraints
10 x1 + 30 x2  90 
where x1 ≥ 0 and x2 ≥ 0. The first step in converting this problem to a maximization
problem is to form the augmented matrix for this system of inequalities. To this
augmented matrix we add a last row that represents the coefficients of the objective
function, as follows.
 60 60 300 
 12 6 36 

 10 30 90 
 
 
0.12 0.15 0 
Next, we form the transpose of this matrix by interchanging its rows and columns.
 60 12 10 0.12
 60 6 30 0.15 

 
 
300 36 90 0 

Note that the rows of this matrix are the columns of the first matrix, and vice versa.
Finally, we interpret the new matrix as a maximization problem as follows. (To do

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this, we introduce new variables, y1, y2, and y3.) We call this corresponding
maximization problem the dual of the original minimization problem.

Dual Maximization Problem: Find the maximum value of

z = 300y1 + 36y 2 + 90y 3 - Dual Objective Function
60 y1 + 12y 2 + 10 y 3  0.12 
 Contraints
60 y1 + 6 y 2 + 30 y 3  0.15 
where y1 ≥ 0, y2 ≥ 0, and y3 ≥ 0.

As it turns out, the solution of the original minimization problem can be found
by applying the simplex method to the new dual problem, as follows.

Basic
y1 y2 y3 s1 s2 b Variables
60 12 10 1 0 0.12 s1 Departing
60 6 30 0 1 0.15 s2
–300 -36 -90 0 0 0
Entering

Basic
y1 y2 y3 s1 s2 b Variables
1 1/5 1/6 1/60 0 1/500 y1
0 -6 20 -1 1 3/100 s2 Departing

0 24 -40 0 0 3/5
Entering

Basic
y1 y2 y3 s1 s2 b Variables
1 1/4 0 1/40 -1/120 7/4000 y1
0 -3/10 1 -1 1 3/2000 y3
0 24 0 3 2 33/50
x1 x2
Thus, the solution of the dual maximization problem is z = 33/50/= 0.66. The x-values
corresponding to this optimal solution are obtained from the entries in the bottom row
corresponding to slack variable columns. In other words, the optimal solution occurs
When x1 = 3 and x2 = 2.
The fact that a dual maximization problem has the same solution as its original
minimization problem is stated formally in a result called the von Neumann Duality
Principle, after the American mathematician John von Neumann (1903–1957).

The von Neumann Duality Principle

The objective value w of a minimization problem in standard form has a minimum
value if and only if the objective value z of the dual maximization problem has a maximum
value. Moreover, the minimum value of w is equal to the maximum value of z.

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3. The Simplex Method: Mixed Constraints

In previous discussion, we looked at linear programming problems that
occurred in standard form. The constraints for the maximization problems all involved
≤ inequalities, and the constraints for the minimization problems all involved ≥
inequalities.
Linear programming problems for which the constraints involve both types of
inequalities are called mixed-constraint problems. For instance, consider the
following linear programming problem below.

Minimization Problem: Find the minimum value of

z = x1 + x2 + 2x3 - Objective Function
2x1 + x2 + x3  50

2x1 + x2  36  Contraints
x1 + x3  10 
where x1 ≥ 0, x2 ≥ 0, and x3 ≥ 0. Since this is a maximization problem, we would
expect each of the inequalities in the set of constraints to involve ≤. Moreover, since
the first inequality does involve ≤, we can add a slack variable to form the following
equation.
2x1 + x2 + x3 + s1 = 50.
For the other two inequalities, we must introduce a new type of variable, called a
surplus variable, as follows.
2 x1 + x2 − s2 = 36
x1 + x3 − s3 = 10
Notice that surplus variables are subtracted from (not added to) their inequalities.
We call s1 and s3 surplus variables because they represent the amount that the left
side of the inequality exceeds the right side. Surplus variables must be nonnegative.
Now, to solve the linear programming problem, we form an initial simplex
tableau as follows.

Basic
x1 x2 x3 s1 s2 s3 b Variables
2 1 1 1 0 0 50 s1
2 1 0 0 -1 0 36 s2
1 0 1 0 0 -1 10 s3 Departing
-1 -1 -2 0 0 0 0
Entering

You will soon discover that solving mixed-constraint problems can be difficult.
One reason for this is that we do not have a convenient feasible solution to begin the
simplex method. Note that the solution represented by the initial tableau above.
(x1, x2, x3, s1, s2, s3) = (0, 0, 0, 50, -36, -10).
is not a feasible solution because the values of the two surplus variables are
negative. In fact, the values x1 = x2 = x3 = 0 do not even satisfy the constraint

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equations. In order to eliminate the surplus variables from the current solution, we
basically use “trial and error.” That is, in an effort to find a feasible solution, we
arbitrarily choose new entering variables. For instance, in this tableau, it seems
reasonable to select x3 as the entering variable. After pivoting, the new simplex
tableau becomes

Basic
x1 x2 x3 s1 s2 s3 b Variables
1 1 0 1 0 1 40 s1
2 1 0 0 -1 0 36 s2 Departing
1 0 1 0 0 -1 10 x3
1 -1 0 0 0 -2 20
Entering

The current solution (x1, x2, x3, s1, s2, s3) = (0, 0, 10, 40, -36, 0) is still not feasible,
so we choose x2 as the entering variable and pivot to obtain the following simplex
tableau.

Basic
x1 x2 x3 s1 s2 s3 b Variables
-1 0 0 1 1 1 4 s1 Departing
2 1 0 0 -1 0 36 x2
1 0 1 0 0 -1 10 x3
3 0 0 0 -1 -2 56
Entering

At this point, we finally obtained a feasible solution

(x1, x2, x3, s1, s2, s3) = (0, 36, 10, 4, 0, 0)

From here on, we apply the simplex method as usual. Note that the entering variable
here is s3 because its column has the most negative entry in the bottom row. After
pivoting one more time, we obtain the following final simplex tableau.

Basic
x1 x2 x3 s1 s2 s3 b Variables
-1 0 0 1 1 1 4 s3
2 1 0 0 -1 0 36 x2
0 0 1 1 1 0 14 x3
1 0 0 2 1 0 64

Note that this tableau is final because it represents a feasible solution and there are
no negative entries in the bottom row. Thus, we conclude that the maximum value
of the objective function is
z = 64 (maximum value)
and this occurs when
x1 = 0, x2 = 36, and x3 = 14.

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A Minimization Problem with Mixed Constraints

Example.
Find the minimum value of
w = 4 x1 + 2x2 + x3 - Objective Function
2x1 + 3 x2 + 4 x3  14 

3 x1 + x2 + 5 x3  4  Contraints
x1 + 4 x2 + 3 x3  6 
where x1 ≥ 0, x2 ≥ 0, and x3 ≥ 0.
Solution.
First, we rewrite the objective function by multiplying each of its coefficients by
as follows.
w = −4 x1 − 2x2 − x3 - Revised Objective Function
Maximizing this revised objective function is equivalent to minimizing the original
objective function. Next, we add a slack variable to the first inequality and subtract
surplus variables from the second and third inequalities to produce the following
initial simplex tableau.

Basic
x1 x2 x3 s1 s2 s3 b Variables
2 3 4 1 0 0 14 s1
3 1 5 0 -1 0 4 s2 Departing
1 4 3 0 0 -1 6 s3
4 2 1 0 0 0 0
Entering

Note that the bottom row has the negatives of the coefficients of the revised objective
function. Another way of looking at this is that for minimization problems (in
nonstandard form), the bottom row of the initial simplex consists of the coefficients
of the original objective function.
As with maximization problems with mixed constraints, this initial simplex
tableau does not represent a feasible solution. By trial and error, we discover that
we can choose x2 as the entering variable and s2 as the departing variable. After
pivoting, we obtain the following tableau.

Basic
x1 x2 x3 s1 s2 s3 b Variables
-7 0 -11 1 3 0 2 s1
3 1 5 0 -1 0 4 x2
-11 0 -17 0 4 -1 -10 s3
-2 0 -9 0 2 0 -8

From this tableau, we can see that the choice of x2 as the entering variable was a
good one. All we need to do to transform the tableau into one that represents a
feasible solution is to multiply the third row by -1, as follows.

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Basic
x1 x2 x3 s1 s2 s3 b Variables
-7 0 -11 1 3 0 2 s1
3 1 5 0 -1 0 4 x2
11 0 17 0 -4 1 10 s3 Departing
-2 0 -9 0 2 0 -8
Entering

Now that we have obtained a simplex tableau that represents a feasible solution,
we continue with our standard pivoting operations as follows.

Basic
x1 x2 x3 s1 s2 s3 b Variables
2/17 0 0 1 7/17 11/17 144/17 s1
-4/17 1 0 0 3/17 -5/17 18/17 x2 Departing
11/17 0 1 0 -4/17 1/17 10/17 x3
65/17 0 0 0 -2/17 9/17 -46/17
Entering

Basic
x1 x2 x3 s1 s2 s3 b Variables
2/3 -7/3 0 1 0 4/3 6 s1
-4/3 17/3 0 0 1 -5/3 6 s2
1/3 4/3 1 0 0 -1/3 2 x3
11/3 2/3 0 0 0 1/3 -2

Finally, we conclude that the maximization value of the revised objective function is
z = –2, and hence the minimum value of the original objective function is w = 2 (the
negative of the entry in the lower-right corner), and this occurs when
x1 =0, x2 = 0, and x3 = 2.

4. Duality and Sensitivity Analysis

Sensitivity analysis is used to determine how minor variations in an LP problem
affect the final solution. Most real-world LP problems are large, and many of the
values in the model are estimates of future conditions. It is important to study what
will happen to the optimal solution if other conditions occur. For example, it may be
possible to purchase more resources, or management may need to decide whether
to add a new product. You can conduct these types of analysis without rerunning the
entire LP.
To understand sensitivity analysis, it is important to understand the concept of
opportunity cost. Opportunity cost represents the cost of employing a resource for
one use instead of another. In other words, if you give up ₱0.50 of profit by using a
unit of wood to produce a table instead of a chair, the opportunity cost of the wood
is ₱0.50.
Another part of sensitivity analysis is duality theory. An LP problem is called a
primal. Every primal has an associated LP problem called a dual. If the primal LP

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objective function is maximized, the dual LP objective function is minimized. In other

words, when the objective of the primal is profit maximization, the objective of the
dual is resource minimization at a certain level of profit. Solving the original LP
problem also provides a solution to its dual.

Constructing a Dual LP
Consider the following problem.
A manufacturer produces wooden tables and chairs. The company wishes to
allocate resources so as to maximize profits. Wood and labor are the two resources
used to produce tables and chairs. It takes 30 board feet (bf) of wood and 5 hours of
labor to make a table, and 20 bf of wood and 10 hours of labor to make a chair. There
are 300 bf of wood available and 110 hours of labor available. Unit profit is ₱6 for a
table and ₱8 for a chair.
Our primal LP problem can be formulated as:

Maximize: z = 6x1 + 8x2 (objective function: maximize profit)

Subject to: 30x1 + 20x2 ≤ 300 (wood constraint: 300 bf)
5 x1 + 10 x2 ≤ 110 (labor constraint: 110 hrs)
x1, x2 ≥ 0 (nonnegativity conditions)

The maximum value of the objective function for the primal is:
z = ₱6(4) + ₱8(9) = ₱96
In other words, the company would produce four tables and nine chairs for a
profit of ₱96.
The right-hand values of the primal constraints (300 bf and 110 hours) become
the coefficients of the dual objective function. For this example, there are 300 board
feet of wood available and 110 hours of labor available. Using w to represent cost,
y1 to represent the opportunity cost of a unit of wood, and y2 to represent the
opportunity cost of a unit of labor, we can rewrite the objective function as:
Minimize R = 300y1 + 110y2
This equation states that we want to minimize total cost (R), which is equal to
300 units of wood times the opportunity cost of a unit of wood plus 110 units of labor
times the opportunity cost of a unit of labor.
To find the dual’s constraints, we transpose the coefficients used on the left-
hand side of the primal constraints.
30 x1 + 20 x2  300 30 20 
 A= 
5 x1 + 10 x2  110  5 10 
Now create a new matrix called Matrix AT by transposing the values in A so
that the first column of A becomes the first row of AT. The second column of A
becomes the second row of AT, and so on, if there are more columns.
30 5 
AT =  
20 10 

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The values in the rows of AT will become the coefficients on the left-hand side
of the dual’s constraints.
The dual’s constants (right-hand side) are obtained from the objective function
of the primal (R = 6x1 + 8x2). Thus, the constants are 6 and 8.
If the primal is a maximization problem and the constraints are ≤, the dual is a
minimization problem and the constraints become ≥. Thus, we can write the
constraints as:
30 y1 + 5 y 2  6
20 y1 + 10 y 2  8
The first constraint states that the amount of wood needed to produce a table
(30 bf) multiplied by the opportunity cost of using the wood to make tables (y1) plus
the amount of labor needed to make a table (5 hours) multiplied by the opportunity
cost of using the labor to make tables (y2) must be greater than or equal to ₱6. The
₱6 is the net profit for a table. If the opportunity cost of producing tables is equal to
the net profit, tables will be produced. If it is greater than the net profit, no tables will
be produced, and the units of wood and labor will be used elsewhere to attain higher
profits.
The second constraint can be interpreted in the same manner. The amount of
wood needed to produce a chair (20 bf) times the opportunity cost of using the wood
to make chairs (y1) plus the amount of labor needed to make a chair (10 hours) times
the opportunity cost of using the labor to make chairs (y2) must be greater than or
equal to ₱8. The ₱8 is the net profit for a chair. If the opportunity cost of producing
chairs is equal to the net profit, chairs will be produced. If it is greater than the net
profit, no chairs will be produced, and the units will be used elsewhere to attain higher
profits.
Therefore, we can formulate the dual as:
Minimize: R = 300y1 + 110y2
Subject to: 30y1 + 5y2 ≥ 6 (tables)
20y1 +10y2 ≥ 8 (chairs)
x1, x2 ≥ 0

Graph of the Dual LP Problem

Let the x axis represent wood, and the y axis represent labor. Refer to figure
below as we briefly go through the steps of graphically solving the dual.
First, we can determine the two constraint lines:
For the table constraint:
when y1 = 0, y2 = 6/5 or 1.2
when y2 = 0, y1 = 6/30 or 0.2
Plot the table constraint line using the intercepts y1 = 0.2 and y2 = 1.2.
For the chair constraint: When O1 = 0, O2 = 8/10 or 0.8
when y2 = 0, y1 = 8/20 or 0.4
Plot the chair constraint line using the intercepts y1 = 0.4 and y2 = 0.8.

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Next, we can determine the valid side of the constraint lines by substituting the origin
(0,0) into the table constraint equation. We get 30(0) + 5(0) ≥ 6. This statement is
false, so we know the valid side of the table constraint line is away from the origin.
In the same manner, 20(0) + 10(0) > 8 is false, so the valid side of the chair constraint
line also is away from the origin. Place small arrows on both constraint lines pointing
away from the origin. Any point on the nonorigin side of the table and chair constraint
lines represents a feasible solution. Draw a heavy line to show the boundary of the
feasible region.
Plot two objective function lines to determine the direction of improvement.
Let R = 165 Let R = 110
165 = 300 y1 + 110 y 2 110 = 300 y1 + 110 y 2
Set y 2 = 0 and solve for y1 Set y 2 = 0 and solve for y1
165 = 300 y1 + 110 ( 0 ) 110 = 300 y1 + 110 ( 0 )
165 = 300 y1 110 = 300 y1
y1 = 0.55 y1 = 0.37
Next:
Set y1 = 0 and solve for y 2 Set y1 = 0 and solve for y 2
165 = 300 ( 0 ) + 110 y 2 110 = 300 ( 0 ) + 110 y 2
165 = 110 y 2 110 = 110 y 2
y 2 = 1.5 y 2 = 1.0

We can see from the two objective function lines that R decreases as we move
toward the origin (0,0). We want to minimize R, so we will draw a line parallel to the
objective function lines that touches the corner in the feasible region that is closest
to the origin. This point is the most attractive corner and the optimal solution to the
problem. It is where the table and chair constraint lines intersect.

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If our graph were drawn perfectly and we could read it perfectly, we could
determine the optimal amounts of tables and chairs from the corresponding
coordinates. Because we cannot read it exactly, we instead will solve the equations
simultaneously to determine the exact coordinates:
30 y1 + 50 y 2 = 6
−0.5 ( 20 y1 + 10 y 2 ) = 8
20 y1 + 0 y 2 = 2
Therefore: y1 = 2/20 = (0.10 or ₱0.10 per board foot of wood)
Substitute 0.10 into either of the equations to find the value of y2:
30 ( 0.10 ) + 5 y 2 = 6
3 + 5y 2 = 6
Therefore: y2 = 3/5 = (0.60 or ₱0.60 per hour of labor)
The final step is to calculate the minimum value of the objective function:
R = 300(₱0.10) + 110(₱0.60) = ₱96
This is the same value that was obtained when maximizing the objective function of
the primal.
The ₱0.10 represents the actual worth of 1 unit (board foot) of wood to the
manufacturing operation. That is, 1 more board foot of wood could be used to
produce more furniture sold for a ₱0.10 profit. If 1 more board foot of wood were
available (301 board feet), total profit would increase by ₱0.10. The ₱0.10 also can
be viewed as the lost potential profit as a result of not having an additional board foot
of wood.
Likewise, an additional hour of labor will increase profit by ₱0.60. An additional
2 hours of labor will increase profit by 2 x ₱0.60 or ₱1.20.
These values are the dual prices, or shadow prices. They help the company
decide whether to buy more wood or labor to increase production. If it can purchase
additional wood at ₱0.08 per board foot, it will realize a net gain of ₱0.02 for each
additional board foot of wood acquired. If it can buy an hour of labor for ₱0.40, it will
realize a net gain of ₱0.20 for each additional hour of labor.
The dual price associated with a particular LP constraint remains constant until
the constraint becomes nonbinding. In other words, it no longer constrains the
optimal solution. For example, adding units of wood at first improves profit.
Eventually, however, you will find that adding wood no longer improves profit
because you can utilize no more wood without also adding more labor.
When a constraint is nonbinding, the dual price takes on a value of zero. If
graphed, the constraint line would lie outside the feasible region. The feasible region
is bounded by other constraints, and the optimal solution is found at one or more
corners of the feasible region.
Most LP computer programs have a command that lets you view the valid
range of dual price values.

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Evaluating New Products

What if the marketing group suggests adding two more items to the company’s
product line? Based on a market study, management agrees that enough demand
exists to add wooden benches and stools to the product line. The business team
calculates that the per-unit profit on benches will be ₱7 and the per-unit profit on
stools will be ₱2. Engineering estimates that a bench will require 25 bf of wood and
7 hours of labor, and a stool will require 10 bf of wood and 2 hours of labor.
Using the dual values for wood and labor, the opportunity cost of a bench and
a stool can be calculated as:
Opportunity cost of manufacturing a bench = 25(0.10) + 7(0.60) = ₱6.70
Opportunity cost of manufacturing a stool = 10(0.10) + 2(0.60) = ₱2.20

The ₱6.70 opportunity cost of a bench is less than the profit of ₱7 per bench,
so the company should make benches. That is, wood and labor can earn less
elsewhere than they can by being used to make benches.
The ₱2.20 opportunity cost of a stool is greater than the profit of ₱2 per stool,
however. Thus, each stool consumes resources in excess of the profit it will earn.
Using the resources to make stools is not as profitable as using the resources
somewhere else. Thus, the company should not produce stools.

1) Taha, H. (2012). Operations research: an introduction. Pearson Education.

2) Kolluri, B., Panik, M. J., & Singamsetti, R. N. (2016). Introduction to quantitative methods
in business: With applications using microsoft office excel. Retrieved from
https://ebookcentral.proquest.com
3) Baker, K. R. (2015). Optimization modeling with spreadsheets. Retrieved from
https://ebookcentral.proquest.com
4) Ramamurthy, P. (2000). Operations research. Retrieved from
https://ebookcentral.proquest.com
5) Guiasu, S. (2009). Probablistic models in operations research. Retrieved from
https://ebookcentral.proquest.com

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Activity 1. Now that you know the concepts of the system of linear equations. Let us
try to check your understanding of these concepts by doing the following
exercises.

A. Write the simplex tableau for the given linear programming problem. You do not need
to solve the problem.
1. Maximize Objective Function: 2. Maximize Objective Function:
z = x1 + 2x2 z = 2x1 + 3 x2 + 4 x3
Constraints: Constraints:
2 x1 + x2  8 x1 + 2x2  12
x1 + x2  5 x1 + x3  8
x1, x2  0 x1, x2 , x2  0

3. Minimize Objective Function: 4. Minimize Objective Function:

w = 2x1 + 2x2 z = x1 + x2
Constraints: Constraints:
x1 + 2x2  3 x1 + 2 x2  4
3x1 + 2 x2  5 x1, x2  0
x1, x2  0

B. Determine the dual of the given minimization problem.

1. Objective Function: 2. Objective Function:
w = 3 x1 + 3 x2 w = 4 x1 + x2 + x3
Constraints: Constraints:
2 x1 + x2  4 3 x1 + 2x2 + x3  23
x1 + 2x2  4 x1 + x3  10
x1, x2  0 8 x1 + x2 + 2 x3  40
x1, x2 , x3  0
3. Objective Function: 4. Objective Function:
w = 9 x1 + 6 x2 w = 14 x1 + 20 x2 + 24 x3
Constraints: Constraints:
x1 + 2x2  5 x1 + x2 + 2 x3  7
2x1 + 2 x2  8 x1 + 2 x2 + x3  4
2x1 + x2  6 x1, x2 , x3  0
x1, x2  0

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C. Add the appropriate slack and surplus variables to the system and form the initial
simplex tableau.

1. Maximize Objective Function: 2. Maximize Objective Function:

w = 10 x1 + 4 x2 w = 3 x1 + x2 + x3
Constraints: Constraints:
2 x1 + x2  4 x1 + 2 x2 + x3  10
x1 + x2  8 x 2 + 5 x3  6
x1, x2  0 4 x1 − x2 + x3  10
x1, x2 , x3  0

3. Minimize Objective Function: 4. Minimize Objective Function:

w = x1 + x2 w = 2x1 + 3 x2
Constraints: Constraints:
2x1 + x2  4 3x1 + x2  4
x1 + 3 x2  2 4x1 + 2x2  3
x1, x2  0 x1, x2  0

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Activity 1. Getting acquainted with the essential terms and concepts of the
simplex method, what also matters is you should also be able to
apply these concepts in solving problems. Solve the following
problems.

1. A fruit juice company makes two special drinks by blending apple and pineapple juices.
The first drink uses 30% apple juice and 70% pineapple, while the second drink uses
60% apple and 40% pineapple. There are 1000 liters of apple and 1500 liters of pineapple
juice available. If the profit for the first drink is ₱0.60 per liter and that for the second drink
is ₱0.50, use the simplex method to find the number of liters of each drink that should be
produced in order to maximize the profit.
2. An accounting firm has 900 hours of staff time and 100 hours of reviewing time available
each week. The firm charges ₱2000 for an audit and ₱300 for a tax return. Each audit
requires 100 hours of staff time and 10 hours of review time, and each tax return requires
12.5 hours of staff time and 2.5 hours of review time. What number of audits and tax
returns will bring in a maximum revenue?
3. A grower has 50 acres of land for which she plans to raise three crops. It costs ₱200 to
produce an acre of carrots and the profit is ₱60 per acre. It costs ₱80 to produce an acre
of celery and the profit is ₱20 per acre. Finally, it costs ₱140 to produce an acre of lettuce
and the profit is ₱30 per acre. Use the simplex method to find the number of acres of
each crop she should plant in order to maximize her profit. Assume that her cost cannot
exceed ₱10,000.
4. A small petroleum company owns two refineries. Refinery 1 costs ₱25,000 per day to
operate, and it can produce 300 barrels of high-grade oil, 200 barrels of medium-grade
oil, and 150 barrels of low-grade oil each day. Refinery 2 is newer and more modern. It
costs ₱30,000 per day to operate, and it can produce 300 barrels of high-grade oil, 250
barrels of medium-grade oil, and 400 barrels of low-grade oil each day. The company
has orders totaling 35,000 barrels of high-grade oil, 30,000 barrels of medium-grade oil,
and 40,000 barrels of low-grade oil. How many days should the company run each
refinery to minimize its costs and still meet its orders?
5. A steel company has two mills. Mill 1 costs ₱70,000 per day to operate, and it can
produce 400 tons of high-grade steel, 500 tons of medium-grade steel, and 450 tons of
low-grade steel each day. Mill 2 costs ₱60,000 per day to operate, and it can produce
350 tons of high-grade steel, 600 tons of medium-grade steel, and 400 tons of low-grade
steel each day. The company has orders totaling 100,000 tons of high-grade steel,
150,000 tons of medium-grade steel, and 124,500 tons of low-grade steel. How many
days should the company run each mill to minimize its costs and still fill the orders?
6. A company has budgeted a maximum of ₱600,000 for advertising a certain product
nationally. Each minute of television time costs ₱60,000 and each one-page newspaper
ad costs ₱15,000. Each television ad is expected to be viewed by 15 million viewers, and
each newspaper ad is expected to be seen by 3 million readers. The company’s market
research department advises the company to use at least 6 television ads and at least 4

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newspaper ads. How should the advertising budget be allocated to maximize the total
audience?
7. A warehouse operator has 24,000 square meters of floor space in which to store two
products. Each unit of product I requires 20 square meters of floor space and costs ₱12
per day to store. Each unit of product II requires 30 square meters of floor space and
costs ₱8 per day to store. The total storage cost per day cannot exceed ₱12,400.
8. A merchant plans to sell two models of home computers at costs of ₱250 and ₱$400,
respectively. The ₱250 model yields a profit of ₱45 and the ₱400 model yields a profit of
₱50. The merchant estimates that the total monthly demand will not exceed 250 units.
Find the number of units of each model that should be stocked in order to maximize profit.
Assume that the merchant does not want to invest more than ₱70,000 in computer
inventory.
9. A store sells two types of toys, A and B. The store owner pays ₱8 and ₱14 for each one
unit of toy A and B respectively. One unit of toys A yields a profit of ₱2 while a unit of toys
B yields a profit of ₱3. The store owner estimates that no more than 2000 toys will be
sold every month and he does not plan to invest more than ₱20,000 in inventory of these
toys. How many units of each type of toys should be stocked in order to maximize his
monthly total profit?
10. Ariana Grande is ready to hit the road and go on tour. She has a posse consisting of 150
dancers, 90 back-up singers, and 150 different musicians and due to union regulations
each performer can only appear once during the tour. A small club tour requires 1 dancer,
1 back-up singer and 2 musicians for each show while a larger arena tour requires 5
dancers, 2 back-up singers and 1 musician each night. If a club concert nets Grande
₱175 a night while an arena show nets her ₱400 a night, how many of each show should
she schedule so that her income is a maximum and what is that maximum income?

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Activity 1. Based from the definition of the most essential terms and concepts in
the study of simplex method and the learning exercises that you have
done, please feel free to write your arguments or lessons learned
below.

1.

2.

3.

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Do you have any question for clarification?

Questions / Issues Answers

1.

2.

3.

4.

5.

Simplex Method Maximization Minimization

Mixed Constraints Optimal Solution Basic Variables
Non-basic Variables Entering Variable Departing Variable
Von Neumann
Pivot Slack Variables
Principle
Duality and
Surplus Variables Augmented Matrix
Sensitivity Analysis

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Week 6-7: Unit Learning Outcomes (ULO):

At the end of the unit, you are expected to
a. Solve linear programming problems with integer programming,
transportation problem, and assignment problem methods.

Big Picture in Focus

ULO-a. Solve linear programming problems with integer programming,
transportation problem, and assignment problem methods.

Metalanguage

In this section, the essential terms relevant to the study of integer

programming, transportation problem, and assignment problem methods and to
demonstrate ULO-a will be operationally defined to establish a common frame of
reference as to how the texts work. You will encounter these terms as we go through
the study of the nature of mathematics. Please refer to these definitions in case you
will encounter difficulty in understanding some concepts.

1. Integer Programming
An integer (linear) programming problem (IP) is a linear programming
problem in which at least one of the variables is restricted to integer values.
When formulating LP's we often found that, strictly, certain variables should
have been regarded as taking integer values but, for the sake of convenience, we
let them take fractional values reasoning that the variables were likely to be so large
that any fractional part could be neglected. Whilst this is acceptable in some
situations, in many cases it is not, and in such cases we must find a numeric solution
in which the variables take integer values.
Problems in which this is the case are called integer programs (IP's) and the
subject of solving such programs is called integer programming (also referred to by
the initials IP).
IP's occur frequently because many decisions are essentially discrete (such
as yes/no, go/no-go) in that one (or more) options must be chosen from a finite set
of alternatives.
Note here that problems in which some variables can take only integer values
and some variables can take fractional values are called mixed-integer programs
(MIP's).

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As for formulating LP's the key to formulating IP's is practice. Although there
are a number of standard "tricks" available to cope with situations that often arise in
formulating IP's it is probably true to say that formulating IP's is a much harder task
than formulating LP's.

2. Transportation Problem
The transportation problem is a special type of linear programming problem
where the objective is to minimize the cost of distributing a product from a number
of sources or origins to a number of destinations. Because of its special structure
the usual simplex method is not suitable for solving transportation problems. These
problems require a special method of solution. The origin of a transportation
problem is the location from which shipments are dispatched. The destination of a
transportation problem is the location to which shipments are transported. The unit
transportation cost is the cost of transporting one unit of the consignment from an
origin to a destination.

3. Assignment Problem
Assignment problem is a special type of linear programming problem which
deals with the allocation of the various resources to the various activities on one to
one basis. It does it in such a way that the cost or time involved in the process is
minimum and profit or sale is maximum. Though there are problems can be solved
by simplex method or by transportation method but assignment model gives a
simpler approach for these problems.

Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the sixth and
seventh weeks of the course, you need to fully understand the following essential
knowledge that will be laid down in the succeeding pages. Please note that you are
not limited to refer to these resources exclusively. Thus, you are expected to utilize
other books, research articles, and other resources that are available in the
university’s library e.g., ebrary, search.proquest.com, etc.

1. Integer Programming
The feasible region of the LP model is continuous in the sense that each
variable is restricted to over a continuous interval. If variables are further restricted
to integer values, it becomes an integer LP (IP) model. As its feasible region consists
of discrete points, IP model differs from LP model essentially. However, such type of

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models can be handled through a series of LP subprograms, and are so rich in

practice as form a major application area of LP computation.
Branch-and-bound and cutting-plane methods have been principle tools for
solving IP models for about fifty years. Both of them deal with the models by solving
a sequence of LP problems by simplex methods. It will be clear that only finitely many
LP problems need to be solved by the former in principle, whereas the same is
proved for a cutting-plane method (Gomory, 1958). However, such finiteness is of
theoretical value only. In practice, any of them alone is far from satisfaction, while
the latter is even not competitive to the former in general, despite a variety of cuts
suggested in the past. As a remedy, the so-called “branch-and-cut" scheme
combining them is now widely used to solve IP problems.

Branch-and-Bound Method
The Branch-and-bound method is not a solution technique specifically limited
to integer programming problems. It is a solution approach that can be applied to a
number of different types of problems. The branch and bound approach is based on
the principle that the total set of feasible solutions can be partitioned into smaller
subsets of solutions. These smaller subsets can then be evaluated systematically
until the best solution is found. When the branch and bound approach is applied to
an integer programming problem, it is used in conjunction with the normal non-
integer solution approach. We will demonstrate this method using the following
example.
Example.
The owner of a machine shop is planning to expand by purchasing some new
machines – presses and lathes. The owner has estimated that each press
purchased will increase profit by P100 per day and each lathe will increase profit by
P150 daily. The number of machines the owner can purchase is limited by the cost
of the machines and the available floor space in the shop. The machine purchase
prices and space requirements are as follows:

Required Purchase
Machine
Floor Space (ft2) Price
Press 15 P8,000
Lathe 30 P4,000
Solution:
The owner has a budget of P40,000 for purchasing machines and 200 square
feet of available floor space. The owner wants to know how many of each type of
machine to purchase to maximize the daily increase in profit.
The linear programming model for an integer programming problem is
formulated in exactly the same way as the linear programming example in previous
lesson. The only difference is hat in this problem, the decision variables are
restricted to integer values because the owner cannot purchase a fraction, or portion,
of a machine. The linear programming model follows:

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Maximize z = 100 x1 + 150 x2

Subject to
8000 x1 + 4000 x2  40,000
15x1 + 30 x2  200
x1, x2  0 and integer
The decision variables in this model are restricted to whole numbers. The fact
that both decision variables, x1 and x2, can assume any integer value greater than
or equal to zero is what is gives this model its designation as a total integer model.
We begin the branch and bound method by first solving the problem as a
regular linear programming model without integer restrictions; that is, the integer
restrictions are relaxed or a solution with no integer restrictions. The linear
programming model for the problem and the optimal relaxed solution is
Maximize z = 100 x1 + 150 x2
Subject to
8000 x1 + 4000 x2  40,000
15x1 + 30 x2  200
x1, x2  0
and
x1 = 2.22, x2 = 5.56, and z = ₱1055.56
The branch and bound method employs a diagram consisting of nodes and
branches as a framework for the solution process. The first node of the branch and
bound diagram, as show below, contains the relaxed linear programming solution
earlier and the rounded-down solution.

Notice that this node has two designated bounds: an upper bund (UB) of
P1055.56 and a lower bound (LB) of P950. The lower bound is the z value for the
rounded-down solution, x1 = 2 and x2 = 5; the upper bound is the z value for the
relaxed solution on, x1 = 2.22 and x2 = 5.56. The optimal integer solution will be
between these two bounds.
Rounding down might result in a suboptimal solution. In other words, we are
hoping that a z value greater than P950 might be possible. We are not concerned
that a value lower than P950 might be available. Thus, P950 represents a lower
bound for our solution. Alternatively, since z = P1055.56 reflects an optimal point on

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the solution space boundary, a greater z value cannot possibly be attained. Hence,
z = P1,055.56 is the upper bound of our solution.
Now that the possible feasible solutions have been narrowed to values
between the upper and lower bounds, we must test the solutions within these bounds
to determine the best one. The first step in the branch and bound method is to create
two solutions subsets from the present relaed solution. This is accomplished by
observing the relaxed solution value for each variable, x1 = 2.22 and x2 = 5.56 and
seeing which one is the farthest from the rounded-down integer value (i.e., which
variable has the greatest fractional part). The 0.56 portion of 5.56 is the greatest
fractional part; thus x2 will be the variable that we will branch on.
Because x2 must be an integer value in the optimal solution, the following
constraints can be developed:
x2 ≤ 5
x2 ≥ 6
In other words, x2 can be 0, 1, 2, 3, 4, 5, or 6, 7, 8, etc., but it cannot be a value
between 5 and 6 such as 5.56. These two new constraints represent the two solution
subsets for our solution approach. Each of these constraints will be added to our
linear programming model, which will then be solved normally to determine a relaxed
solution. This sequence of events is shown on the branch and bound diagram below.
The solutions at nodes 2 and 3 will be the relaxed solutions obtained by solving our
example model with the appropriate constraints added.

First, the solution at node 2 is found by solving the following model with the
constraint x2 ≤ 5.
Maximize z = 100 x1 + 150 x2
Subject to
8000 x1 + 4000 x2  40,000
15x1 + 30 x2  200
x2  5
x1, x2  0

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The optimal solution for this model with integer restrictions relaxed is x1 = 2.5,
x2 = 5, and z = ₱1000.
Next, the solution at node 3 is found by solving the model with x2 ≥ 6 added.
Maximize z = 100 x1 + 150 x2
Subject to
8000 x1 + 4000 x2  40,000
15x1 + 30 x2  200
x2  6
x1, x2  0
The optimal solution for this model with integer restrictions relaxed is x1 = 1.33,
x2 = 6, and z = ₱1033.33.
These solutions with x2 ≤ 5 and x2 ≥ 6 reflect the portioning of the original
relaxed model into two subsets formed by the addition of the two constraints. The
resulting solution sets are shown in the graphs below.

Notice that in the node 2 graph, the solution point x1 = 2.5, x2 = 5 results in a
maximum z value of ₱1000, which is the upper bound for this node. Next, notice
that in the node 3 graph, the solution point x1 = 1.33, x2 = 6 results in a maximum z
value of ₱1033. Thus, ₱1033 is the upper bound for node 3. The lower bound at
each of these nodes is the maximum integer solution. Since neither of these relaxed
solutions is totally integer, the lower bound remains P950, the integer solution value
already obtained at node 1 for the rounded-down integer solution. The diagram
below reflects the addition of the upper and lower bounds at each node.
Since we do not have an optimal and feasible integer solution yet, we must
continue to branch (i.e., partition) the model, from either node 2 or node 3. A look at
figure below reveals that if we branch from node 2, the maximum value that can
possibly be achieved is ₱1000 (upper bound). However, if we branch from node 3,

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a higher maximum value of ₱1033 is possible. Thus, we will branch from node 3. In
general, always branch from the node with the maximum upper bound.

Now the steps for branching previously followed at node 1 are repeated at node
3. First, the variable that has the value with the greatest fractional part is selected.
Because x2 has an integer value, x1, with a fractional part 0.33, is the only variable
we can select. Thus, two new constraints are developed from x1,
x1 ≤ 1
x1 ≥ 2
This process creates the new branch and bound diagram shown below.

Next, the relaxed linear programming model with the new constraints added
must be solved at nodes 4 and 5. However, do not forget that the model is not the
original, but the original with the constraint previously added, x2 ≥ 6. Consider the
node 4 model first.
Maximize z = 100 x1 + 150 x2
Subject to

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8000 x1 + 4000 x2  40,000

15x1 + 30 x2  200
x2  6
x1  1
x1, x2  0

The optimal solution for this model with integer restrictions relaxed is x1 = 1, x2
= 6.17, and z = ₱1025.
Next, consider the node 5 model.
Maximize z = 100 x1 + 150 x2
Subject to
8000 x1 + 4000 x2  40,000
15x1 + 30 x2  200
x2  6
x1  2
x1, x2  0
However, there is no feasible solution for this model. Therefore, no solution
exists at node 5, and we have only to evaluate the solution at node 4. The branch
an bound diagram reflecting these results is shown below.

The branch and bound diagram in figure indicates that we still have not reached
an optimal integer solution; thus, we must repeat the branching steps followed
earlier. Since a solution does not exist at node 5, there is no comparison between
the upper bounds at nodes 4 and 5. Comparing nodes 2 and 4, we must branch
from node 4 because it has the greater upper bound. Next, since x1 has an integer

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value, x2, with a fractional part of 0.17, is selected by default. The two new constraints
developed from x2 are
x2 ≤ 6
x2 ≥ 7
This creates the new branch and bound diagram in figure below.
The relaxed linear programming model with the new constraints added must
be solved at nodes 6 and 7. Consider the node 6 model first.

Maximize z = 100 x1 + 150 x2

Subject to
8000 x1 + 4000 x2  40,000
15x1 + 30 x2  200
x2  6
x1  1
x2  6
x1, x2  0
The optimal solution or this relaxed liner programming model is x1 = 1, x2 = 6,
and z = ₱1000.
Next, consider the node 7 model.
Maximize z = 100 x1 + 150 x2
Subject to

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8000 x1 + 4000 x2  40,000

15x1 + 30 x2  200
x2  6
x1  1
x2  7
x1, x2  0
However, the solution to this model is infeasible and no solution exists at node
7. The branch and bound diagram reflecting these results is shown below. This
version of the branch and bound diagram indicates that the optimal integer solution,
x1 = 1, x2 = 6, has been reached at node 6. The value of ₱1,000 at node 6 is the
maximum, or upper bound, integer value that can be obtained. It is also recomputed
lower bound because it is the maximum integer solution achieved to this point. Thus,
it is not possible to achieve any higher value by further branching from node 6. A
comparison of the node 6 solution with those nodes 2, 5, and 7 shows that a better
solution is not possible. The upper bound at node 2 is ₱1000, which is the same as
that obtained at node 6; thus, node 2 can result in no improvement. The solutions
at nodes 5 and 7 are infeasible (and thus further branching will result in only
infeasible solutions). By the process of elimination, the integer solution at node 6 is
optimal.

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In general, the optimal integer solution is reached when a feasible integer

solution is generated at a node and the upper bound at that node is greater than or
equal to the upper bound at any other ending node. (i.e., a node at the end of a
branch).
In the context of the original example, this solution indicates that if the machine
shop owner purchases one press and six lathes, a daily increase in profit P1000 will
result.
The steps of the branch and bound method for determining an optimal integer
solution for maximization model (with ≤ constraints) can be summarized as follows.
1. Find the optimal solution to the linear programming model with the integer
restrictions relaxed.
2. At node 1 let the relaxed solution be the upper bound and the rounded-
down integer solution be the lower bound.
3. Select the variable with the greatest fractional part for branching. Create
two new constraints for this variable reflecting the partitioned integer values.
The result will be a new ≤ constraint and a new ≥ constraint.
4. Create two new nodes, one for the ≥ constraint and one for the ≤ constraint.
5. Solve the relaxed linear programming model with the new constraint added
at each of these nodes.
6. The relaxed solution is the upper bound at each node, and the exiting
maximum integer solution (at any node) is the lower bound.
7. If the process produces a feasible integer solution with the greatest upper
bound value of any ending node, the optimal integer solution has been
reached. If a feasible integer solution does not emerge, branch from the
node with the greatest upper bound.
8. Return to step 3.

For minimization model, relaxed solutions are rounded up, and upper and
lower bounds are reversed.

Mixed integer linear programming problems can also be solved using the
branch and bound method. The same basic steps that were applied to the total
integer model in the previous unit are used for a mixed integer model with only a few
differences.
First, at node 1 only those variables with integer restrictions are rounded down
to achieve the lower bound. Second, in determining which variable to branch from,
we select the greatest fractional part from among only those variables that must be
integer. All other steps remain the same. The optimal solution is reached when a
feasible solution is generated at a node that has integer values for those variables
requiring integers and that has reached the maximum upper bound of all ending
nodes.

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2. Special-Purpose Algorithms of Linear Programming

The Transportation and Assignment problems are types of LP techniques
called network flow problems.
1. Transportation Problem
➢ Deals with the distribution of goods from several points of supply
(sources) to a number of points of demand (destinations).
➢ Transportation models can also be used when a firm is trying to decide
where to locate a new facility.
➢ Good financial decisions concerning facility location also attempt to
minimize total transportation and production costs for the entire
system.
2. Assignment Problem
➢ Refers to the class of LP problems that involve determining the most
efficient assignment of
• people to projects,
• salespeople to territories,
• contracts to bidders,
• jobs to machines, etc.
➢ The objective is most often to minimize total costs or total time of
performing the tasks at hand.
➢ One important characteristic of assignment problems is that only one
job or worker is assigned to one machine or project.
More efficient special-purpose algorithms than LP (though applicable) exist for
solving the Transportation and Assignment applications.
As in the simplex algorithm, they involve
➢ finding an initial solution,
➢ testing this solution to see if it is optimal, and
➢ developing an improved solution.
➢ this process continues until an optimal solution is reached.
Unlike the simplex method, the Transportation and Assignment methods are
fairly simple in terms of computation.

Streamlined versions of the simplex method are important for two reasons:
1. Their computation times are generally 100 times faster than the simplex
algorithm.
2. They require less computer memory (and hence can permit larger
problems to be solved).
Two common techniques for developing initial solutions are:
➢ the northwest corner method and
➢ Vogel’s approximation method.
After an initial solution is developed, it must be evaluated by either
➢ the stepping-stone method or
➢ the modified distribution (MODI) method.

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Also introduced is a solution procedure for assignment problems alternatively

called the Hungarian method, Flood’s technique, or the reduced matrix method.

2.1 Transportation Problems

Because location of a new factory, warehouse, or distribution center is a
strategic issue with substantial cost implications, most companies consider and
evaluate several locations. With a wide variety of objective and subjective factors to
be considered, rational decisions are aided by a number of techniques. One of those
techniques is transportation modeling.
The transportation models described in this module prove useful when
considering alternative facility locations within the framework of an existing
distribution system. Each new potential plant, warehouse, or distribution center will
require a different allocation of shipments, depending on its own production and
shipping costs and the costs of each existing facility. The choice of a new location
depends on which will yield the minimum cost for the entire system.
Transportation modeling finds the least-cost means of shipping supplies from
several origins to several destinations. Origin points (or sources) can be factories,
warehouses, car rental agencies, or any other points from which goods are shipped.
Destinations are any points that receive goods. To use the transportation model, we
need to know the following:
1. The origin points and the capacity or supply per period at each.
2. The destination points and the demand per period at each.
3. The cost of shipping one unit from each origin to each destination.

To illustrate transportation problem, we look at a company called ROA Gravel

Supply company to three new road projects at three different locations. In our
example, the firm must decide which of its three gravel warehouses will supply its
three road projects. Relevant data are presented in table and figure below. Note that
this is balanced problem (i.e., demand equals supply).

Transportation Costs for Gravel Supply

Project
Warehouse Supply
A B C
1 4 8 8 158
2 16 24 16 184
3 8 16 24 179
Demand 174 204 143 521

The first step in the modeling process is to set up a transportation matrix. Its purpose
is to summarize all relevant data and to keep track of algorithm computations. Using
the information above, we can construct a transportation matrix as shown below.

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Transportation Matrix
Project
Warehouse SUPPLY
A B C
4 8 8
1 158

16 24 16
2 184

8 16 24
3 179

DEMAND 174 204 143 521

Developing an Initial Solution

Once the data are arranged in tabular form, we must establish an initial feasible
solution to the problem. A number of different methods have been developed for this
step. We now discuss the northwest-corner rule.
The northwest-corner rule requires that we start in the upper left-hand cell
(or northwest corner) of the table and allocate units to shipping routes as follows:
1. Exhaust the supply (factory capacity) of each row before moving down to
the next row.
2. Exhaust the (warehouse) requirements of each column before moving to
the next column on the right.
3. Check to ensure that all supplies and demands are met.

Initial Distribution Table

Project
Warehouse SUPPLY
A B C
4 8 8
1 158 158

16 24 16
2 16 168 184

8 16 24
3 36 143 179

DEMAND 174 204 143 521

The initial distribution is set up by satisfying the first project demand using
north-west method by giving the availability of the first warehouse. Since the
demand of the first project is not yet satisfied, we go down to the second row and
get the remainder from the second warehouse. If the demand is satisfied, we go to
the right (next project) and satisfy the next demand. Continue the process until all
demands are satisfied. Take note that the sum of quantities in each row and each
column must be always equal to the quantity supplied, and quantity demand.
Observe that the number of used cells must be equal to the number of rows plus the

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number of columns minus one. If the number is less than this, the table is said to be
degenerate (Degeneracy will be discussed later).

We may compute for the total cost of transportation by multiplying the entry by
the corresponding cost:
Occupied Cell Cost
1-A 158 x 4 = 632
2-A 16 x 16 = 256
2-B 168 x 24 = 4,032
3-B 36 x 16 = 576
3-C 143 x 24 = 3,432
Cost = ₱ 8,928

The stepping-stone method will help us move from an initial feasible solution
to an optimal solution. It is used to evaluate the cost effectiveness of shipping goods
via transportation routes not currently in the solution. When applying it, we test each
unused cell, or square, in the transportation table by asking: What would happen to
total shipping costs if one unit of the product was tentatively shipped on an unused
route? We conduct the test as follows:
1. Select any unused square to evaluate.
2. Beginning at this square, trace a closed path back to the original square via
squares that are currently being used (only horizontal and vertical moves
are permissible). You may, however, step over either an empty or an
occupied square.
3. Beginning with a plus (+) sign at the unused square, place alternating minus
signs and plus signs on each corner square of the closed path just traced.
Calculate an improvement index by first adding the unit-cost figures found
in each square containing a plus sign and then by subtracting the unit costs
in each square containing a minus sign.
4. Repeat steps 1 through 4 until you have calculated an improvement index
for all unused squares. If all indices computed are greater than or equal to
zero, you have reached an optimal solution. If not, the current solution can
be improved further to decrease total shipping costs.

Computation for Improvement of Initial Table

To test whether we can minimize the cost, we pay attention to the vacant cells.
What will happen if a unit is transferred to, say cell 1-B? If a unit is transferred to i-B,
it means an additional cost of P8, but a decrease in the cost of 1-A and 2-B, and
addition to cost of 2-A. In other words, we take each of the vacant cells and show
the effect in its neighboring cells if a unit is transferred to the particular unused cell.
We must always move in a vertical and horizontal direction in tracing the path of the
route. Take costs of occupied cells in rectangular and zigzag in position to each
other.

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Vacant Cell Route

1-A 8 – 24 + 16 – 4 = –4
1-C 8 – 24 + 16 – 24 + 16 – 4 = –12
2-C 16 – 24 + 16 – 24 = –16
3-A 8 – 16 + 24 – 16 = 0

In the computation for improvement, we must bear in mind that aside from the
fact that the direction is vertical and horizontal, the landing cell must be an occupied
cell, vertical or horizontal position to the point of destination.
Note that the most negative result in the computation for improvement is in cell
2-C, which has a sum of –16. This means that if a unit is transferred to 2-C, we can
minimize the cost by P16 per truckload.
The problem now is where to get the units to be given to cell 2-C. Let us
examine its improvement procedure. There are two negative cost among addends:
–24 and –24. These are costs of cells 2-B and 3-C, whose entries are 168 units and
143 respectively. Now, since 143 is smaller, then it should be the entry to be
transferred to 2-C.
Note that adding 143 to cell 2-C means subtracting 143 from 2-B, but adding it
to cell 3-B as indicated in the test for the improvement.

Distribution Table 2
Project
Warehouse SUPPLY
A B C
4 8 8
1 158 158

16 24 16
2 16 25 143 184

8 16 24
3 179 179

DEMAND 174 204 143 521

Compute for the total cost of transportation.

Occupied Cell Cost

1-A 158 x 4 = 632
2-A 16 x 16 = 256
2-B 25 x 24 = 600
2-C 143 x 16 = 2,288
3-B 179 x 16 = 2,864
Cost = ₱ 6,640

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Computation for Improvement of Table 2

Vacant Cell Route

1-B 8 – 24 + 16 – 4 = –4
1-C 8 – 16 + 16 – 4 = 4
3-A 8 – 16 + 24 –16 = 0
3-C 24 – 16 + 24 – 16 = 16

The improvement shows that we have to transfer some units to 1-B. The
choice is between -24 and -4, which are costs of cells 1-A and 2-B, respectively, with
entries 158 and 25. Since we must always select the smaller entry, then 25 should
be transferred to 1-B.

Distribution Table 3
Project
Warehouse SUPPLY
A B C
4 8 8
1 133 25 158

16 24 16
2 41 143 184

8 16 24
3 179 179

DEMAND 174 204 143 521

Compute for the total cost of transportation.

Occupied Cell Cost

1-A 133 x 4 = 532
1-B 25 x 8 = 200
2-A 41 x 16 = 656
2-C 143 x 16 = 2,288
3-B 179 x 16 = 2,864
Cost = ₱ 6,540

Computation for Improvement of Table 3

Vacant Cell Route

1-C 8 – 16 + 16 – 4 = 4
2-B 24 – 16 + 4 – 8 = 4
3-A 8 – 4 + 8 –16 = –4
3-C 24 – 16 + 8 – 4 + 16 –16 = 12

Since 3-A has the negative improvement, we have to transfer some units to 3-
A. Only the cells involved in the improvement should be affected. The negative
numerals in the improvement are costs of cells 1-A and 3-B, with entries 133 and

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179, respectively. Since 133 is smaller than 179, then 133 should be transferred to
3-A.
Distribution Table 4
Project
Warehouse SUPPLY
A B C
4 8 8
1 158 158

16 24 16
2 41 143 184

8 16 24
3 133 46 179

DEMAND 174 204 143 521

Compute for the total cost of transportation.

Occupied Cell Cost

1-B 158 x 8 = 1,264
2-A 41 x 15 = 656
2-C 143 x 16 = 2,268
3-A 133 x 8 = 1,064
3-B 46 x 16 = 736
Cost = ₱ 6,008
Computation for Improvement of Table 4

Vacant Cell Route

1-A 4 – 8 + 16 – 8 = 4
1-C 8 – 16 + 16 – 8 + 16 – 8 = 4
2-B 24 – 16 + 8 –16 = 0
3-C 24 – 16 + 16 – 8 = 16
Since the improvement has all positive results, this means that we cannot
minimize the cost of transportation any further. Hence, table 4 is optimum.

Decision:
Transport from Route
Plant 1 to Project B 158 truckloads
Plant 2 to Project A 41 truckloads
Plant 2 to Project C 143 truckloads
Plant 3 to Project A 133 truckloads
Plant 3 to Project B 46 truckloads

Minimum Cost: ₱ 6,008

Unbalanced Transportation Problems

In actual practice, it seldom happens that the quantity demanded is just equal
to the quantity supplied. Under normal situation, transportation problems come as

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unbalanced problems. But since we can only handle a balanced table, we must find
a way of converting an unbalanced table to a balanced one. This can be done by the
use of a dummy. A dummy is something we pretend to exists, although in reality it
does not. We must remember the following:
a) If the demand is greater, use a dummy supply.
b) If the supply is greater, use a dummy demand.

A. Supply is Greater than Demand

Project
Warehouse SUPPLY
A B C
4 8 8
1 76

16 24 16
2 82

8 16 24 77
3

235
DEMAND 72 102 41 215

The above table is unbalanced, since the total supply is 235 units, while the
total demand is 215.
To convert the table to a balanced one, create a dummy demand. So, new
column must be added to the right. The cost of transportation for each dummy cell
is zero.
A new table with a dummy demand and the initial distribution of units is shown
below.

Project
Warehouse SUPPLY
A B C Dummy
4 8 8 0
1 72 76

16 24 16 0
2 82 82

8 16 24 0
3 16 24 77
235
DEMAND 72 102 41 20 235

The above table shows a surplus of 20 units which is entered in the dummy
demand. (You may continue solving for the optimum table.)

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B. Demand is Greater than Supply

Project
Warehouse SUPPLY
A B C
4 8 8
1 56

16 24 16
2 82

8 16 24
3 77
215
DEMAND 80 102 41 223

To convert the table to a balanced table, create s dummy supply.

Project
Warehouse SUPPLY
A B C
4 8 8
1 56 76

16 24 16
2 24 58 82

8 16 24
3 44 33 77

0 0 0
Dummy 8 8
223
DEMAND 80 102 41 223

The above table shows a demand surplus of 8 units, entered in the dummy
supply. Use either stepping stone method.

Degenerate Transportation Problems

If the total number of used cells is not equal to the number of rows plus the
number of columns minus one, degeneracy in transportation occurs. Degeneracy
may occur in an initial solution or in subsequent solutions. A degenerate table is one
which cannot be improved due to lack of entries.

A. Degenerate in an Initial Solution

This particular case of degeneracy arises when in using north-west method of
initial distribution, both column requirement and row requirement are satisfied
simultaneously, thus breaking the stair-step pattern. To resolve this, we assign a
zero entry to one of the unused cells.
By the use of the north-west distribution, the entries are shown in the table.
While the number of rows plus the number of columns minus one is supposed to be
5, the number of occupied cells in the table is only 4. Hence, the table is degenerate.

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If we try to compute the vacant cells 1-C, 2-C, 3-B, and 3-A, no route (rectangular or
zigzag) is possible.

Initial Distribution Table

Project
Warehouse SUPPLY
A B C
4 8 8
1 35 20 55

16 24 16
2 25 25

8 16 24
3 30 30

DEMAND 35 45 30 110

A zero entry may be assigned to cell 2-C or 3-B. Either case will give the same
optimum solution.
The new table with zero assigned to an unused cell is shown below:

Initial Distribution Table

Project
Warehouse SUPPLY
A B C
4 8 8
1 35 20 55

16 24 16
2 25 0 25

8 16 24
3 30 30

DEMAND 35 45 30 110

We can now solve the problem, treating the zero entry just like an ordinary non-
zero entry.

B. Degenerate in an Subsequent Solution

Some transportation problems begin with an initial table that is not degenerate,
but in the process of finding the optimum solution, degeneracy arise. This happens
when a tie exists between two or more entries that represent the smallest on the path
of improvement with minus sign.
The following table has an initial solution which is not degenerate. This is the
second table after the transfer of 35 to cell 3-B.
It is degenerate because only 4 cells are occupied, while the rows plus the
number of columns minus 1 is 5.

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Initial Distribution Table

Project
Warehouse SUPPLY
A B C
4 8 24
1 50 45 95

8 4 8
2 65 65

16 4 16
3 35 35

DEMAND 50 80 65 195

To resolve this when there are two cells that will remain vacant, it is advisable
to indicate 0 in one of the two vacated cells. Assume that only one quantity was
removed or transferred, and the other one was subtracted, thus leaving 0 in one cell.
The affected cells are:
Distribution Table 2
Project
Warehouse SUPPLY
A B C
4 8 24
1 50 45 95

8 4 8
2 0 65 65

16 4 16
3 35 35

DEMAND 50 80 65 195

You can continue now to find the optimum table.

Transportation Problem: Maximization Process

Maximization transportation problems have the same procedure of solving as
that of minimization, except that instead of finding the greatest negative value in the
computation for improvement, we find the greatest positive value. The reason is
obvious, positive value in the improvement indicates the greatest contribution to the
objective.

2.2 Assignment Method

Another special-purpose algorithm used in linear programming is the
Assignment Method. The problem is concerned with allocating the jobs to each of
the workers for minimum cost.
There are three main steps to follow in solving an assignment problem:
1) Subtract the smallest cost from each entry in each row. If each zero can now be
assigned one-to-one correspondence with the workers, an optimal solution is
reached. If it cannot, go on to step 2.

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2) Subtract the smallest cost in each column. If the zero entries can now be
distributed one-to-one correspondence with the workers, an optimal solution is
reached. If it cannot, go on to step 3.
3) Cover the zero entries by vertical or horizontal lines, using the least number of
lines possible; this can be done by covering first the row or column having the most
number of zeros. Subtract the smallest uncovered cost from each uncovered cost
but add it to the entry found at the intersection of the lines. If an assignment is
already possible, an optimal solution is reached. If not repeat step 3.
An assignment is optimum if the number of lines used is equal to the number
of rows or the number of columns.

Example.
Four engineers are to work on 4 projects of ROA Construction Company. The
problem is to decide which engineer should be assigned to which project. Each
engineer charge different fees on each project, due to distances of the projects and
the complexity of the work. The cost of assigning particular engineers to particular
projects are as follows:

Project
Engineer
A B C D
1 ₱11,000 ₱8,000 ₱10,000 ₱7,000
2 6,000 5,000 3,000 8,000
3 4,000 8,000 10,000 9,000
4 11,000 10,000 5,000 7,000

The objective is to find the least cost of assignment.

Solution.
For easy computation, since all entries have 3 zero-endings, we may
temporarily eliminate the three zeros first.

11 8 10 7
6 5 3 8
Result after removing three zeros in each entry.
4 8 10 9
11 10 5 7

4 1 3 0
3 2 0 5 Result after subtracting the smallest entry in each row. Since the
zeros cannot yet be assigned to each engineer, proceed to the next
0 4 6 5
step.
6 5 0 2

4 0 3 0
3 1 0 5 Result after subtracting the smallest entry in each column. Zeros
0 3 6 5 cannot yet be assigned one-to-one to each engineer.
6 4 0 2

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4 0 3 0
3 1 0 5 Covering zero entries with the least number of vertical and
0 3 6 5 horizontal lines.
6 4 0 2

5 0 4 0 Result after subtracting 1, the smallest uncovered, from each

uncovered entry and add it to the intersection of the lines. This table
3 0 0 4
is optimum since the least number of vertical lines or horizontal
0 2 6 4
lines that can be drawn is equal to the number of columns, and
6 3 0 1 each zero can now be assigned to each engineer.

Assigning the projects to the engineer:

Engineer 1 can go to Project B or D
Engineer 2 can go to project B or C
Engineer 3 can go to Project A
Engineer 4 can go to Project C
Final Decision:
Cost
Engineer 1 to D ₱ 7,000
Engineer 2 to B 5,000
Engineer 3 to A 4,000
Engineer 4 to C 5,000
Minimum Cost ₱ 21,000

Explanation: Since engineers 4 and 3 cannot go to any project except C and

A respectively, then engineer 2 must go to project B, while engineer 1 has no other
choice but D.

1) Taha, H. (2012). Operations research: an introduction. Pearson Education.

2) Kolluri, B., Panik, M. J., & Singamsetti, R. N. (2016). Introduction to quantitative methods
in business: With applications using microsoft office excel. Retrieved from
https://ebookcentral.proquest.com
3) Baker, K. R. (2015). Optimization modeling with spreadsheets. Retrieved from
https://ebookcentral.proquest.com
4) Ramamurthy, P. (2000). Operations research. Retrieved from
https://ebookcentral.proquest.com
5) Guiasu, S. (2009). Probablistic models in operations research. Retrieved from
https://ebookcentral.proquest.com

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Activity 1. Now that you know the concepts of the integer programming,
transportation, and assignment methods, let us try to check your
understanding of these concepts by answering the following
questions.

1. Describe the branch and bound method in integer programming.

2. What are the three information needs of the transportation model?

3. Identify the three “steps” in the northwest-corner rule.

4. How to find the optimal solution to the linear programming problem model with
the integer restrictions relaxed?

5. Suppose you are using the Hungarian Algorithm to minimize cost. After creating
a matrix with people as rows and activities as columns, you have 8 rows and 7
columns. What do you have to do before you can start the steps of the algorithm?

6. For Company Z, the amount shipped to three out of four destinations must not
exceed 45 tons. This is an example of what kind of constraint?

7. The more sources and destinations there are for a transportation problem, the
smaller the percentage of all cells that will be used in the optimal solution. Explain.

8. All of the transportation examples appear to apply to long distances. Is it possible

for the transportation model to apply on a much smaller scale, for example, within
the departments of a store or the offices of a building? Discuss; create an example
or prove the application impossible.

9. What is meant by an unbalanced transportation problem, and how would you

balance it?

10. Explain what is meant by the term degeneracy within the context of transportation
modeling.

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Activity 1. Getting acquainted with the essential terms and concepts of the integer
programming, transportation problem, and assignment problem, what also
matters is you should also be able to apply these concepts in solving the
following problems.

1. Ronald owns 2 warehouses of television sets located in Davao City and Tagum City. His warehouse in
Davao City has 10 units, and Tagum City has 9 units. There are three orders to fill: Panabo orders for 6
units, Digos orders 8 units, and Mati orders for 5 units. Transportation costs per unit from Davao to
Panabo, Digos, and Mati are ₱15, ₱18, and ₱8 respectively; from Tagum are ₱16, ₱20, and ₱10. Find
a plan of distribution that will minimize the cost of transportation.

2. The Helix Mining Company mines ore at different locations and ship it for processing to three different
manufacturing locations. Ore availabilities are 20, 23, and 28 tons at mine 1, 2, and 3 respectively.
Requirements at plants 1, 2, and 3 are 22, 22, and 27 respectively. Shipping costs are: from mine 1 to
plants 1, 2, and 3 are ₱45, ₱75, and ₱55 per ton; from mine 2 are ₱85, ₱55, and ₱75; from mine 3 are
₱65, ₱55, and ₱65. Formulate a plan that will minimize the cost of transportation.

3. Engr. Santos has to assign 4 teams to work on 4 projects. The costs charged by each team are
as follows. Costs are in thousands of pesos. Determine the least cost of assignment.
Projects
Teams
1 2 3 4
A 15 18 20 16
B 18 17 14 20
C 21 20 13 15
D 17 15 18 19

4. The purchasing agent for ROA Company wishes to purchase replacement tires for the company’s
service vehicles. He needs 400 units of type A, 400 units of type B, and 400 units of type C. Three
tire suppliers have bid at the prices given below. Each of them says it will supply all or part of the
order. The purchasing agent would like to buy tires in such a way that the entire requirement of
each type is purchased from a single dealer. Use the assignment model to determine the least
cost of purchasing plan.
Tire Type
Company
A B C
Firestone 850 1000 880
Goodrich 860 880 890
Goodyear 800 890 890

5. A jeweler and her apprentice make silver pins and necklaces by hand. Each week they have 80
hours of labor and 36 ounces of silver available. It requires 8 hours of labor and 2 ounces of silver
to make a pin, and 10 hours of labor and 6 ounces of silver to make a necklace. Each pin also
contains a small gem of some kind. The demand for pins is no more than six per week. A pin
earns the jeweler P400 in profit, and a necklace earns P100. The jeweler wants to know how
many of each item to make each week in order to maximize profit.
a) Formulate an integer programming model for this problem.
b) Solve this model using the branch and bound method. Compare this solution with the solution
without integer restrictions and indicate if the rounded-down solution would have been
optimal.

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Activity 1. Based from the definition of the most essential terms and concepts in
the study integer programming, transportation, and assignment
problems and the learning exercises that you have done, please feel
free to write your arguments or lessons learned below.

1.

2.

3.

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Do you have any question for clarification?

Questions / Issues Answers

1.

2.

3.

4.

5.

Transportation
Integer Programming Assignment Problem
Problem
Stepping-stone
North-west method Optimal solution
method
Relaxed restrictions Branch and Bound Unbalanced problem
Supply and demand Degeneracy Initial Table
One-to-One
Minimum cost Sub-problem
correspondence

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Week 8-9: Unit Learning Outcomes (ULO):

At the end of the unit, you are expected to
a. Solve problems on project scheduling, decision theory, business
forecasting and queuing models.

Big Picture in Focus

ULO-a. Solve problems on project scheduling, decision theory, business
forecasting and queuing models.

Metalanguage

In this section, the essential terms relevant to the study of project scheduling,
decision theory, business forecasting and queuing models and to demonstrate
ULO-a will be operationally defined to establish a common frame of reference as to
how the texts work. You will encounter these terms as we go through the study of
the nature of mathematics. Please refer to these definitions in case you will
encounter difficulty in understanding some concepts.

1. Project Management
Project management is the process of leading the work of a team to achieve
goals and meet success criteria at a specified time. The primary challenge of project
management is to achieve all of the project goals within the given constraints. This
information is usually described in project documentation, created at the beginning
of the development process. The primary constraints are scope,
time, quality and budget. The secondary challenge is to optimize the allocation of
necessary inputs and apply them to meet pre-defined objectives.
The objective of project management is to produce a complete project which
complies with the client's objectives. In many cases the objective of project
management is also to shape or reform the client's brief to feasibly address the
client's objectives. Once the client's objectives are clearly established, they should
influence all decisions made by other people involved in the project – for example
project managers, designers, contractors, and sub-contractors. Ill-defined or too
tightly prescribed project management objectives are detrimental to decision
making.
A project is a temporary endeavor designed to produce a unique product,
service or result with a defined beginning and end (usually time-constrained, and
often constrained by funding or staffing) undertaken to meet unique goals and

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objectives, typically to bring about beneficial change or added value. The temporary
nature of projects stands in contrast with business as usual (or operations), which
are repetitive, permanent, or semi-permanent functional activities to produce
products or services. In practice, the management of such distinct production
approaches requires the development of distinct technical skills and management
strategies.

2. Program Evaluation and Review Technique (PERT)

PERT is a project management planning tool used to calculate the amount
of time it will take to realistically finish a project. PERT charts are tools used to plan
tasks within a project - making it easier to schedule and coordinate team members
accomplishing the work. PERT charts were created in the 1950s to help manage
the creation of weapons and defense projects for the US Navy. While PERT was
being introduced in the Navy, the private sector simultaneously gave rise to a similar
method called Critical Path. PERT is similar to critical path in that they are both used
to visualize the timeline and the work that must be done for a project. However with
PERT, you create three different time estimates for the project: you estimate the
shortest possible amount time each task will take, the most probable amount of
time, and the longest amount of time tasks might take if things don't go as planned.
PERT is calculated backward from a fixed end date since contractor deadlines
typically cannot be moved.

3. Critical Path Method (CPM)

The critical path method (CPM), or critical path analysis (CPA), is
an algorithm for scheduling a set of project activities. It is commonly used in
conjunction with the program evaluation and review technique (PERT). A critical
path is determined by identifying the longest stretch of dependent activities and
measuring the time required to complete them from start to finish.This method is one
of the most important concepts in project management, and certainly among the
most enduring.
Simply, it is generally used for the projects whose time duration is known with
certainty and also the amount of resources required for the completion of the project
is assumed to be known. First of all, the activities comprised in a project are
identified along with their importance, i.e. the dependency of activities on each other.
For each activity, it is identified that which other activities are required to be
completed before it starts and how long the activities takes to get finished.
Once the critical activities are identified, the network is drawn connecting all the
crucial activities and depicting which activity to be carried first, so that successor
activities could be performed effectively.

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Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the eighth and
ninth weeks of the course, you need to fully understand the following essential
knowledge that will be laid down in the succeeding pages. Please note that you are
not limited to refer to these resources exclusively. Thus, you are expected to utilize
other books, research articles, and other resources that are available in the
university’s library e.g., ebrary, search.proquest.com, etc.

1. Project Management with PERT/CPM

One of the most challenging jobs that any manager can take on is the
management of a large-scale project that requires coordinating numerous activities
throughout the organization. A myriad of details must be considered in planning how
to coordinate all these activities, in developing a realistic schedule, and then in
monitoring the progress of the project.
Fortunately, two closely related operations research techniques, PERT
(program evaluation and review technique) and CPM (critical path method), are
available to assist the project manager in carrying out these responsibilities. These
techniques make heavy use of networks to help plan and display the coordination of
all the activities. They also normally use a software package to deal with all the data
needed to develop schedule information and then to monitor the progress of the
project.
PERT and CPM have been used for a variety of projects, including the following
types.
1. Construction of a new plant
2. Research and development of a new product
3. NASA space exploration projects
4. Movie productions
5. Building a ship
6. Government-sponsored projects for developing a new weapons system
7. Relocation of a major facility
8. Maintenance of a nuclear reactor
9. Installation of a management information system
10. Conducting an advertising campaign

PERT and CPM were independently developed in the late 1950s. Ever since,
they have been among the most widely used OR techniques.
Consequently, practitioners now commonly use the two names
interchangeably, or combine them into the single acronym PERT/CPM, as we often
will do. We will make the distinction between them only when we are describing an
option that was unique to one of the original versions.

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Example.
The RELIABLE CONSTRUCTION COMPANY has just made the winning bid
of ₱5.4 million to construct a new plant for a major manufacturer. The manufacturer
needs the plant to go into operation within a year. Therefore, the contract includes
the following provisions:
• A penalty of ₱300,000 if Reliable has not completed construction by the
deadline 47 weeks from now.
• To provide additional incentive for speedy construction, a bonus of ₱150,000
will be paid to Reliable if the plant is completed within 40 weeks.
Reliable is assigning its best construction manager, David Perty, to this project
to help ensure that it stays on schedule. He looks forward to the challenge of bringing
the project in on schedule, and perhaps even finishing early. However, since he is
doubtful that it will be feasible to finish within 40 weeks without incurring excessive
costs, he has decided to focus his initial planning on meeting the deadline of 47
weeks.
Mr. Perty will need to arrange for a number of crews to perform the various
construction activities at different times. Table below shows his list of the various
activities. The third column provides important additional information for coordinating
the scheduling of the crews.

Table 1. Activity list for the Reliable Construction Co. project

Immediate Estimated
Activity Activity Description
Predecessors Duration
A Excavate - 2 weeks
B Lay the Foundation A 4 weeks
C Put up the rough wall B 10 weeks
D Put up the roof C 6 weeks
E Install the exterior plumbing C 4 weeks
F Install the interior plumbing E 5 weeks
G Put up the exterior siding D 7 weeks
H Do the exterior painting E, G 9 weeks
I Do the electrical work C 7 weeks
J Put up the wallboard F, I 8 weeks
K Install the flooring J 4 weeks
L Do the interior painting J 5 weeks
M Install the exterior fixtures H 2 weeks
N Install the interior fixtures K, L 6 weeks

For any given activity, its immediate predecessors (as given in the third
column of the table are those activities that must be completed by no later than the
starting time of the given activity. (Similarly, the given activity is called an immediate
successor of each of its immediate predecessors.)
For example, the top entries in this column indicate that
1. Excavation does not need to wait for any other activities.
2. Excavation must be completed before starting to lay the foundation.

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3. The foundation must be completely laid before starting to put up the rough
wall, etc.
When a given activity has more than one immediate predecessor, all must be
finished before the activity can begin.
In order to schedule the activities, Mr. Perty consults with each of the crew
supervisors to develop an estimate of how long each activity should take when it is
done in the normal way. These estimates are given in the rightmost column of the
table above.
Adding up these times gives a grand total of 79 weeks, which is far beyond the
deadline for the project. Fortunately, some of the activities can be done in parallel,
which substantially reduces the project completion time.
Given all the information in the table, Mr. Perty now wants to develop answers
to the following questions.
1. How can the project be displayed graphically to better visualize the flow of
the activities?
2. What is the total time required to complete the project if no delays occur?
3. When do the individual activities need to start and finish (at the latest) to
meet this project completion time?
4. When can the individual activities start and finish (at the earliest) if no delays
occur?
5. Which are the critical bottleneck activities where any delays must be
avoided to prevent delaying project completion?
6. For the other activities, how much delay can be tolerated without delaying
project completion?
Being a regular user of PERT/CPM, Mr. Perty knows that this technique will
provide invaluable help in answering these questions.

a. Using a Network to Visually Display a Project

Networks play a key role in dealing with projects. They enable showing the
relationships between the activities and placing everything into perspective. They
then are used to help analyze the project and answer the kinds of questions raised
above.

Project Networks
A network used to represent a project is called a project network. A project
network consists of a number of nodes (typically shown as small circles or
rectangles) and a number of arcs (shown as arrows) that lead from some node to
another.
As table above indicates, three types of information are needed to describe a
project.
1. Activity information: Break down the project into its individual activities (at
the desired level of detail).

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2. Precedence relationships: Identify the immediate predecessor(s) for each

activity.
3. Time information: Estimate the duration of each activity.

The project network needs to convey all this information. Two alternative types
of project networks are available for doing this.

One type is the activity-on-arc (AOA) project network, where each activity is
represented by an arc. A node is used to separate an activity (an outgoing arc) from
each of its immediate predecessors (an incoming arc). The sequencing of the arcs
thereby shows the precedence relationships between the activities.

The second type is the activity-on-node (AON) project network, where each
activity is represented by a node. The arcs then are used just to show the precedence
relationships between the activities. In particular, the node for each activity with
immediate predecessors has an arc coming in from each of these predecessors.

The original versions of PERT and CPM used AOA project networks, so this
was the conventional type for some years. However, AON project networks have
some important advantages over AOA project networks for conveying exactly the
same information.
1. AON project networks are considerably easier to construct than AOA
project networks.
2. AON project networks are easier to understand than AOA project networks
for inexperienced users, including many managers.
3. AON project networks are easier to revise than AOA project networks when
there are changes in the project.

For these reasons, AON project networks have become increasingly popular
with practitioners. It appears somewhat likely that they will become the conventional
type to use. Therefore, we now will focus solely on AON project networks, and will
drop the adjective AON.

Figure 1 below shows the project network for Reliable’s project. Referring also
to the third column of the table, note how there is an arc leading to each activity from
each of its immediate predecessors. Because activity A has no immediate
predecessors, there is an arc leading from the start node to this activity. Similarly,
since activities M and N have no immediate successors, arcs lead from these
activities to the finish node. Therefore, the project network nicely displays at a glance
all the precedence relationships between all the activities (plus the start and finish of
the project). Based on the rightmost column of the table, the number next to the node
for each activity then records the estimated duration (in weeks) of that activity.

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Figure 1. The project network for the Reliable Construction Co. project.

b. Scheduling a Project with PERT/CPM

At the previous section, we mentioned that Mr. Perty, the project manager for
the Reliable Construction Co. project, wants to use PERT/CPM to develop answers
to a series of questions. His first question has been answered in the preceding
section. Here are the five questions that will be answered in this section.
Question 2: What is the total time required to complete the project if no delays
occur?
Question 3: When do the individual activities need to start and finish (at the
latest) to meet this project completion time?
Question 4: When can the individual activities start and finish (at the earliest) if
no delays occur?
Question 5: Which are the critical bottleneck activities where any delays must
be avoided to prevent delaying project completion?
Question 6: For the other activities, how much delay can be tolerated without
delaying project completion?
The project network in Figure 1 enables answering all these questions by
providing two crucial pieces of information, namely, the order in which certain
activities must be performed and the (estimated) duration of each activity. We begin
by focusing on Questions 2 and 5.

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The Critical Path

How long should the project take? We noted earlier that summing the durations
of all the activities gives a grand total of 79 weeks. However, this is not the answer
to the question because some of the activities can be performed (roughly)
simultaneously. What is relevant instead is the length of each path through the
network.
A path through a project network is one of the routes following the arcs from
the START node to the FINISH node. The length of a path is the sum of the
(estimated) durations of the activities on the path.
The six paths through the project network in Figure 1 are given in the table,
along with the calculations of the lengths of these paths. The path lengths range from
31 weeks up to 44 weeks for the longest path (the fourth one in the table).
So given these path lengths, what should be the (estimated) project duration
(the total time required for the project)? Let us reason it out.
Since the activities on any given path must be done one after another with no
overlap, the project duration cannot be shorter than the path length. However, the
project duration can be longer because some activity on the path with multiple
immediate predecessors might have to wait longer for an immediate predecessor not
on the path to finish than for the one on the path. For example, consider the second
path in the table and focus on activity H. This activity has two immediate
predecessors, one (activity G) not on the path and one (activity E) that is. After
activity C finishes, only 4 more weeks are required for activity E but 13 weeks will be
needed for activity D and then activity G to finish. Therefore, the project duration
must be considerably longer than the length of the second path in the table.

The paths and path lengths through Reliable’s project

Path Length
START→A→B→C→D→G→H→M→FINISH 2 + 4 + 10 + 6 + 7+9+2 = 40 weeks
START→A→B→C→E→H→M→FINISH 2 + 4 + 10 + 4 + 9 + 2 = 31 weeks
START→A→B→C→E→F→J→K→ N→FINISH 2 + 4 + 10 + 4 + 5 + 8 + 4 + 6 = 43 weeks
START→A→B→C→E→F→J→L→ N→FINISH 2 + 4 + 10 + 4 + 5 + 8 + 5 + 6 = 44 weeks
START→A→B→C→I→J→K→ N→FINISH 2 + 4 + 10 + 7 + 8 + 4 + 6 = 41 weeks
START→A→B→C→I→J→L→ N→FINISH 2 + 4 + 10 + 7 + 8 + 5 + 6 = 42 weeks

However, the project duration will not be longer than one particular path. This
is the longest path through the project network. The activities on this path can be
performed sequentially without interruption. (Otherwise, this would not be the longest
path.) Therefore, the time required to reach the FINISH node equals the length of
this path. Furthermore, all the shorter paths will reach the FINISH node no later than
this. Here is the key conclusion.
The (estimated) project duration equals the length of the longest path through
the project network. This longest path is called the critical path. (If more than one
path tie for the longest, they all are critical paths.)
Thus, for the Reliable Construction Co. project, we have

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Critical path: START →A→B→C→E→F→J→L→N→ FINISH

(Estimated) project duration = 44 weeks.

We now have answered Mr. Perty’s Questions 2 and 5 given at the beginning
of the section. If no delays occur, the total time required to complete the project
should be about 44 weeks. Furthermore, the activities on this critical path are the
critical bottleneck activities where any delays in their completion must be avoided to
prevent delaying project completion. This is valuable information for Mr. Perty, since
he now knows that he should focus most of his attention on keeping these particular
activities on schedule in striving to keep the overall project on schedule.
Furthermore, if he decides to reduce the duration of the project (remember that
bonus for completion within 40 weeks), these are the main activities where changes
should be made to reduce their durations.
For small project networks like Figure 1, finding all the paths and determining
the longest path is a convenient way to identify the critical path. However, this is not
an efficient procedure for larger projects. PERT/CPM uses a considerably more
efficient procedure instead.
Not only is this PERT/CPM procedure very efficient for larger projects, it also
provides much more information than is available from finding all the paths. In
particular, it answers all five of Mr. Perty’s questions listed at the beginning of the
section rather than just two. These answers provide the key information needed to
schedule all the activities and then to evaluate the consequences should any
activities slip behind schedule.

c. Scheduling Individual Activities

The PERT/CPM scheduling procedure begins by addressing Question 4: When
can the individual activities start and finish (at the earliest) if no delays occur? Having
no delays means that (1) the actual duration of each activity turns out to be the same
as its estimated duration and (2) each activity begins as soon as all its immediate
predecessors are finished. The starting and finishing times of each activity if no
delays occur anywhere in the project are called the earliest start time and the
earliest finish time of the activity.
These times are represented by the symbols
ES = earliest start time for a particular activity,
EF = earliest finish time for a particular activity,
where
EF = ES + (estimated) duration of the activity.

Rather than assigning calendar dates to these times, it is conventional instead to

count the number of time periods (weeks for Reliable’s project) from when the project
started.
Thus,

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Starting time for project = 0.

Since activity A starts Reliable’s project, we have
Activity A: ES = 0,
EF = 0 + duration (2 weeks)
= 2,
where the duration (in weeks) of activity A is given in Figure 1 as the boldfaced
number next to this activity. Activity B can start as soon as activity A finishes, so
Activity B: ES = EF for activity A
= 2,
EF = 2 + duration (4 weeks)
= 6.
This calculation of ES for activity B illustrates our first rule for obtaining ES.
If an activity has only a single immediate predecessor, then
ES for the activity = EF for the immediate predecessor.
This rule (plus the calculation of each EF) immediately gives ES and EF for activity
C, then for activities D, E, I, and then for activities G, F as well. Figure 2 shows ES
and EF for each of these activities to the right of its node. For example,
Activity G: ES = EF for activity D
= 22,
EF = 22 + duration (7 weeks)
= 29,
Figure 2.
Earliest start time (ES) and earliest finish time
(EF) values for the initial activities in figure
above that have only a single immediate
predecessor.

which means that this activity (putting up the exterior siding) should start 22 weeks
and finish 29 weeks after the start of the project.

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Now consider activity H, which has two immediate predecessors, activities G

and E.
Activity H must wait to start until both activities G and E are finished, which gives the
following calculation.
Immediate predecessors of activity H:
Activity G has EF = 29.
Activity E has EF = 20.
Larger EF = 29.
Therefore,
ES for activity H = larger EF above
= 29.
This calculation illustrates the general rule for obtaining the earliest start time for any
activity.

Earliest Start Time Rule

The earliest start time of an activity is equal to the largest of the earliest finish
times of its immediate predecessors. In symbols,
ES = largest EF of the immediate predecessors.
When the activity has only a single immediate predecessor, this rule becomes the
same as the first rule given earlier. However, it also allows any larger number of
immediate predecessors as well. Applying this rule to the rest of the activities in
Figure 2 (and calculating each EF from ES) yields the complete set of ES and EF
values given in Figure 3.

Figure 3.
Earliest start time (ES) and earliest finish time
(EF) values for all the activities (plus the
START and FINISH nodes) of the Reliable
Construction Co. project.

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Note that Figure 3 also includes ES and EF values for the START and FINISH
nodes. The reason is that these nodes are conventionally treated as dummy
activities that require no time. For the START node, ES = 0 = EF automatically. For
the FINISH node, the earliest start time rule is used to calculate ES in the usual way,
as illustrated below.
Immediate predecessors of the FINISH node:
Activity M has EF = 40.
Activity N has EF = 44.
Larger EF = 44.
Therefore,
ES for the FINISH node = larger EF above
= 44.
EF for the FINISH node = 44 + 0 = 44.
This last calculation indicates that the project should be completed in 44 weeks
if everything stays on schedule according to the start and finish times for each activity
given in Figure 3. (This answers Question 2.) Mr. Perty now can use this schedule
to inform the crew responsible for each activity as to when it should plan to start and
finish its work.
This process of starting with the initial activities and working forward in time
toward the final activities to calculate all the ES and EF values is referred to as
making a forward pass through the network.
Keep in mind that the schedule obtained from this procedure assumes that the
actual duration of each activity will turn out to be the same as its estimated duration.
What happens if some activity takes longer than expected? Would this delay project
completion? Perhaps, but not necessarily. It depends on which activity and the length
of the delay.
The next part of the procedure focuses on determining how much later than
indicated in Figure 3 can an activity start or finish without delaying project completion.
The latest start time for an activity is the latest possible time that it can
start without delaying the completion of the project (so the FINISH node
still is reached at its earliest finish time), assuming no subsequent delays
in the project. The latest finish time has the corresponding definition
with respect to finishing the activity.
In symbols,
LS = latest start time for a particular activity,
LF = latest finish time for a particular activity,
where
LS = LF – (estimated) duration of the activity.

To find LF, we have the following rule.

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Latest Finish Time Rule

The latest finish time of an activity is equal to the smallest of the latest
start times of its immediate successors. In symbols,
LF = smallest LS of the immediate successors.
Since an activity’s immediate successors cannot start until the activity finishes, this
rule is saying that the activity must finish in time to enable all its immediate
successors to begin by their latest start times.
For example, consider activity M in Figure 3. Its only immediate successor is
the FINISH node. This node must be reached by time 44 in order to complete the
project within 44 weeks, so we begin by assigning values to this node as follows.
FINISH node: LF = its EF = 44,
LS = 44 - 0 = 44.
Now we can apply the latest finish time rule to activity M.
Activity M: LF = LS for the FINISH node
= 44,
LS = 44 - duration (2 weeks)
= 42.
(Since activity M is one of the activities that together complete the project, we also
could have automatically set its LF equal to the earliest finish time of the FINISH
node without applying the latest finish time rule.)
Since activity M is the only immediate successor of activity H, we now can
apply the latest finish time rule to the latter activity.
Activity H: LF = LS for activity M
= 42,
LS = 42 - duration (9 weeks)
= 33.
Note that the procedure being illustrated above is to start with the final activities
and work backward in time toward the initial activities to calculate all the LF and LS
values. Thus, in contrast to the forward pass used to find earliest start and finish
times, we now are making a backward pass through the network.
Figure 4 shows the results of making a backward pass to its completion. For
example, consider activity C, which has three immediate successors.
Immediate successors of activity C:
Activity D has LS = 20.
Activity E has LS = 16.
Activity I has LS = 18.
Smallest LS = 16.
Therefore,
LF for activity C = smallest LS above
= 16.
Mr. Perty now knows that the schedule given in Figure 4 represents his “last
chance schedule.” Even if an activity starts and finishes as late as indicated in the

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figure, he still will be able to avoid delaying project completion beyond 44 weeks as
long as there is no subsequent slippage in the schedule. However, to allow for
unexpected delays, he would prefer to stick instead to the earliest time schedule
given in Figure 3 whenever possible in order to provide some slack in parts of the
schedule.

Figure 4.
Latest start time (LS) and latest finish time
(LF) for all the activities (plus the START and
FINISH nodes) of the Reliable Construction
Co. project.

If the start and finish times in Figure 4 for a particular activity are later than the
corresponding earliest times in Figure 3, then this activity has some slack in the
schedule. The last part of the PERT/CPM procedure for scheduling a project is to
identify this slack, and then to use this information to find the critical path. (This will
answer both Questions 5 and 6.)

Identifying Slack in the Schedule

To identify slack, it is convenient to combine the latest times in Figure 4 and
the earliest times in Figure 3 into a single figure. Using activity M as an example, this
is done by displaying the information for each activity as follows.

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(Note that the S or F in front of each parentheses will remind you of whether these
are Start times or Finish times.) Figure 5 displays this information for the entire
project.
Figure 5.
The complete project network showing ES
and LS (in parentheses above the node) and
EF and LF (in parentheses below the node) for
each activity of the Reliable Construction Co.
project. The darker arrows show the critical
path through the project network.

This figure makes it easy to see how much slack each activity has.
The slack for an activity is the difference between its latest finish time and its earliest
finish time. In symbols,
Slack = LF – EF.
(Since LF – EF = LS – ES, either difference actually can be used to calculate slack.)
For example, Slack for activity M = 44 – 40 = 4.

This indicates that activity M can be delayed up to 4 weeks beyond the earliest time
schedule without delaying the completion of the project at 44 weeks. This makes
sense, since the project is finished as soon as both activities M and N are completed
and the earliest finish time for activity N (44) is 4 weeks later than for activity M (40).
As long as activity N stays on schedule, the project still will finish at 44 weeks if any
delays in starting activity M (perhaps due to preceding activities taking longer than
expected) and in performing activity M do not cumulate more than 4 weeks.

Table 2 below shows the slack for each of the activities. Note that some of the
activities have zero slack, indicating that any delays in these activities will delay
project completion. This is how PERT/CPM identifies the critical path(s).
Each activity with zero slack is on a critical path through the project
network such that any delay along this path will delay project completion.

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Thus, the critical path is

START →A→B→C→E→F→J→L→N→ FINISH,
Table 2. Slack for Reliable’s activities
Slack On Critical
Activity
(LF – EF) Path?
A 0 Yes
B 0 Yes
C 0 Yes
D 4 No
E 0 Yes
F 0 Yes
G 4 No
H 4 No
I 2 No
J 0 Yes
K 1 No
L 0 Yes
M 4 No
N 0 Yes

just as we found by a different method at the beginning of the section. This path is
highlighted in Figure 5 by the darker arrows. It is the activities on this path that Mr.
Perty must monitor with special care to keep the project on schedule.

2. Decision Theory
A decision process is a matter of selecting a single act among all available
alternatives. A sound decision is likely to be arrived at, if a careful deliberation is
made. Making use of quantities in decision-making helps a great deal in minimizing
mistakes. Some methods of computation should therefore be learned.

The Concept of Probability

Probability is a measure of certainty. The value of probability is certain to
happen the probability is 1 or 100%. If an event is impossible to happen the
probability is zero. The probability of success plus the probability of failure is equal
to 1 or 100%. As an example, if the probability that it will rain 60%, the probability
that it will not rain is 40%.

Computation of ME or EV
If P represents the probability value and x represents the amount of money,
EV = P(X). If several events are expected to happen, with each having its own
amount of probability,
EV = P1(X1) + P2(X2) + … + Pn(Xn)
Expected value is sometimes negative, that is if the person will tend to lose
instead of gain.
Example.
Suppose that a fair coin is tossed and one has to receive P4 if it lands head,
and pay P6 if it lands tail. Find the EV.

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Solution.
Since there are only two possibilities; head or tail, so the probability of head is
1 out of 2 or 1/2., and that of tail is also ½. Hence,
P1 = ½ X1 = 4
P2 = ½ X2 = –6 (negative sign is used if one has to give)
EV = ½(4) + ½(–6) = 2 – 3
= –1
This means that the game is not fair for the person.

Example.
Suppose a manager has to decide whether to accept a bid or not. If he accepts
the bid, the company may gain P2 million if it succeeds, or lose P1.5 million if it fails.
The probability that it will succeed is 30%. Find the EV if he accepts the bid.
Solution.
P1 = 30% X1 = 2
P2 = 70% X2 = –1.5
EV = 0.30(2) + 0.70(–1.5) = 0.60 – 1.05
= –0.45
This means that the company is expected to lose.

Example.
In a game involving the roll of a single die, the following rules have been agreed
upon: I pay P1 for each roll of the die. If a 6 comes out, I received P5; if a 5 comes
out I receive P2.50, and if a 4 or 2 comes out , I receive P2. I receive nothing for a
1 or 3. Find my EV.
Solution.
P1 = 1/6 X1 = 5 – 1 = 4
P2 = 1/6 X2 = 2.50 –1 = 1.50
P3 = 1/6 + 1/6 = 2/6 X3 = 2 – 1 = 1
P4 = 1/6 + 1/6 = 2/6 X4 = 0 – 1 = –1
EV = 1/6(4) + 1/6(1.50) + 2/6(1) + 2/6 (–1)
= 0.916
This means that the game is favorable for the person because the EV is
positive.

The Decision Tree Analysis

In making a decision, it is most helpful to use a decision tree. The branches of
the tree represent the alternatives. A decision tree is a physical representation of a
decision situation. It provides an overview of the total process, thereby helping the
decision maker examine possible outcomes.
In decision tree, let a rectangle represents a decision point, or a place where a
choice must be made; while a circle represents a chance event, or expected value.

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The circle is a point where the possible outcomes are beyond the control of the
decision maker. Probabilities are involved in chance events.
Example.
Consider the problem of a student who has to decide whether to stop his
studies and work for a job paying P1,500 monthly or continue his studies, after which
a job awaits him paying P2,500 a month, provided he passes his remaining subjects.
He feels that the probability that he will pass his remaining subjects is 40%. Which
choice is better for the student?
Solution.
The decision tree is shown below.

A B pass
continue

stop
fail

The tree starts with a square. At this point the student can choose whether to
stop or continue his studies. If he stops, it is the end of the branch. If he continues
his studies, there are two possible outcomes, he may pass or fail. These outcomes
are beyond his control, hence a circle is drawn.
Let us now add the financial values and probabilities.

A B pass
P2,500
continue P = 0.40

P = 0.60
stop 0
fail
P1,500

If the student stops, he will have P1,500 monthly. P1,500 is indicated at the
end of the branch.
If he continues and passes his remaining subjects, he will have P2,500 at the
end of one branch of the circle. If he fails, he will not have any income, thus zero is
placed at the end of the other branch of the circle. Probabilities are indicated in each
branch.
To compute for the chance event, find the EV of position B.
EV = 0.40(2500) + 0.60(0) = 1,000
To complete the data in the tree, we add the amount of EV.

A B pass
P2,500
continue P = 0.40
P1,000

stop P = 0.60
0
fail
P1,500

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The final alternatives are P1,000 and P1, 500.

A B
continue
P1,000

stop
P1,500

The decision maker has now to choose between P1,000 and P1,500. Since
P1,500 is greater, it is better for him to stop studying and continue to work.

3. Business Forecasting
Forecasting is telling in advance a possible event that may take place in the
future. Forecasts are commonly not accurate. But since decisions are made
everyday especially in business, and these are based on the best available
information, forecasting somehow helps business managers prepare for the future.

Forecasting by Extension of Past History

When history is taken as the beginning point for forecasting, it is believed that
future patterns tend to be extensions of past ones and that some useful forecasts
can be made by studying past behavior. It is common belief that his kind of
forecasting ha a high degree of inaccuracy when extended far into the future. This
type of forecasting is also known as the time series method, and this is good only for
the immediate future.

Average Forecast
A. Unweighted Average Forecast
The simplest way to forecast the sale for the next period, using the available
previous data is to find the average of the said data. The easiest way for example
to foretell the sale next month is by finding the average of the sales in the past 2 or
more months.
Example.
If the enrolment of UM in 2018 was 25,000 and it was 26,000 in 2019, forecast
for 2020 is
25,000 + 26,000
F= = 25,500
2
B. Weighted Average Forecast
Most often it is logical to give a greater weight to the most recent data. It is
very likely for example for UM to have enrolment figure in 2020 closer to 26,000 than
25,000. Hence, giving a weight of 2 to the most recent data.
1( 25,000 ) + 2 ( 26,000 )
F= = 25,667
3

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Therefore, 25,667 is a weighted average forecast in 2020

Moving Average Forecast

Averages that are updated as new data arrive are called moving averages. In
using moving forecast, we move on from one period to another.
Example.
The Soriano Auto Sales Inc. made the following forecasts in the past year. It
made use of 3- and 4-month moving average forecasts.
Actual Sales
Month 3-Month Moving Averages 4-Month Moving Averages
In millions (₱)
January 5.0
February 6.5
March 4.5
April 7.0 (5.0 + 6.5 + 4.5) ÷ 3 = 5.33
May 6.0 (6.5 + 4.5 + 7.0) ÷ 3 = 6.00 (5.0 + 6.5 + 4.5 + 7.0) ÷ 4 = 5.75
June 8.0 (4.5 + 7.0 + 6.0) ÷ 3 = 5.83 (6.5 + 4.5 + 7.0 + 6.0) ÷ 4 = 6.00
July 5.5 (7.0 + 6.0 + 8.0) ÷ 3 = 7.00 (4.5 + 7.0 + 6.0 + 8.0) ÷ 4 = 6.374
August 9.0 (6.0 + 8.0 + 5.5) ÷ 3 = 6.50 (7.0 + 6.0 + 8.0 + 5.5) ÷ 4 = 6.625
September 10.0 (8.0 + 5.5 + 9.0) ÷ 3 = 7.50 (6.0 + 8.0 + 5.5 + 9.0) ÷ 4 = 7.125
October 9.5 (5.5 + 9.0 + 10.0) ÷ 3 = 8.17 (8.0 + 5.5 + 9.0 + 10) ÷ 4 = 8.125
November 9.75 (9.0 + 10.0 + 9.5) ÷ 3 = 9.50 (5.5 + 9.0 + 10 + 9.5) ÷ 4 = 8.50
December 12.0 (10.0 + 9.5 + 9.75) ÷ 3 = 9.75 (9.0 + 10 + 9.5 + 9.75) ÷ 4 = 9.56

If a company uses weighted moving average forecast for 3 months for instance,
it must compute the forecast by the formula

F=
( M1 + 2M2 + 3M3 )
6
where M1 is the information 3 months ago, M2 is the information 2 months ago, and
M3 is the information last month. The denominator 6 is obtained by finding the total
weight.
Sale forecasts of Soriano Auto Sales Inc. using 3-month weighted moving
average is
Actual Sales 3-Month Weighted
Month
In millions (₱) Moving Averages
January 5.0
February 6.5
March 4.5
April 7.0 [5.0 + 2(6.5) + 3(4.5)] ÷ 6 = 5.25
May 6.0 [6.5 + 2(4.5) + 3(7.0)] ÷ 6 = 6.083
June 8.0 [4.5 + 2(7.0) + 3(6.0)] ÷ 6 = 6.083
July 5.5 [7.0 + 2(6.0) + 3(8.0)] ÷ 6 = 7.167
August 9.0 [6.0 + 2(8.0) + 3(5.5)] ÷ 6 = 6.417
September 10.0 [8.0 + 2(5.5) + 3(9.0)] ÷ 6 = 7.67
October 9.5 [5.5 + 2(9.0) + 3(10.0)] ÷ 6 = 8.917
November 9.75 [9.0 + 2(10.0) + 3(9.5)] ÷ 6 = 9.583
December 12.0 [10.0 + 2(9.5) + 3(9.75)] ÷ 6 = 9.708

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General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Forecasting by the Use of Exponential Smoothing

This method uses a single weighting factor called alpha (α). Alpha stands for
the probability that the same actual sale will take place.
Formula: Forecast = α (actual sale) + (1 – α)(previous forecast)
where
Actual sale refers to the actual sale of the previous period.

Example.
Suppose we want to forecast the sale of Soriano Sales Inc. for the month of
January of the following year, using α = 0.6, and previous forecast for December was
10.5 M while the actual previous sale was 12 M.
Solution.
Forecast = 0.6(12) + 0.4(10.5)
= 11.4 M

Forecasting by Trend Projection

This is a mathematical method which fits a trend line to a set of past
observations projecting the line into the future. The first step after the gathering of
the past data, before any forecast could be undertaken is to establish the trend
equation.
Formula for the trend line : Y = a + bx
where
Y = represents the quantity being forecast
a = the point at which the trend line intercepts the vertical axis
b = rate of change or slope of the line
x = the independent variable, usually represents time

To compute for b in the trend line:

b=
 xy − nxy
 x − nx
2 2

where
x = time
n = number of items
x = mean of x
y = mean of x

To compute for a in the trend line:

a = y − bx

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Example.
Suppose that the sales of ROA Supermart in the past 6 months were recorded
as follows:
Actual Sales
Month
(in 000’s)
May 250
June 300
July 275
August 325
September 290
October 350

The amount of sales is represented by Y. To find the x values, we may choose

the first month as the point of origin, hence the beginning month has x = 0.

Actual Sales
Month x xy x2
(in 000’s)
May 250 0 0 0
June 300 1 300 1
July 275 2 550 4
August 325 3 975 9
September 290 4 1,160 16
October 350 5 1,750 25
∑y = 1,790 ∑x = 15 ∑xy = 4,735 ∑x2 = 55

x=
 x = 15 = 2.5 and y=
 y = 1,790 = 298.33
n 6 n 6
Solving for b, Solving for a,

b=
 xy − nxy = 4,735 − 6 ( 2.5 )( 298.33 ) a = y − bx
 x − nx
2 2
55 − 6 ( 2.5 )
2
a = 298.33 − 14.68 ( 2.5 )
b = 14.86 a = 261.18

Therefore, the Trend Equation is

Y = 261.18 + 14.86x
We can now forecast the value of Y for any value of x (time).

Example.
a) Suppose we wanted to forecast the sale of ROA Supermart for the month
of November.
b) Forecast the sale in January of the following year.
Solution.
a) From May to November is 6 months, hence x = 6
Y = 261.18 + 14.86 x = 261.18 + 14.86 ( 6 )
Y = 350.34 (thousands)

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

b) From May to January, x = 8

Y = 261.18 + 14.86 x = 261.18 + 14.86 ( 8 )
Y = 380.06 (thousands)

Judgmental Projection
In modern times, forecasts of social and economic environment have become
more and more necessary in business to keep the business manager informed about
what is likely to happen.
When good data are not readily available, we tend to consult some
experienced individuals or experts to ask for their personal judgments, in which case
we primarily rely on human judgment to interpret available data and make projections
about the future.
One kind of judgmental forecast is the Delphi Technique where a group of
experts is asked for their opinions in an environment which all of them individually
have access to the information but in which the majority opinion is not disclosed to
prevent influencing one another.
Of course experts are sometimes wrong in their forecast, just like anyone of
us, and any method of forecasting oftentimes yields inaccurate results, but in
business, it is better to forecast than not to forecast at all.

1) Taha, H. (2012). Operations research: an introduction. Pearson Education.

2) Kolluri, B., Panik, M. J., & Singamsetti, R. N. (2016). Introduction to quantitative methods
in business: With applications using microsoft office excel. Retrieved from
https://ebookcentral.proquest.com
3) Baker, K. R. (2015). Optimization modeling with spreadsheets. Retrieved from
https://ebookcentral.proquest.com
4) Ramamurthy, P. (2000). Operations research. Retrieved from
https://ebookcentral.proquest.com
5) Guiasu, S. (2009). Probablistic models in operations research. Retrieved from
https://ebookcentral.proquest.com

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Activity 1. Now that you know the concepts of project management, let us try to
check your understanding of these concepts by answering the
following questions.

1. What is the earliest start time (ES) for an activity leaving node C using the AOA
approach?

2. What is the latest finish time (LF) for an activity entering node H using the AOA
approach?

3. Describe the CPM time-cost trade-off function?

4. When does the marginal cost of crashing a network could change?

5. Did all activities on the critical path have their latest finish time equal to their
earliest start time?

6. Describe briefly how a decision tree is being constructed.

7. What tool that provides the decision-makers with alternatives in attempting to

achieve objectives for the business and provides measures of how well objectives
will be reached if final outcomes are achieved?

8. When good data are not available, how are you going to make predictions for the
future scenario?

9. What is forecasting using exponential smoothing? Explain.

10. How does forecasting helps business managers prepare for the future of their
business.

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General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Activity 1. Getting acquainted with the essential terms and concepts of the project
management, decision analysis, and business forecasting, what also matters is
you should also be able to apply these concepts in solving the following problems.

1. Suppose that the Davao City College had the following record of enrolment from 2011 – 2018.
Year Enrolment Year Enrolment
2011 1,200 2015 3,000
2012 1,500 2016 5,800
2013 2,000 2017 6,000
2014 2,500 2018 7,000

a) Forecast the 2019 enrolment using 5-year weighted average forecast.

b) Forecast the 2019 enrolment using the trend projection.
c) Forecast the 2019 enrolment using exponential smoothing forecast if alpha was 0.6 and
previous forecast for 2018 was 5,500.
d) Use 2-year weighted moving average forecasts from 2013 to 2019.

2. The ROA Concession Company is considering to bid on the concession at Rizal Memorial Stadium
during a championship game. There is no cost to prepare the bid. The company can bid for either the
beverage concession or the hotdog concession, but not both. There is a 40% chance of either being
accepted. The company’s estimates of net profits depend on whether it is a rainy day or a clear day. For
the beverage concession, the company estimates a profit ₱8,000 on a clear day and a loss of 5,000
on a rainy day. For a hotdog concession, the company estimates a profit of 5,000 regardless of weather
conditions. During this particular time of the year, it has been observed that 80% of the day are clear
and 20% are rainy. Should the company prepare a bid, and if so, should it be for beverage or hotdog?

3. You and several friends are about to prepare a lasagna dinner. The tasks to be performed, their
immediate predecessors, and their estimated durations are as follows:
Task that
Task Task Description Time
Must Precede
A Buy the mozzarella cheese 30 minutes
B Slice the mozzarella A 5 minutes
C Beat 2 eggs 2 minutes
D Mix eggs and ricotta cheese C 3 minutes
E Cut up onions and mushrooms 7 minutes
F Cook the tomato sauce E 25 minutes
G Boil large quantity of water 15 minutes
H Boil lasagna noodles G 10 minutes
I Drain the lasagna noodles H 2 minutes
J Assemble all the ingredients I, F, D, B 10 minutes
K Preheat the oven 15 minutes
L Bake the lasagna J, K 30 minutes

a) Construct the project network for preparing this dinner.

b) Find all the paths and path lengths through this project network. Which of these paths is a
critical path?
c) Find the earliest start time and earliest finish time for each activity.
d) Find the latest start time and latest finish time for each activity.
e) Find the slack for each activity. Which of the paths is a critical path?

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Activity 1. Based from the definition of the most essential terms and concepts in
the study integer programming, transportation, and assignment
problems and the learning exercises that you have done, please feel
free to write your arguments or lessons learned below.

1.

2.

3.

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General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

Do you have any question for clarification?

Questions / Issues Answers

1.

2.

3.

4.

5.

Business
Project Management Decision Analysis
Forecasting
PERT/CPM Decision Tree Average Forecast
Exponential
Critical Path Decision point
Smoothing
Project Network Expected value Trend Projection
Judgmental
Earliest Start Time Probabilities
Forecasting
Earliest Finish Time Project Duration Slack for an Activity

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

COURSE SCHEDULES

Activity Date Where to submit

Week 1 – 3
Big Picture A: Let’s Check Activities
Big Picture A: Let’s Analyze Activities
Big Picture A: In a Nutshell Activities
Big Picture A: QA List
First Exam
Week 4 – 5
Big Picture A: Let’s Check Activities
Big Picture A: Let’s Analyze Activities
Big Picture A: In a Nutshell Activities
Big Picture A: QA List
Big Picture B: Let’s Check Activities
Big Picture B: Let’s Analyze Activities
Big Picture B: In a Nutshell Activities
Big Picture B: QA List
Second Exam
Week 6 – 7
Big Picture A: Let’s Check Activities
Big Picture A: Let’s Analyze Activities
Big Picture A: In a Nutshell Activities
Big Picture A: QA List
Third Exam
Week 8 – 9
Big Picture A: Let’s Check Activities
Big Picture A: Let’s Analyze Activities
Big Picture A: In a Nutshell Activities
Big Picture A: QA List
Final Exam

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 College of Arts and Sciences Education
General Education - Mathematics
2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

ONLINE CODE OF CONDUCT

1) All teachers/Course Facilitators and students are expected to abide by an honor code of
conduct, and thus everyone and all are exhorted to exercise self-management and self-
regulation.

2) Faculty members are guided by utmost professional conduct as learning facilitators in

holding OBD and DED conduct. Any breach and violation shall be dealt with properly under
existing guidelines, specifically on social media conduct (OPM 21.15) and personnel
discipline (OPM 21.11).

3) All students are likewise guided by professional conduct as learners in attending OBD or
DED courses. Any breach and violation shall be dealt with properly under existing guidelines,
specifically in Section 7 (Student Discipline) in the Student Handbook.

4) Professional conduct refers to the embodiment and exercise of the University’s Core Values,
specifically in the adherence to intellectual honesty and integrity; academic excellence by
giving due diligence in virtual class participation in all lectures and activities, as well as fidelity
in doing and submitting performance tasks and assignments; personal discipline in
complying with all deadlines; and observance of data privacy.

5) Plagiarism is a serious intellectual crime and shall be dealt with accordingly. The University
shall institute monitoring mechanisms online to detect and penalize plagiarism.

6) All borrowed materials uploaded by the teachers/Course Facilitators shall be properly

acknowledged and cited; the teachers/Course Facilitators shall be professionally and
personally responsible for all the materials uploaded in the online classes or published in
SIM/SDL manuals.

7) Teachers/Course Facilitators shall devote time to handle OBD or DED courses and shall
honestly exercise due assessment of student performance.

8) Teachers/Course Facilitators shall never engage in quarrels with students online. While
contentions intellectual discussions are allowed, the teachers/Course Facilitators shall take
the higher ground in facilitating and moderating these discussions. Foul, lewd, vulgar and
discriminatory languages are absolutely prohibited.

9) Students shall independently and honestly take examinations and do assignments, unless
collaboration is clearly required or permitted. Students shall not resort to dishonesty to
improve the result of their assessments (e.g. examinations, assignments).

10) Students shall not allow anyone else to access their personal LMS account. Students shall
not post or share their answers, assignment or examinations to others to further academic
fraudulence online.

11) By handling OBD or DED courses, teachers/Course Facilitators agree and abide by all the
provisions of the Online Code of Conduct, as well as all the requirements and protocols in
handling online courses.

12) By enrolling in OBD or DED courses, students agree and abide by all the provisions of the
Online Code of Conduct, as well as all the requirements and protocols in handling online
courses.

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2nd Floor, DPT Building, Matina Campus, Davao City
Phone No.: (082)300-5456/305-0647 Local 134

MONITORING OF OBD AND DED

1) The Deans, Asst. Deans, Discipline Chairs and Program Heads shall be
responsible in monitoring the conduct of their respective OBD classes through
the Blackboard LMS. The LMS monitoring protocols shall be followed, i.e.
monitoring of the conduct of Teacher Activities (Views and Posts) with generated
utilization graphs and data. Individual faculty PDF utilization reports shall be
generated and consolidated by program and by college.

2) The Academic Affairs and Academic Planning & Services shall monitor the
conduct of LMS sessions. The Academic Vice Presidents and the Deans shall
collaborate to conduct virtual CETA by randomly joining LMS classes to check
and review online the status and interaction of the faculty and the students.

3) For DED, the Deans and Program Heads shall come up with monitoring
instruments, taking into consideration how the programs go about the conduct of
DED classes. Consolidated reports shall be submitted to Academic Affairs for
endorsement to the Chief Operating Officer.

Course prepared by:

RONNIE O. ALEJAN

Course reviewed by:

RONNIE O. ALEJAN
Program Head

Approved by:

KHRISTINE MARIE D. CONCEPCION, Ph.D.

Dean

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