Session 1: LPP-Introduction,

Formulation & Graphical Solution

The Maximization Problem

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 The Flair Furniture Company (FFC)
• FFC produces inexpensive tables and chairs. The
production process is similar in that both requires a
certain number of hours of carpentry work and a certain
number of labor hours in the painting and varnishing
department. Each table requires 4 hours of carpentry and 2
hours in painting and varnishing department. Each chair
requires 3 hours in carpentry and 1 hour in painting and
varnishing department. During the current production
period, 240 hours of carpentry time available and 100
hours in painting and varnishing time are available. The
profit contribution from each table sold is $70 and from
each chair sold is $50.

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 Linear Programming Problem (LPP)
• A large number of decision problems faced by a business
manager involves allocation of resources to various
activities, with the objective of increasing profits or
decreasing costs, or both.
• Resources are used to make products (furniture, food,
machines etc.) or services (advertisement policies,
investment decisions etc.).
• Resources typically involves machinery, labor, money, time,
raw materials etc.

• When resources are in excess, no difficulty is experienced.

• Practically the mangers are confronted with the problem of
scarce resources.
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 LPP Cont’d.
• LPP: A widely used mathematical modelling technique that
helps in resource allocation decisions.
• The word ‘programming’ means ‘choosing a course of
action’ or refers to modeling and solving a problem
mathematically.
• Linear programming involves a course of action when
mathematical model of the problem contains only linear
functions.

• Note that in general, we maximize the profit contribution

which is the difference between unit selling price and
costs.

• Depreciation, general expense and advertising are

excluded from calculations.
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 LPP: Components
• The decision variables that represent the actual decisions that
the decision maker will make. Generally, denoted by x, y, z etc.
• In all LPPs the maximization or minimization of some quantity
referred as the objective function. Usually, profit or cost.
• The objectives must be clearly stated and defined
mathematically.

• Restrictions or constraints that limit the degree to which the

objective can be fulfilled.
• There must be alternatives available.

• The values of the decision variables must be non-negative.

• The above four components together constitute a LP model.

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 LPP: Assumptions
• Proportionality (production of one unit uses 3hrs, then 10
units would use 30 hrs.)
• Additivity (total of all activities is equal to sum of
individual activities)
• Certainty (the values in the model do not change over
time)
• Divisibility (the decision variables may take fractional any
value)

• The LP method is a technique for choosing the best

alternative from a set of feasible alternatives, in
situations in which the objective function as well as the
constraints can be expressed as a linear mathematical
function.
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 General form of LPP
• A general form of LPP consisting of n variables and m
constraints can be defined as follows:
Max. or Min. Z = c1 x1 + c 2 x 2 + .... + c n x n (Objective Function)
Subject to:
a11 x1 + a12 x 2 + .... + a1m x n or b1
a 21 x1 + a 22 x 2 + .... + a 2 m x n or b2
. (Constra int s )
.
a m1 x1 + a m 2 x 2 + .... + a mn x n or bm
xi 0 for all i = 1,2,..n (Non-negativity)

where cj, a ij and b i ( i = 1, 2, ….., m ; j = 1, 2, ….., n) are

known constants and respectively termed as the profit /cost
coefficients, technological coefficients, and resource values
and x j’s are decision variables.
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 LP (Mathematical) Formulation of FFC
• Decision variables: Let x and y represents the number
of tables and chairs produced.
• Objective Function: Max. Z =70x +50y
• Subject to (constraints):
4x+3y ≤ 240 (Carpentry)
2x+y ≤ 100 (Painting & Varnishing)
• x, y ≥ 0 (Non-negativity)

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 FFC Graphical Solution
• Draw the constraint lines considering equality.
• Identify a region satisfying all constraints including
non-negativity. This region is called feasible region.
• Identify the corner points of the feasible region.
• Evaluate the objective function at each corner points.
• Select the corner point with maximum / minimum
value will give the required optimal solution.

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• Graph

• Hence the optimal solution: x= 30 tables and y=40 chairs

with Max. profit=$4100.
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 FFC Graphical Solution

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 The Par Inc. Problem

• Par, Inc., is a small manufacturer of golf equipment and

supplies whose management has decided to move into the
market for medium-and high-priced golf bags. Par’s
distributor is enthusiastic about the new product line and
has agreed to buy all bags Par produces over the next 3
months. After a thorough investigation of the steps
involved in the manufacturing a golf bag, management has
determined that each golf bag produced will require the
following operations.
1. Cutting and Dyeing 2. Sewing 3. Finishing and
4. Inspection and Packaging

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 Par Inc. Cont’d

• After analyzing each operations the director of

manufacturing concluded that if the company produces a
medium-priced standard model, each bag will require 7 / 10
hr, 1 / 2hr, 1hr and 1 / 10hr respectively in the above
mentioned departments. Similarly the high-priced deluxe
model will require 1hr, 5 / 6hr, 2 / 3hr and 1 / 4hr
respectively in the above departments.
• After studying the departmental work load projections, the
director estimates that 630hrs,600hrs,708hrs, and 135hrs
will be available for the production of golf bags during the
next 3 months respectively in the above departments.

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 Par Inc…
• The accounting department has analyzed the production
data ,and arrived at prices for both bags that will result in a
profit contribution of $10 for every standard bag and $9 for
every deluxe bag produced.

• Question 1: Develop a mathematical model that can be

used to determine the number of standard bags and the
number of deluxe bags to produce in order to maximize
total profit contribution?
• Question 2: Find which department has not utilized the
available resources?

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 Mathematical model for Par Inc.
• Let the decision variables be S & D where S = Number of
standard bags and D = Number of deluxe bags.

• Max. Z =10S + 9D
• Subject to (s.t) the constraints:
0.7S + 1D ≤ 630 (Cutting & Dyeing)
0.5S + 0.83D ≤ 600 (Sewing)
1S + 0.66D ≤ 708 (Finishing)
0.1S + 0.25D ≤ 135 (Inspection & Packaging)
S,D ≥ 0 (Non-negativity)

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 D

•1062 Finishing Par Inc. Graph

The optimal solution is S = 540 and D = 252
Max. profit = $7668

720 Sewing

630

E
540

D
540, 252
C
C&D
Feasible region
I&P

A B S
0 708 900 1200 1350
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 Continuation of Par Inc.
• To identify the amount of unused resource, we need to
compute slack associated with each constraints.
• Cutting & Dyeing
0.7(540) +1(252) +S1 =630 ⇒S1=0
• Sewing
0.5(540)+0.83(252)+S2 = 600 ⇒S2=120.84
• Finishing
1(540)+0.66(252) +S3=708 ⇒S3=1.68
• Inspection & Packaging
0.1(540)+0.25(252) +S4 =135 ⇒S4=18

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 Homework Problem-1
• A firm is engaged in producing two products A and B. each
unit of product A requires 2kg of raw materials and 4 labor
hrs for processing, whereas each unit of product B requires
3kg material and 3 hrs of labor of the same type. Every
week, the firm has an availability of 60kg raw materials
and 96 labor hrs. One unit of product A sold yields Rs 40
and one unit of product B sold gives Rs 35 as profit.
• Formulate this problem as a LPP to determine as to how
many units of each of the products should be produced per
week so that the firm can earn the max. profit. Assume that
there is no marketing constraint so that all that is produced
can be sold.
• Also identify slack / surplus if any
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 Reference

• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and

Badri, T.N., (2016), Quantitative Analysis for
Management, 12 th ed., Pearson Education.
• Anderson, D.R., Sweeney, D.J., and Williams, T.A.,
(2005), An Introduction to Management Science,
Thomson South-Western

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 Session 2: LPP Formulation and
Graphical Solution
The Minimization Problem

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 M&D Chemicals
• M&D Chemicals produces two products that are sold raw
materials to companies manufacturing bath soaps and
laundry detergents. Based on analysis of current inventory
levels and potential demand for the coming month, M&D’s
management has specified that the combined production
for products A and B must total at least 350 gallons.
Separately, a major customer’s order for 125 gallons of
product of A must also be satisfied.
• Product A requires 2 hrs of processing time per gallons
while product B requires 1 hrs of processing time per
gallon, and for the coming month, 600hrs of processing
time are available. For products A and B the production
costs are $2 / gallon and $3 / gallon.
• Formulate M&D’s problem as LPP and obtain an optimal
product mix so that the total cost is minimized.

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 LP formulation of M&D
• Decision Variables
A = # of gallons of product A and
B = # of gallons of product B.

• Objective function: Min. Z= 2A + 3B

• Subject to the constraints:
A >= 125 Demand constraint
A + B >= 350 Total production constraint
2A + B <= 600 Processing time constraint
A, B >=0 Non-negativity

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• Graph

• Hence the optimal solution is A =250 gallons and B= 100

gallons with Min. Cost = $800.

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 Some definitions
• Feasible solution: A solution that satisfies all the constraints.
• Feasible region: The set of all feasible solutions.

• Slack: Any unused capacity in a less than or equal to

constraint .
• Slack variable: A variable added to the left-hand-side of a less
than or equal to constraint to convert the constraint into an
equality. Note that unused capacity makes no contribution to
profit and hence have coefficients zero in the objective
function.

• Extreme point: Extreme points are the feasible solution

points occurring at the vertices or corners of the feasible
region.
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 Definitions Cont’d.
• Surplus: Any excess quantity corresponding to a greater than
or equal to constraint.
• Surplus variable: A variable added to the right-hand-side of a
greater than or equal to constraint to convert the constraint
into an equality. Just like slack variables surplus have
coefficients zero in the objective function.

• Redundant constraint: A constraint that does not affect the

feasible region. It can be removed from the problem without
affecting the feasible region.

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 Special Cases in LPP
• Alternative optimal solution: The case in which more than one
solution provides the optimal value for the objective function.
• The solution if it exists to a LPP shall always be unique if the slope
of the objective function is different from the slopes of the
constraints. In case the objective function has slope which is
same as the constraints, then multiple optimal solution might
exist.

• Infeasibility: The situation in which no solution to the LPP which

satisfies all the constraints.
• Unbounded: If the value of the solution may be made infinitely
large in a maximization problem or infinitely small in a
minimization problem without violating any of the constraints,
then the problem is said to be unbounded.

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 Special Case-1
• Alternative optimal solution: Consider the Par Inc. problem
(see S1 PPT). The mathematical model for this problem is
Max. 10S + 9D
Subject to (s.t) the constraints
0.7S + 1D ≤ 630 (Cutting & Dyeing)
0.2S + 0.83D ≤ 600 (Sewing)
1S + 0.66D ≤ 708 (Finishing)
0.1S + 0.25D ≤ 135 (Inspection & Packaging)
S,D ≥ 0 (Non-negativity)
The optimal solution is S = 540 and D = 252 with Max. Z=7668.

• Suppose the profit for the standard bag (S) has been
decreased to $ 6.30. The objective function becomes
Max. 6.3S + 9D
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 New Solution

• Solving graphically we observe that there are two corner

points (300, 420) and (540,252) which gives us the same
objective function value Max. Z = 5670.
• Further more any point on the line connecting the two
optimal corner (extreme) points also provides an optimal
solution. Try S =420,D = 336.

• Unfortunately, determining whether a problem has

alternative optimal solution is not simple matter for a
larger problem with several variables and constraints.

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 Graph
D

600

300,420

400

540, 252
Feasible region
200 Objective function line

S
0 200 400 600 800

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 Special Case-2
• Infeasibility: Graphically this means that a feasible region
does not exist.
• Consider the Par Inc. problem. Suppose the management
had specified that at least 500 of the standard bags and at
least 360 of the deluxe must be manufactured. Now the
model becomes
Max. 10S + 9D
Subject to 0.7S + 1D ≤ 630 (Cutting & Dyeing)
0.2S + 0.83D ≤ 600 (Sewing)
1S + 0.66D ≤ 708 (Finishing)
0.1S + 0.25D ≤ 135 (Inspection & Packaging)
S ≥ 500, D ≥ 360 (Production)
S,D ≥ 0 (Non-negativity)
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 D

•1062 Finishing Par Inc. Graph: Infeasibility

S=500

720 Sewing

630

E
540
Feasible Region fulfilling
production constraints
D D=360

Feasible Region fulfilling C

C&D, S, F, I&P
C&D
I&P

A B S
0 708 900 1200 1350
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 Special Case-3
• Unbounded: If the value of the solution may be made infinitely
large in a maximization problem or infinitely small in a
minimization problem without violating any of the constraints,
then the problem is said to be unbounded. This condition might
be termed as managerial utopia.
• In a maximization problem the manager could achieve an
unlimited profit. However in LP models of real problems, the
occurrence of an unbounded solution means that the problem
has been improperly formulated.

• It is not possible to increase profits indefinitely. Therefore , we

conclude that if a profit maximization problem results in an
unbounded solution, the model does not represent the real
world problem sufficiently.

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• Example: Consider the following LPP
• Max 20x + 10y
subject to: x ≥ 2 , y ≤ 5, x, y ≥ 0.
y
15
x=2

10 Feasible region is not bounded!!

y=5
5
Feasible region

x
0 5 10 15

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Home work problem-1: The Wyndor Glass Co.(WGC)
• The WGC produces high-quality glass products, including
windows and glass doors that feature handcrafting and the
finest workmanship. Although the products are expensive, they
fill a market niche by providing the highest quality available in
the industry for the most discriminating buyers. The company
has three plants. Plant1: produces aluminum frames and
hardware, Plant2: produces wood frames, and Plant3: produces
the glass and assembles the windows and doors.
• Because of declining sales for certain products, top management
has decided to revamp the company’s product line. Mr. Jim, the
product development manager and his team developed the
following new products:
1) An 8 foot glass door with aluminum frame
2) A 4 by 6 foot double-hung, wood-framed window.
The product 1 requires some of the production capacity in plants
1 and 3, but not in plant2 Dr.
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and product 2 needs only plants 2 and
Mahesh K C 15
3.
 Wyndor Cont’d
• The production department’s estimated production capacities
that requires in each plant is as follows: plant 1 needed 4hrs per
week, plant 2 needed 12hrs per week, and plant 3 needed 18
hrs. per week for both products.
• Also it is estimated that each door will require one hrs of
production time in Plant 1 and 3hrs in Plant 3. For each window,
2hrs will be needed in both Plant 2 and 3. By analyzing the cost
data and the pricing decision, the account department estimates
the profit from the two products.
• The projection is that the profit per unit will be $300 for the
doors and $500 for the windows.

• Formulate an LP model so as to determine the optimal product

mix for WGC. Also find the maximum profit. Also find
slack / surplus if any.
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 Homework Problem-2
• The Agricultural Research Institute suggested to a farmer
to spread out at least 4800kg of a special phosphate
fertilizer and not les than 7200kg of a special nitrogen
fertilizer to raise the productivity of crops in his fields.
There are sources for obtaining these- mixtures A and B.
Both of these are available in bags weighing 100kg each
and they cost Rs 40 and Rs 24 respectively. Mixture A
contains Phosphate and nitrogen equivalent of 20kg and
80kg respectively, while mixture B contains these
ingredients equivalent of 59kg each.
• Write a LPP and determine how many bags of each type
the farmer should buy in order to obtain the required
fertilizers at minimum cost.
• Also find slack / surplus if any.

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 Reference

• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and

Badri, T.N., (2016), Quantitative Analysis for
Management, 12 th ed., Pearson Education.
• Anderson, D.R., Sweeney, D.J., and Williams, T.A.,
(2005), An Introduction to Management Science,
Thomson South-Western

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S3 & S4- LP Formulation and
Solution Using Excel

Dr. Mahesh K C 1
 LP Formulation
• Decision Variables: x 1, x2, x 3, and x 4 respectively denotes the
number of units of 75C,33C, 05X and 07X to be produced.
• Objective Function:
Max. Z = 34 x1 + 30 x 2 + 60 x3 + 25 x 4
• Subject to the constraints:
x1 + 2 x 2 + x 4 4000
x1 + x 2 + 4 x3 + x 4 4200
(Plant Capacity)
x1 + 3x 2 2000
x1 + 3x3 + 2 x 4 2300
x1 1400
x2 250
( April Orders )
x3 1510
x4 1116

x1 150
(Key Customer Demand )
x4 600

xi 0 for all i = 1,2,3,4 (Non-negativity)

Dr. Mahesh K C 2
 Solving LPP Using Excel 2007 onward
• Install “Solver” package in excel. You may use the following steps:
• Go to Customize Quick Access Toolbar More Commands
Add-Ins Analysis Tool Pack Tick on Solver
Add-In Click OK. Once installed, you can see “Solver” in
“Data”.

• Enter the data in the following manner:

Decision Variables: Cell B4 to E4 (x 1, x 2, x 3, and x 4 ).
Constraint labels: Cell A5 to A14 (C1, C2, C3, …, C10 ).
Enter the label “Objective Function” in Cell A15. Enter the Objective function
coefficient in cell B15 to E15.
Enter the label “Values” in Cell A16.
Enter the label “Max” in Cell A17.
Enter constraint coefficients: Cell B5 to E14.
Enter the label “Utilized” in Cell F4.
Dr. Mahesh K C 3
Enter “Operator” in Cell G4. Enter “RHS” in Cell H4.
 Excel Entry Snapshot

Enter the formula in the cell B17: sumproduct(B15:E15, B17:E17)

corresponding to “Max” cell.
Enter the formula in the cell F5 and then drag up to F14:
sumproduct(B5:E5, $B$16:$E$16)
Dr. Maheshcorresponding
KC to “Utilized” cell. 4
Excel Entry Snapshot After Entering Formula

Dr. Mahesh K C 5
Solver Snapshot

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Solver Result

Dr. Mahesh K C 7
Solver Output

Dr. Mahesh K C 8
 Interpretation of the Solver Results
• The optimal solution and maximum profit :
x1 = 1100 , x 2 = 250, x3 = 0, x 4 = 600 & Max.Z = $59900

• The amount of Slack / Surplus at the optimal solution can be

obtained by (Available ± Utilized).
The constraints having slack /surplus zero is
called “binding constraints”. Any change in
the RHS of such constraints will change the
optimal solution.

For a non-binding constraints, any change in

the RHS will not change optimal solution.

Dr. Mahesh K C 9
 Reference
• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and Badri, T.N.,
(2016), Quantitative Analysis for Management, 12 th ed.,
Pearson Education.

Dr. Mahesh K C 10
 S5: Application of LPP in
Marketing, Finance and HR

Dr. Mahesh K C 1
 LPP in Marketing
• The LP models are used in marketing majorly in the
following two fields:
Media Selection and Market / Consumer Research
• In advertising field, LPP is used as a decision aid in
selecting an effective media mix so that the agency can
minimize the advertising costs by allocating the limited
budget across various media like radio, TV, print etc.
• The restrictions could be either from contract
requirements, limited media availability or company policy.

• Another application could be maximizing audience

exposure.

Dr. Mahesh K C 2
 Win-Win Advertisers (WWA) Inc.
• WWA is a small advertising firm located in Alabama. Ms. Jessica Martinez, the
campaign manger of Mr. Kelley who is contesting for a re-election in a small
town in Alabama. Jessica was planning to go for a marketing campaign and
decided to choose four ways to advertise: TV, Radio, Billboards and
Newspapers. Jessica asked WWA to help her in identifying the number of adds
to be placed in each of the media so that it should reach maximum people.
• Jessica also decided that there should be at least six adds on TV or radio or
some combination of those two. The amount spent on billboards and
newspapers together must not exceed the amount spent on TV adds. The
maximum monthly budget for advertising has been set at $15000. The
following table gives some other relevant information.
Type of Add Cost ($)per Add Audience Reached / Add Max. Number

TV 800 30000 10

Radio 400 22000 10

Billboards 500 24000 10

Newspapers 100 8000 10

Dr. Mahesh K C 3
 WWA Cont’d.
• How many adds of each type should be placed to maximize the total
number of people reached?

• LP Formulation and Solution: Let x 1, x 2, x 3 and x 4 denotes the number of

adds to be inserted in TV, Radio, Billboards and Newspaper respectively.
Max.Z = 30000 x1 + 22000 x2 + 24000 x3 + 8000 x 4 (ObjectiveFunction)
Subject to :
800 x1 + 400 x 2 + 500 x3 + 100 x 4 15000 ( Budget)
x1 10
x2 10
( Max.Number)
x3 10
x4 10
x1 + x 2 6 (TV & Radio Re quirement)
500 x3 + 100 x 4 800 x1 ( Billboard & Newspaper Re quirement)
xi 0, for all i = 1,2,3,4 ( Non negativity)

• Optimal Solution:
x 1 = 6 . 875 , x 2 = 10 , x 3 = 9 , x 4 = 10 & Max . Z = 722250
Dr. Mahesh K C 4
 LPP in Finance
• A problem frequently encountered by managers of
banks, mutual funds, investment services and
insurance companies is the selection of specific
investments from among a wide variety of
alternatives. The manger’s overall objective is usually
to maximize expected return on investment.

• Maximizing ROI subject to a set of risk constraints is a

popular financial application of LP.

Dr. Mahesh K C 5
 The International City Trust (ICT) Inc.
• ICT invests in short-term trade credits, corporate bonds, gold stocks, and
construction loans. To encourage a diversified portfolio, the board of directors
has placed limits on the amount that can be committed to any one type of
investment. ICT has $5 million available for immediate investment and wishes
to do to two things: 1) maximize the ROI made over the next six months and 2)
satisfy the diversification requirements. The specifics of the investment
possibilities are as follows:
Investment Interest return (%) Max. Investment ($
millions)
Trade Credit 7 1
Corporate Bonds 11 2.5
Gold Stocks 19 1.5
Construction loans 15 1.8

• In addition, the director boards that at least 55% of the funds invested must be
in gold stocks and construction loans and that no less than 15% be invested in
trade credit.

Dr. Mahesh K C 6
 LP Formulation and Solution of ICT
• Let x 1, x 2, x 3 and x 4 denotes the dollars invested in trade credit,
corporate bonds, gold stocks and construction loans
respectively.
Max. Z = 0.07 x1 + 0.11x 2 + 0.19 x3 + 0.15 x 4 (Objective Function)
Subject to:
x1 + x2 + x3 + x 4 5000000 (Total investment )
x1 1000000
x2 2500000
(Max.investment )
x3 1500000
x4 1800000
4
x1 0.15 xi TradeCredit requirement
(

)
i =1
4
x3 + x 4 0.55 xi ( gold & constructi on )
i =1

xi 0 for all i = 1,2 ,3,4 (Non-negativity)

• Optimal Solution:
x1 = $750000 , x 2 = $950000 , x3 = $1500000 , x 4 = $1800000 & Max.Z = $712000
Dr. Mahesh K C 7
 LP in HR: Y.S Chang Restaurant
• In HR, labor planning problems address staffing needs over a specific time
period. They are especially useful when managers have some flexibility in
assigning workers to jobs that require overlapping or interchangeable talents.

• The famous YSC is open 24 hours a day. Waiters and busboys report for duty at
3A.M, 7A.M, 11A.M, 3P.M, 7P.M or 11 P.M and each works an 8-hour shift. The
following table shows the minimum number of workers needed during the six
periods into which the day is divided. Chang’s scheduling problem is to
determine how many waiters and busboys should report for work at the start
of each time period to minimize the total staff required for one day’s operation.
Period Time # of waiters &
busboys required
1 3AM-7AM 3

2 7AM-11AM 12

3 11AM-3PM 16

4 3PM-7PM 9

5 7PM-11PM 11

6 11PM-3AM
Dr. Mahesh K C4 8
 Y. S. Chang Formulation
• Let x i denotes the number of waiters and busboys beginning
work in time period i where i=1,2,3,4,5,6.
6
Min. Z = xi (Objective Function)
i =1

Subject to:
x1 + x6 3
x1 + x 2 12
x 2 + x3 16
x3 + x 4 9
x 4 + x5 11
x5 + x 6 4
xi 0 for all i = 1,2 ,3,4,5,6 (Non-negativity)

• Optimal Solution:

x1 = 16, x 2 = 9, x3 = 2, x 4 = 3 & Min.Z = 30

Dr. Mahesh K C 9
 The Profit-Gambit Co. (P&GC)
• The P&G C produces cleaning products for home use Since the
market is highly competitive, management has decided to
undertake a major new advertising campaign that will focus on
the following three key products: 1) A spray pre wash stain
remover, 2) A liquid laundry detergent and 3) A powder laundry
detergent.

• This campaign will use both TV and the Print Media (PM). A
commercial has been developed to run on national channel that
will feature the liquid detergent. The ad for the print media will
promote all three products and will include cents-off coupons
that consumers can use to purchase the products at reduced
prices.

• The management has set the following goals for the campaign:
1) sales of the stain remover should increase by at least 3%, 2)
sales of liquid detergent should increase by at least 18%, and 3)
sales of powder detergent should increase by at least 4%. The
general goal is to increase the sales of each products. The
following table gives the necessary data.
Dr. Mahesh K C 10
• Determine how much to advertise in each medium to meet the
sales goals at a minimum cost.

Product TV PM Min. Req.

Incr.
Stain 0% 1% 3%
remover
Liquid 3 2 18
detergent
Powder -1 4 4
detergent

Unit cost $1 $2
million million

-1% for the powder detergent in the TV column implies that the TV commercial
featuring liquid detergent will take away some sales from the powder detergent.
Dr. Mahesh K C 11
 Kelson Sporting Equipment, Inc.,
• Kelson Sporting Equipment, Inc., makes two different types of baseball
gloves: regular model (RM) and catcher’s model (CM). The firm has
900hrs of production time available in its cutting and sewing
department, 300hrs available in its finishing department, and 100hrs
available in its packaging and shipping department. The production
time requirements and profit contribution per glove are given below.
Assuming that the company is interested in maximizing the total
profit, answer the following:

Model C&S Finishing P&S Profit

RM 1 1/8 $5
CM 3/2 1/3 $8

• How many glove of each model should Kelson manufacture and what
is the profit Kelson can earn with the listed production quantities?
• How many hours of production time will be scheduled in each
department? Also find amount of resources that are not utilized in
each department. Dr. Mahesh K C 12
 Delhi Investment Inc. Problem
• A financial adviser (FA) at Delhi Investments has identified two
companies that are likely candidates for a takeover in the near future.
Eastern Cable (EC) is a leading manufacturer of flexible cable systems
used in the construction industry and ComSwitch (CS) is a new firm
specializing in digital systems. EC is currently trading for $40 per share
and CS is currently trading $25 per share. If the takeovers occur, the FA
estimates that the price of EC will go to $55 per share and CS will go to
$43 per share. At this point in time, the FA has identified CS as the
higher risk alternative. Assume that the client has shown willingness to
invest a maximum of $50,000 in the two companies. He / she wants to
invest at least $15,000 in EC and at least $10,000 in CS. Because the
higher risk associated with CS, the FA has recommended that at most
$25,000 should be invested in CS.
• Formulate a LPP that can be used to determine the number of shares of
EC and the number of shares of CS that will meet the investment
constraints and maximize the total return for the investment.
• Find the optimal solution graphically. Is there any slack / surplus
available?. If so find it. Dr. Mahesh K C 13
The Diet Problem: The Battery Park Stable (BPS) Firm
• BPS feeds and houses the horses used to pull tourist-filled carriages through
the streets. The owner, an ex-racehorse trainer, recognizes the need to set a
nutritional diet for the horses in his care. At the same time, he would like to
keep the overall daily cost for the feed to a minimum.
• The feed mixes available for the horse’s diet are an oat product, a highly
enriched grain, and a mineral product. Each of these mixes contains a certain
amount of five ingredients daily to keep the average horse healthy. The BPS
owner is also aware that an overfed horse is a sluggish worker and finds that 6
pounds of feed per day are the most that any horse needs to function properly.
Formulate an LP model and find the optimal daily mix and the minimum cost.
All units are in pounds.
Ingredients Oat Enriched Mineral Min. Daily
Product Grain product requirement
A 2 3 1 6

B 0.5 1 0.5 2

C 3 5 6 9

D 1 1.5 2 8

E 0.5 0.5 1.5 5

Cost / lb ($) 0.09 0.14 0.17

Dr. Mahesh K C 14
 Reference
• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and Badri, T.N.,
(2016), Quantitative Analysis for Management, 12 th ed.,
Pearson Education.

Dr. Mahesh K C 15
S6: Duality in LPP

Dr. Mahesh K C 1
 Duality
• Every LP problem has an associated LPP called the dual problem.
• The original formulation of the LPP is referred as the primal
problem.
• Before deriving dual, the primal LPP must be expressed in
“canonical form”.
• All constraints must be “≤” form for maximization problem and all
constraints must be “≥” form for minimization problem.

• A maximization problem with all less-than or equal to constraints

and non-negativity requirements for the variables is said to be in
maximization canonical form.

• A minimization problem with all greater-than or equal to

constraints and non-negativity requirements for the variables is
said to be in minimization canonical form.
Dr. Mahesh K C 2
 Construction of Dual from Primal
• Define dual variables for each primal constraints say u 1, u 2,
u3 …

• If the primal objective function is of maximization

(minimization) type, then the dual objective function is of
minimization (maximization) type.
• The RHS of the primal constraints becomes the objective
function coefficients in the dual.

• The constraint coefficients of the primal variables become

the coefficients of the constraints in the dual.
• The objective function coefficients of the primal constraints
becomes the RHS of the dual constraints.
• The constraint inequalities willK get
Dr. Mahesh C reversed. 3
 An example
• Consider the Flair Furniture (see Session 1 ppt) LP model:
Primal :
Max. Z =70x +50y
Subject to:
4x+3y ≤ 240
2x+y ≤ 100
x, y ≥ 0
• Dual:
• Since we have two constraints in the primal, we need to define two
dual variables. Let u 1 and u 2 denotes the dual variables.
Min. Z = 240 u 1 +100 u 2
Subject to:
4u 1 + 2u 2 ≥ 70 Worth of resource needed to produce x must be at
least equal to the profit derived from the product.
3u 1 + u 2 ≥ 50
(u 1 , u 2 )≥ 0
Dr. Mahesh K C 4
 Characteristics of primal-dual pair
1. A dual variable is defined for each primal constraint.
2. A dual constraint is defined for each primal variable.
3. The RHS of the primal constraints becomes the objective function
coefficients in the dual.
4. The objective function coefficients in the primal becomes the RHS
of the dual constraints.
5. The constraint coefficients of the i th primal variable become the
coefficients in the i th constraint of the dual.

6. When the primal has n decision variables, the dual will have n
constraints. The first constraint of the dual is associated with the
first variable in the primal, second constraint in the dual is
associated with second variable in the primal and so on.

7. When the primal has m constraints, the dual will have m decision
variables. The first dual variable is associated with the first
constraint in the primal. The second dual variable is associated
Dr. Mahesh K C 5
with the second constraint in the primal and so on.
 Interpretation of primal and dual problem
• Primal problem: Given per unit value of each product,
determine how much of each should be produce to maximize
the value of the total production.
• Constraints require the amount of each resource used to be
less than or equal to the amount available.

• Dual problem: Given the availability of each resource,

determine the per-unit value such that the total value of the
resources used is minimized.
• Constraints require the resource per unit be greater than or
equal to the value of each unit of output.

• Note that dual variables represents the potential worth of

resources. Also referred as shadow price.
Dr. Mahesh K C 6
 Fundamental Results on Duality
• Result 1: If the dual problem has an optimal solution, the primal
also has an optimal solution, and vice-versa. Furthermore, the
objective function values at the optimal solution to the dual and
primal problems are equal. This is also referred as the
fundamental theorem on Duality.

• Result 2: Whenever a constraint in one of the problems holds

with strict inequality, so that there is slack in the constraints, the
corresponding variable in other problem equals zero. This result
is referred as complementary slackness theorem in duality.

Dr. Mahesh K C 7
 High-Tech Industries Inc.,
• High-Tech industries imports electronic components that are used to
assemble two different models of personal computers called Desk-
pro and Portable. The management is currently interested in
developing a weekly production schedule for both products. The
Desk-pro generates a profit contribution of $50 per unit, and that of
Portable is $40 per unit.
• For next week’s production, a maximum of 150hrs of assembly time
can be made available. Each unit of the Desk-pro requires 3 hours of
assembly time, and each unit of the Portable requires 5 hours of
assembly time. In addition, High-Tech currently has only 20 Portable
display components in inventory; thus , no more than 20 units may
be assembled. Finally, only 300 square feet of warehouse space can
be made available for new production and each Desk-pro and
Portable requires a warehouse space of 8 and 5 square feet
respectively.

• Develop the dual problem and verify the fundamental and the
complementary slacknessDr.
theorems on duality holds true.
Mahesh K C 8
• Primal LPP: Let x 1 and x 2 denotes the # of units of Desk-pro and
Portable computers respectively.
Max. Z = 50 x 1 + 40 x 2
Subject to: 3 x 1 + 5 x 2 ≤150 ( Assembly time)
x 2 ≤ 20 ( Portable display)
8 x 1 + 5 x 2 ≤ 300 (Warehouse space)
x 1, x 2 ≥ 0
• Primal Optimal solution: x1 = 30, x2 = 12 and Max. Z = 1980.
• Dual LPP: Since the primal has two decision variables, the dual will
have two constraints and primal has three constraints, dual will have
three decision variables. Let u 1, u 2 and u 3 be the dual variables
represents the worth of each resources. Then the dual LPP can be
written as,
Min. Z* = 150u 1 + 20u 2 + 300u 3
Subject to: 3u 1 +8u 3 ≥ 50
5u 1 + u 2 + 5u 3 ≥ 40
u 1 , u 2, u 3 ≥ 0
• Dual Optimal solution: u1 = 14Dr./ 5, u2 = K0,Cu3 = 26 / 5 and Min. Z* = 1980. 9
Mahesh
 Economic interpretation of the dual variables
• Consider the Objective functions of the primal and dual
50 x 1 + 40 x 2 = 1980, 150u 1 + 20u 2 + 300u 3 = 1980
• We can rewrite the above equations as:
50 x 1 + 40 x 2 = 1980
(value / unit of x 1 )(# of units of x 2 ) + (value / unit of x 1 )(# of units of x 2 ) = total
150u 1 + 20u 2 + 300u 3 = 1980
(units of resource 1) + (units of resource 2) + (units of resource 3) = total

• Since both primal and dual objective functions are equal at optimality,
u 1 = dollar value / hr of assembly time
u 2 = dollar value / hr of portable display
u 3 = dollar value / hr of warehouse space

• Hence the dual variables must carry the interpretations of being the value
per unit resource.
Dr. Mahesh K C 10
 Homework 1: Kelson Sporting Equipment, Inc.,
• Kelson Sporting Equipment, Inc., makes two different types of baseball gloves:
regular model (RM) and catcher’s model (CM). The firm has 900hrs of
production time available in its cutting and sewing department, 300hrs
available in its finishing department, and 100hrs available in its packaging
and shipping department. The production time requirements and profit
contribution per glove are given below. Assuming that the company is
interested in maximizing the total profit, answer the following:

Model C&S Finishing P&S Profit

RM 1 1/8 $5

CM 3/2 1/3 $8
•
• How many glove of each model should Kelson manufacture and what is the
profit Kelson can earn with the listed production quantities?
• How many hours of production time will be scheduled in each department?
Also find amount of resources that are not utilized in each department.
• Construct a dual LP model and check whether the results 1 &2 holds true.

Dr. Mahesh K C 11
 Homework 2
• Consider the following LPP:
Max. Z = 32x 1 +25x 2 +15x 3 + 10x 4
Subject to:
x 1 +3x 2 +5x 3 ≤ 50
x 1 +5x 2 +4x 4≤ 40
5x 1 +5x 2 +4x 3 +6x 4 ≥ 100
x 1 +3x 3 +8x 4 ≥ 35
x 1, x 2, x 3, x 4 ≥ 0
• Construct the Dual LPP.

Dr. Mahesh K C 12
 Reference
• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and Badri, T.N.,
(2016), Quantitative Analysis for Management, 12 th ed.,
Pearson Education.

Dr. Mahesh K C 13
Sessions 7, 8 &9 Sensitivity
Analysis
 Sensitivity Analysis
• The study of how changes in the coefficients of a LPP affect the optimal
solution.
• Seeks answers to the following basic questions.
a) How will a change in a coefficient of the objective function affect the
optimal solution / objective function value?
b) How will a change in the right-hand-side (resource) value for a
constraint affect the optimal solution / objective function value?
c) How will a change in the technological coefficients for a constraint affect
the optimal solution / objective function value?

• Because the analysis does not begin until the optimal solution to the
original LPP has been obtained, sensitivity analysis is often referred to
as post-optimality analysis.
• Generally, sensitivity analysis is done for one change at a time by
keeping other coefficients or parameters kept constant.
 Importance of sensitivity analysis
• Sensitivity analysis is important to decision makers
because real-world problems exist in a changing
environment. Prices of raw materials change, product
demand change, stock prices fluctuate, companies
purchases new machinery and so on. If a linear
programming model has been used in such environment,
we can expect some of the coefficients to change over time.

• We will then want to determine how these changes affect

the optimal solution to the original LPP.

• Sensitivity analysis provides us with the information

needed to respond to such changes without requiring the
complete solution of a revised linear program.
 a) Objective Function Changes
Par. Inc., Problem Revisited
Max. Z=10S + 9D
Subject to (s.t) the constraints
0.7S + 1D ≤ 630 (Cutting & Dyeing)
0.5S + 0.833D ≤ 600 (Sewing)
1S + 0.666D ≤ 708 (Finishing)
0.1S + 0.25D ≤ 135 (Inspection & Packaging)
S,D ≥ 0 (Non-negativity)
• The optimal solution is S = 540 and D = 252 with Max. Z = $7669 where
S and D are the number of standard bags and deluxe bag produced.

• Suppose the contribution to standard bag has been increased to

$12.5. How does this change affect the optimal solution?
 D
• Par Inc. Graph
1000 Finishing
The optimal solution is S = 540 and D = 252
Max. Z=7669

800
Sewing

600
I&P
E

400 D
540, 252

C
200

A C&D S
0 200 400 600 B 800 1000 1200 1400
 D
• Par Inc. Graph
1000 S + (2 / 3)D = 708
(Line B)

800 Objective function

10S + 9D

600
E

400 D
540, 252

Feasible Region C
200 0.7S + D = 630
(Line A)
A S
0 200 400 600 B 800 1000 1200 1400
• Rotating the objective function line counter clockwise, the
slope of the line increases and we get an alternative
optimal solution between extreme points C and D. Any
further counter clockwise rotation of the objective function
line will cause extreme point C to be non optimal. Hence,
the slope of the line A provides an upper limit for the slope
of the objective function.

• Rotating the objective function line clockwise, the slope of

the line decreases and we get an alternative optimal
solution between extreme points C and B. Any further
clockwise rotation of the objective function line will cause
extreme point C to be non optimal. Hence, the slope of the
line B provides an lower limit for the slope of the objective
function.
 Solver Output: Par Inc.,
Variable Cells

Final Reduced Objective Allowable Allowable

Cell Name Value Cost Coefficient Increase Decrease

$B$11 Values S 540 0 10 3.51 3.7

$C$11 Values D 252 0 9 5.28 2.34

• The profit contribution of standard bag can vary between 6.3 ≤

C1 ≤ 13.51 so that still Par is producing 540 standard bags and
252 deluxe bags.
• The profit contribution of deluxe bag can vary between 6.66 ≤
C2 ≤ 14.28 so that still Par is producing 540 standard bags and
252 deluxe bags.
• These limits are also called range of optimality.
• Reduced Cost: The amount by which the objective function
coefficients has to be increased / decreased so that a non-zero
optimal solution has been reached.
• Note that the total profit contribution will change due to
change in profit contribution per standard bag.
 b) Right Hand Side Changes
• Consider the Par. Inc., problem. Suppose that an additional 10 hours of
production time is available in the C&D department. The original LPP
can be rewritten as
Max. Z= 10S + 9D
Subject to
0.7S + 1D ≤ 640 (Cutting & Dyeing)
0.5S + 0.83D ≤ 600 (Sewing)
1S + 0.33D ≤ 708 (Finishing)
0.1S + 0.25D ≤ 135 (Inspection & Packaging)
S,D ≥ 0 (Non-negativity)

• Using graphical method the new solution is S = 527.5, D = 270.75 and

Max. Z = $7711.75.
• Increase in profit of $43.75 with a rate of increment of $4.375 per hour
added.
 Solver Output: Par Inc., Cont’d.
Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$5 C & D Utilized 630 4.38 630 52.45 134.4
Sewing
$D$6 Utilized 479.88 0 600 1E+30 120.11
Finishing
$D$7 Utilized 708 6.93 708 192 128.28
$D$8 I &P Utilized 116.97 0 135 1E+30 18.02

• Shadow price (Dual price): The improvement in the value of the

objective function when there is per unit change in the RHS of the
constraint.
• In other words, if we increase the RHS of the constraint (C&D) by 1 hr,
the value of the objective function will improve by $4.375.
• Conversely, if the RHS of the constraint (C&D) were to decrease by 1 hr,
the value of the objective function would get worse by $4.375.
 Solver Output Cont’d.
• Note that the value of shadow price may be applicable only for
small changes in the RHS. As more and more resources are
obtained the RHS value continue to increase, other constraints
will become binding and limit the change in the value of the
objective function.

• The shadow price of non-binding constraint will be zero because

an increase in the RHS.
• A negative shadow price shows that the objective function will
not improve if the RHS is increased by one unit.

• The allowable increase and allowable decrease will provide the

upper and lower bound for the RHS values so that within the
range shadow price will remains the same.
 Problem 1: Kelson Sporting Equipment, Inc.,
• Kelson Sporting Equipment, Inc., makes two different types of baseball gloves:
regular model (RM) and catcher’s model (CM). The production time
requirements, availability and profit contribution per glove are given below.
Assuming that the company is interested in maximizing the total profit,
answer the following:
Model C&S Finishing P&S Profit
RM 1 1/8 $5
CM 3/2 1/3 $8
Availability 900 300 100

• How many glove of each model should Kelson manufacture and what is the
profit? Which constraints are binding?
• Will it be beneficial to Kelson if the profit contribution of RM increased by $4?
Justify. What would be the optimal solution in this case?
• If overtime can be scheduled in one of the departments, where would you
recommend doing so?
• If an additional 50 hrs is made available in C&S department, will it be
beneficial to Kelson? Justify.
• How much the profit will improve if 20 extra hours is made available in P&S ?
Dr. Mahesh K C 12
 Problem 2: Modified Par Inc.,
• Refer the Par Inc., problem. In addition to the standard bag and deluxe
bag, the management is considering the production of lightweight
model designed specifically for golfers. The new LP model is given
below.
Max. Z=10S + 9D+12.85L
Subject to (s.t) the constraints
0.7S + 1D +0.8L≤ 630 (Cutting & Dyeing)
0.5S + 0.833D +L≤ 600 (Sewing)
1S + 0.666D +L≤ 708 (Finishing)
0.1S + 0.25D +0.25L≤ 135 (Inspection & Packaging)
S,D,L ≥ 0 (Non-negativity)
• Find the optimal solution and the max profit.
• How much the profit contribution of Deluxe bags have to be increased
so that Par could start producing the same?
 Reference
• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and Badri, T.N.,
(2016), Quantitative Analysis for Management, 12 th ed.,
Pearson Education.

Dr. Mahesh K C 14
Session 10: The Transportation
Problem
 Introduction and LP formulation
• The Transportation Problem (TP) deal with a special class
of LPP called network flow problems in which the objective
is to ‘transport’ (or ship) a single commodity from several
sources (a.k.a origin, or supply ) to different ‘destinations’
(a.k.a demand or requirement ) at a minimum total cost.
• The TP arises frequently in planning for the distribution of
goods and services from several supply locations to several
demand locations.

• The quantity of goods available at each supply location is

limited, and the quantity of goods needed at each several
demand locations is known.
• The cost of shipping a unit of goods from a known origin to
a known destination is also given.
• Total supply and total demand should be equal.
 Mathematical Model for TP
• Let a i = quantity of product available at origin i.
b j = quantity of product required at destination j.
c ij = cost of shipping one unit from origin i to destination j.
x ij = units shipped from origin i to destination j .

• Then the problem is to determine the transportation schedule so

as to minimize the total transportation cost satisfying supply
and demand conditions.

• Model
Min Z = Σi Σj cij x ij i = 1, 2, ………,m and j = 1, 2, ………,n
Subject to:
Σj x ij ≤ a i ; i = 1, 2, ………,m (supply constraints)
Σi x ij = b j ; j = 1, 2, ………,n (demand constraints)
x ij ≥ 0 for all i and j
 General TP table
•
Destinations
Origin D1 D2 ….. Dn Supply
(Oi)

O1 x11 x12 x1n a1

…..
c11 c12 c1n
O2 x21 x22 x2n a2
…..
c21 c22 c2n

….. ….. ….. ….. ….. …..

Om xm1 xm2 xmn am
…..
cm1 cm2 cmn
Demand b1 b2 bn Σai= Σbj
 Properties
• A necessary and sufficient condition for the existence of a feasible
solution to the TP is Σi a i = Σj b j. In other words, total supply must
be equal to total demand.
• When total supply equal to total demand, the problem is called
balanced TP, otherwise , it is known as unbalanced TP.

• The allocated cells in the transportation table having positive

allocation are called occupied cells and empty cells are called
unoccupied cells.
• The number of positive allocations (values of decision variables)
at any stage of feasible solution must be equal to (row + column -
1) i.e m + n -1.

• When the number of positive allocations (values of decision

variables) at any stage of feasible solution less than or equal to
(row + column -1), the solution is called a degenerate solution
 Foster Generators Inc., Problem
• Foster Generators (FG) is a premier company located in
USA, producing a particular type of generator. It has plants
in Cleveland, Bedford and New York. The firm distributes
its generators through four regional distribution centers
located in Boston, Chicago St. Louis, and Lexington.
Production capacities over the next 3-month planning
period for one particular type of generator are as follows.
Table1
Origin Plant Prod. Cap
1 Cleveland 5000
2 Bedford 6000
3 New York 2500
Total 13500
The 3-month forecast of demand for the distribution centers and the cost
for each unit shipped route is given below. The management would like
to determine how much of its production should be shipped from each
plant to each distribution center so that FG’s total transportation cost
should be minimum.
Table2 Table3
O/D Boston Chicago St. Louis Lexington
Destin Distribution Demand
-ation Center
Cleveland 3 2 7 6
1 Boston 6000
Bedford 7 5 2 3
2 Chicago 4000
3 St.Louis 2000 New york 2 5 4 5

4 Lexington 1500
total 13500
 Network model to FG
• Plants (Origins) TC per unit Destination centers

3 1 6000
5000 1 2
7
6

7 5 2 4000
6000 2
2
3

5
2 3 2000
4
3
2500 5

1500
4
Supplies Distribution routes (arcs)
Demands
 LP formulation of FG
• Let x ij = # of units shipped from origin i to destination j; i = 1, 2, 3
and j = 1, 2, 3, 4.
• Objective function: Since the objective of the TP is to minimize the
total TC, we use data from table3.
Min Z = (3x 11 +2x 12 +7x 13 +6x 14 )+ (7x 21 +5x 22 +2x 23 +3x 24 )+
(2x 31 +5x 32 +4x 33 +5x 34 )

• Supply Constraints (table 1) Demand Constraints (table2)

x 11 +x 12 +x 13 +x 14 ≤ 5000 x 11 +x 21 +x 31 = 6000
x 21 +x 22 +x 23 +x 24 ≤ 6000 x 12 +x 22 +x 32 = 4000
x 31 +x 32 +x 33 +x 34 ≤ 2500 x 13 +x 23 +x 33 = 2000
x 14 +x 24 +x 34 = 1500
• Non-negativity constraint
x ij ≥ 0 for all i = 1, 2, 3 and j = 1, 2, 3, 4.
 Problem1:
• A company imports goods at two ports: Philadelphia and New Orleans.
Shipments of one of its products are made to customers in Atlanta,
Dallas, Columbus and Boston. The supply at each port is as follows: P.
Delphia 5000 and New Orleans 3000. The demand side is as follows:
Atlanta 1400, Dallas 3200, Columbus 2000 and Boston 1400. For the
next planning period, the shipping costs per case from each port to
each customer are given below.

Port Atlanta Dallas Columbus Boston

Philadelphia 2 6 6 2

New Orleans 1 2 5 7

1) Develop a network model of this distribution system.

2) Formulate a LPP to this TP
 Problem 2
• Consider the following network. Develop a LP model for this
transportation network. Clearly define your decision variables.

D’ Moines 25
14
30 Jefferson 9
City 7 Kanas 15
City
8 10

20 Omaha 5
St.Louis 10

Supply Routes Demand

 Problem 3
• Consider the following TP. Draw a network diagram and formulate the
LP model

Warehouse
Factory W1 W2 W3 Supply

F1 10 7 8 45

F2 15 12 9 15

F3 7 8 12 40

Demand 25 55 20 100
 Reference
• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and Badri, T.N.,
(2016), Quantitative Analysis for Management, 12 th ed.,
Pearson Education.

Dr. Mahesh K C 13
Session 11: Finding Initial Basic
Solution to TP
 Procedures to Solve a TP
• Solving a typical TP is in two phases:
Finding an initial basic feasible solution (IBFS)
Finding an optimal solution
• The procedures most often used to find an IBFS to a TP are called
heuristics-a common sense procedure for quickly finding the
solution to a problem. These heuristics are developed for a
balanced TP.

• Commonly used such procedures are:

North-West Corner (NWC) Rule, Least Cost Method (LCM)
Vogel’s Approximation Method (VAM)
• The IBFS must satisfy the following conditions:
1) the solution must be feasible, that is it satisfy the rim requirement
2) The number of positive allocations must be equal to m+n-1.
 General TP table (matrix)
• Consider a TP with m origins and n destinations with known
supplies at origins, demands at destinations and the unit cost of
shipping from different origins to different destinations.
• The transportation table or matrix is given below.

Destinations
Origin (O i ) D1 D2 ….. Dn Supply

O1 C11 C12 …… C1n a1

O2 ….. a2
C21 C22 C2n
….. ….. ….. ….. ….. …..
Om ….. am
Cm1 Cm2 Cmn
Demand b1 b2 ….. bn Σa i = Σb j
 North-West Corner (NWC) Rule & Least Cost Method (LCM)
• NWC Rule:
Step 1: Starting form the north-west corner of the transportation matrix,
allocate the commodity equal to min(a 1, b 1 ).
Step 2: a) If the allocation made in step1 is a 1, then move vertically down to
the cell (2,1). Apply step1 again for next allocation.
b) If the allocation made in step1 is b 1, then move horizontally to the cell (1,
2). Apply step1 again for next allocation.
c) If a 1 =b 1, break the tie randomly and move diagonally to the cell (2, 2).
Step 3: Continue the procedure till all rim requirements are satisfied.
• LCM
Step 1: Select the cell with lowest unit cost in the entire transportation
matrix and allocate as much as possible. Eliminate the row or column in
which either the supply or the demand is fulfilled.
Step 2: After adjusting the supply and demand, repeat the procedure for the
remaining rows and columns.
Step 3: Continue the procedure till all rim requirements are satisfied.
 Vogel’s Approximation Method (VAM)
Step 1: Calculate penalty numbers for each row and column by taking the
difference between the lowest and next lowest unit transportation costs.
This difference indicates the penalty that has to be paid if decision maker
fails to allocate to the cell with minimum unit transportation cost.

Step 2: Select the row or column having the largest penalty number. If there
is a tie then it can be broken by selecting the cell where maximum allocation
can be made.
Step 3: Allocate as much as possible to the cell with the lowest cost in the
row or column selected in step2. Adjust the supply and demand s after
allocation at sources and destinations.

Step 4: Eliminate the row or column for which supply and demand
conditions are met.
Step 5: Repeat steps 1-4 until the entire supply at various sources and
demand at various destinations are met.
• FG Cost matrix
Origin D1 D2 D3 D4 Suppl
y

O1 5000

3 2 7 6

O2 6000

7 5 2 3

2500
O3
4 5
2 5
Dema 6000 4000 2000 1500 13500
nd
 Foster Generators-IBFS by NWC & LCM
Origin D1 D2 D3 D4 Supply Origin D1 D2 D3 D4 Supply

5000 1000 4000 5000

O1 5000 O1
(1000)
3 2 7 6 3 2 7 6

1000 4000 1000 2500 2000 1500 6000

O2 6000 O2 (4000)
7 5 2 3 7 5 2 3 (2500)

1000 1500 2500 2500

O3 O3 2500
(1500)
2 5 4 5 2 5 4 5
Demand 6000 4000 2000 1500 13500 Demand 6000 4000 2000 1500 13500
(1000) (1000 (3500),
) (2500)

• Min.TC (NWC) = 55500

• Min TC (LCM) = 42000
• It can be observed that m+n-1 (=6) condition is satisfied.
 Fosters Generators- IBFS by VAM

• The IBFS: x 11 =1000, x 12 = 4000,

1000 4000
x 21 = 2500, x 23 = 2000, x 24 = 1500,
and x 31 ==2500. 3 2 7 6
2500 2000 1500
• Here m = 3 and n = 4 so that m + n
– 1 =6. Here we got six positive 7 5 2 3
allocations and hence the solution 2500
is not degenerate.
2 5 4 5
• The minimum TC is given by
Min.TC = 3(1000) + 2(4000) +
7(2500) + 2(2000) + 3(1500) +
2(2500) = $42000.
 Problem1
• A distribution system has the following constraints:
Factory Capacity Warehouse Demand
A 45 I 25
B 15 II 55
C 40 III 20
The transportation costs per unit (in Rs) allocated with each route are
given below. I II III

A 10 7 8
B 15 12 9
C 7 8 12
1) Write down the LP model by clearly defining your decision variables.
2) Find IBFS by using NWC, LCM and VAM.
1) Let x ij = # of units shipped from origin i to destination j; i = j =1, 2, 3

Objective Function
Min Z = (10x 11 + 7x 12 + 8x 13 ) + (15x 21 + 12x 22 + 9x 23 )+(7x 31 + 8x 32 + 12x 33 )

Supply constraints Demand constraints

x 11 +x 12 +x 13 ≤ 45 x 11 +x 21 +x 31 = 25
x 21 +x 22 +x 23 ≤ 15 x 12 +x 22 +x 32 = 55
x 31 +x 32 +x 33 ≤ 40 x 13 +x 23 +x 33 = 20

Non-negativity constraint
x ij ≥ 0 for all i = 1, 2, 3 and j = 1, 2, 3

2) The IBFS (VAM) is as follows:

x 12 =40, x 13 =5, x 23 =15, x 31 =25, x 32 =15
Min. TC = 40*7 + 5*8 + 15*9 + 25*7 + 15*8 = 750.
 Problem variations
1) Total supply not equal to total demand:
a) If total supply exceeds total demand, an additional dummy
column or demand center with unit transportation cost set
equal to zero can be added to the transportation table in order
to absorb the excess supply.
b) If total supply is less than total demand, an additional dummy
raw or origin with unit transportation cost set equal to zero can
be added to the transportation table in order to absorb the
excess demand.

2) Prohibited routes:
When it is not possible to transport goods from certain sources to
certain destinations, due to unfavorable weather conditions, road
hazards, etc, the problem can be handled by assigning a very large
cost say M or ∞ to each of the route which are not available.
 Problem Variations Cont’d.
3) Maximization TP:
• In general the transportation model is used for cost
minimization problems. However, it can also be used to solve
problems in which the objective is to maximize total profit.
• Instead of unit cost cij, the profit or payoffs p ij associated with
each route (i, j) is given.

• We convert the profit matrix to corresponding opportunity

cost matrix by subtracting all the profit values from the
highest profit value.
• IBFS is obtained based on this matrix.
• The maximum profit is obtained by using IBFS and the profit
matrix.
 Reference
• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and Badri, T.N.,
(2016), Quantitative Analysis for Management, 12 th ed.,
Pearson Education.

Dr. Mahesh K C 13
S13 & S14: The Assignment
Problem

Dr. Mahesh K C 1
 Assignment Problem (AP)
• The AP is special case of the TP for which a LPP can be
formulated.
• The assignment problem (AP) arises in a variety of
decision-making situations; typical assignment problems
involve assigning jobs to machines, agents to tasks, sales
personals to sales territories, contracts to bidders and so
on.
• A distinguishing feature of the AP is that one agent is
assigned to one and only one task.
• Since one-to-one assignment is carried out, the number of
rows and columns will be same.
• Specifically one may look for set of assignments that will
optimize a stated objective, such as minimize cost,
minimize time or maximize profit.
Dr. Mahesh K C 2
 General LP model for AP
• The general AP involves n agents and n tasks. Let cij denotes
the cost associated in assigning agent i to task j. Define
x ij = 1 if agent i is assigned to task j
= 0 otherwise
Then the general AP is
Min Z = ΣΣ cij x ij , i = 1, 2,….., n and j = 1, 2,……, n
Subject to
Σj x ij =1 i = 1, 2,….., n agents
Σi x ij = 1 j = 1, 2,……, n tasks
x ij = 0 or 1 for all i and j

Dr. Mahesh K C 3
 Hungarian Assignment Method (HAM)
• This method involves what is called matrix reduction. The goal
of this method is to continue reducing the matrix until the value
of one of the solutions is zero-that is, until an assignment of
agents to tasks can be made.

• Step 1: Reduce the initial matrix by subtracting the smallest

element in each row from every element in that row. Then, using
this row-reduced matrix, subtract the smallest element in each
column from every element in that column.

• Step 2: Find the minimum number of straight lines that must be

drawn through the rows and columns of the current matrix so
that all the zeros in the matrix will be covered. If the minimum
number of straight lines is the same as the number of rows (or
columns), an optimal assignment with a value of zero can be
made. Otherwise go to step 3.
Dr. Mahesh K C 4
 HAM Contd’.
• Step 3: Subtract the value of the smallest unlined element from
every unlined element and add this same value to every element
at the intersection of two lines. All other elements remain
unchanged. Return to step 2, and continue until the minimum
number of lines necessary to cover all the zeros in the matrix is
equal to the number of rows.
• Note
To draw minimum number of lines the following heuristic works
well.
a) Choose any row or column with a single zero.
b) If it is a row, draw a line through the column the zero is in.
c) If it is a column, draw a line through the row the zero is in.
d) Continue in this fashion until all zeros are covered.

• Once the optimal solution is obtained, the assignment should be

made to zeros in the reduced matrix. If the assignment made in a
row, then cross out all other zeros in its column. If the
assignment is made to column, then cross out all other zeros in5
Dr. Mahesh K C
its row.
 Fowle Marketing Research (FMR)
• FMR has just received requests for market research studies from three
new clients. The company faces the task of assigning a project leader
(agent) to each client (task). Currently, three individuals have no other
commitments and are available for the project leader assignments.
Fowle’s management realizes, however, that the time required to
complete each study will depend on the experience and ability of the
project leader assigned. The three projects have approximately the
same priority, and the company wants to assign project leaders to
minimize the total number of days required to complete all three
projects. If a project leader is to be assigned to one client only, what
assignments should be made?

• Formulate the AP as a LPP

• Solve using HAM

Dr. Mahesh K C 6
0 0 2 0 0 2
1 5 0 1 5 0
0 3 0 0 3 0

Optimality condition is satisfied and hence we can make assignmnets in

above matrix.
Optimal assignmnets
Terry-- client2 15
Carle -- client 3 5
Mc-- client 1 6 26 days

10 15 9 1 6 0 0 0 0
9 18 5 4 13 0 3 7 0
6 14 3 3 11 0 2 5 0

Since the min. no. of lines not equal to the order of the matrix,
Dr. Mahesh K C 7
an optimal solution has not been reached.
 Problem Variations
• Unbalanced AP: If the number of rows and columns are not
equal, then the AP is called unbalanced.
• To solve such Aps, one need to balance it first by adding a
dummy row / column with zeros in the row / column. Then
apply HAM.

• Maximization case: In some situations , the AP may call for

maximization of profit, revenue, etc., as the objective. In
this case, usually we convert the problem into
minimization problem.
• This is achieved by subtracting each of the elements of the
given matrix from the largest value in the given profit
matrix. Then apply HAM.
Dr. Mahesh K C 8
 Mayfax Distributors, Inc., (MDI)
• MDI has four sales territories, each of which must be
assigned a sales representative. From past experience the
firm’s manager has estimated the annual sales
volume($000s) for each sales territory. Find the territory
assignments that will maximize sales.
SR A B C D

Washing 44 80 52 60
ton
Benson 60 56 40 72

Fredricks 36 60 48 48

Hodson 52 76 36 40

Dr. Mahesh K C 9
 Problem 1
• The following matrix gives the estimate of time each machine would
take to perform each task. Determine the optimum assignment that
will minimize the total man-hours.
Tasks E F G H

A 18 26 17 11

B 13 28 14 26

C 38 19 18 15

D 19 26 24 10

Dr. Mahesh K C 10
 Reference
• Render, B., Stair, R.M., Hanna, M.E., Hale, T.S., and Badri, T.N.,
(2016), Quantitative Analysis for Management, 12 th ed.,
Pearson Education.

Dr. Mahesh K C 11