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Chapter One Introduction To Operations Research 1.1 History of Operations Research and Management Science

1. Operations research began during World War II when teams of scientists from diverse backgrounds worked together to solve complex military problems. This led to the development of operations research as a discipline focused on applying scientific methods to management problems. 2. After the war, operations research was applied to problems in industries and universities. The introduction of computers in the 1950s further accelerated the growth of the field by enabling researchers to solve larger problems. 3. Operations research is defined as the application of scientific methods to analyze and provide optimal solutions for complex management problems, with the goal of helping managers make scientifically informed decisions. It uses interdisciplinary teams and quantitative modeling.

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0% found this document useful (0 votes)
60 views24 pages

Chapter One Introduction To Operations Research 1.1 History of Operations Research and Management Science

1. Operations research began during World War II when teams of scientists from diverse backgrounds worked together to solve complex military problems. This led to the development of operations research as a discipline focused on applying scientific methods to management problems. 2. After the war, operations research was applied to problems in industries and universities. The introduction of computers in the 1950s further accelerated the growth of the field by enabling researchers to solve larger problems. 3. Operations research is defined as the application of scientific methods to analyze and provide optimal solutions for complex management problems, with the goal of helping managers make scientifically informed decisions. It uses interdisciplinary teams and quantitative modeling.

Uploaded by

Robel Habtamu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CHAPTER ONE

Introduction to Operations Research


1.1 History of Operations Research and Management Science
To understand what operations research (OR) is today, one must know something of
its history and evolution. Although particular models and techniques of OR can be
traced back to much earlier origins, it is generally agreed that the discipline began
during World
War II. Many strategic and tactical problems associated with the Allied military effort
were simply too complicated to expect adequate solutions from any one individual, or
even a single discipline. In response to these complex problems, groups of scientists
with diverse educational backgrounds were assembled as special units within the
armed forces. These teams of scientists started working together, applying their
interdisciplinary knowledge and training to solve such problems as deployment of
radars, anti-aircraft fire control, deployment of ships to minimize losses from enemy
submarines, and strategies for air defense. Each of the three wings of Britain’s armed
forces had such interdisciplinary research teams working on military management
problems. As these teams were generally assigned to the commanders in charge of
military operations, they were called operational research (OR) teams. The nature of
their research came to be known as operational research or operations research.

The work of these OR teams was very successful and their solutions were effective in
military management. This led to the use of such scientific teams in other Allied
nations, in particular the United States, France, and Canada. At the end of the war,
many of the scientists who worked in the military operational research units returned
to civilian life in universities and industries. They started applying the OR
methodology to solve complex management problems in industries. Petroleum
companies were the first to make use of OR models for solving large-scale production
and distribution problems. In the universities advancements in OR techniques were
made that led to the further development and applications of OR. Much of the postwar
development of OR took place in the United States.

An important factor in the rapid growth of operations research was the introduction of
electronic computers in the early 1950s. The computer became an invaluable tool to
the operations researchers, enabling them to solve large problems in the business
world.

The Operations Research Society of America (ORSA) was formed in 1952 to serve
the
Professional needs of these operations research scientists. Due to the application of
OR in
industries, a new term called management science (MS) came into being. In 1953, a
national society called The Institute of Management Sciences (TIMS) was formed in
the United States to promote scientific knowledge in the understanding and practice of
management. The journals of these two societies, Operations Research and
Management Science, as well as the joint conferences of their members, helped to
draw together the many diverse results into some semblance of a coherent body of
knowledge. In 1995, the two societies, ORSA and TIMS, merged to form the Institute
of Operations Research and Management Sciences (INFORMS).

Another factor that accelerated the growth of operations research was the introduction
of OR/MS courses in the curricula of many universities and colleges in the United
States. Graduate programs leading to advanced degrees at the master’s and doctorate
levels were introduced in major American universities. By the mid-1960s many
theoretical advances in OR techniques had been made, which included linear
programming, network analysis, integer programming, nonlinear programming,
dynamic programming, inventory theory, queuing theory, and simulation.
Simultaneously, new applications of OR emerged in service organizations such as
banks, health care, communications, libraries, and transportation. In addition, OR
came to be used in local, state, and federal governments in their planning and
policy-making activities.

It is interesting to note that the modern perception of OR as a body of established


models
and techniques—that is, a discipline in itself—is quite different from the original
concept of OR as an activity, which was performed by interdisciplinary teams. An
evolution of this kind is to be expected in any emerging field of scientific inquiry. In
the initial formative years, there are no experts, no traditions, and no literature. As
problems are successfully solved, the body of specific knowledge grows to a point
where it begins to require specialization even to know what has been previously
accomplished. The pioneering efforts of one generation become the standard practice
of the next. Still, it ought to be remembered that at least a portion of the record of
success of OR can be attributed to its ecumenical nature.

Meaning of Operations Research


From the historical and philosophical summary just presented, it should be apparent
that the term “operations research” has a number of quite distinct variations of
meaning. To some, OR is that certain body of problems, techniques, and solutions that
has been accumulated under the name of OR over the past 60 years and we apply OR
when we recognize a problem of that certain genre. To others, it is an activity or
process, which by its very nature is applied. It would also be counterproductive to
attempt to make distinctions between “operations research” and the “systems
approach.” For all practical purposes, they are the same.

How then can we define operations research? The Operational Research Society of
Great
Britain has adopted the following definition:
Operational research is the application of the methods of science to complex
problems arising in the direction and management of large systems of men, machines,
materials and money in industry, business, government, and defense. The distinctive
approach is to develop a scientific model of the system, incorporating measurement of
factors such as chance and risk, with which to predict and compare the outcomes of
alternative decisions, strategies or controls. The purpose is to help management
determine its policy and actions scientifically.
The Operations Research Society of America has offered a shorter, but similar,
description:
Operations research is concerned with scientifically deciding how to best design and
operate man–machine systems, usually under conditions requiring the allocation of
scarce resources.
However, the following definition is proposed here:
“Operations Research is a systematic analysis of a problem through scientific
methods, carried out by appropriate specialists, working together as a team,
constituted at the instance of management for the purpose of finding an optimum and
the most appropriate solution, to meet the given objective under a given set of
constraints.”
From the concept and definition given above, Operations Research is:
1. The application of scientific methods, techniques and tools to the problem to find
an answer
2. A management tool in the hands of a manager to take a decision
3. A scientific approach to decision making process
4. An “applied research” aims at finding a solution for an immediate problem facing
a society, industry or a business enterprise .This is not “fundamental research”
5. A decision-oriented research, using scientific methods, for providing management a
quantitative basis for taking decision regarding operations under its control
6. Applied decision theory. It uses scientific, mathematical and logical means to take
decisions.

In general, most of the definitions of OR emphasize its methodology, namely its


unique approach to problem solving, which may be due to the use of interdisciplinary
teams or due to the application of scientific and mathematical models. In other words,
each problem may be analyzed differently, though the same basic approach of
operations research is employed. As more research went into the development of OR,
the researchers were able to classify and to some extent many of the important
management problems that arise in practice. Examples of such problems are those
relating to allocation, inventory, network, queuing, replacement, scheduling, and so
on.

1.2. Decision Making and Problem Solving


Making appropriate decision is the most vital aspect in management. Every one of us
takes number of decisions every day. Some are important; some are trivial. Some
decisions initiate a set of activities; some put an end to a certain activities. In business
environment right decisions at the right times ensure success. This shows the
importance of decision making.
Decision making requires for all human being because each of us make decision every
day in our life. Thus, decision making is universal. Decision making is a rational
selection among alternatives.

Definition
Decision making is the process of selecting or choosing based on some criteria, the
best alternative among alternatives.
-Problem is any variation between what was planned and what is actually
have/produced.
-Problem solving can be defined as the process of identifying a difference between
some actual and some desired states of affairs and then taking action to resolve the
difference.

The problem solving process:


Steps in the process of rational problem solving
1. Identify and define the problem
Problem is a necessary condition for a decision. i.e.: There would be no need for
decisions if problems did not exist.
2. Determine the set of alternative solutions.
3. Determine the criteria to evaluate alternatives.
=>Identifying those characteristics that are important in making the decision.
4. Analyze the alternatives.
==>The advantages and disadvantages of each alternative.
5. Select the best alternative
==> Select the best alternative that suits to solve our decision problem. In selecting
the best alternative, factors such as risk, timing and limiting factors should be
considered adequately
6. Implement the solution
==> Putting the decision into action
7. Establishing a control and evaluation system
==> Ongoing actions need to be monitored
==> Following the decision
==> Evaluate the results and determine if a satisfactory solution has been obtained.
Decision making is generally associated with the first five steps of the problem
solving process.
The Decision-Making Environment
Decisions are made under three basic conditions:
 Decision under certainty
 Decision under risk
 Decision under uncertainty
i. Decision making under conditions of certainty
 The decision maker has perfect knowledge about the outcome.
 In this situation, we are reasonably sure what will happen when we make
a decision. The information is available & is considered to be reliable
& we know the cause & effect relationships.
Example: If you decide to invest your money in saving account in the Commercial
Bank of Ethiopia, you are certain that you will earn three percent interest.
ii.Decision making under condition of risk
Usually, decision makers do not have a precise knowledge about the outcome of a
decision. Decision makers may only be able to attach a probability to the expected
outcomes of each alternative. Under this situation, one may have factual information,
but it may be incomplete.
Example: If we gamble by tossing a fair coin, the probability that a tail will turn up
is 50%.
iii. Decision making under conditions of uncertainty
It is a case where neither there is complete data nor probabilities can be assigned to
the surrounding condition. It is the most difficult for a manager.
Some conditions that are uncontrollable by management include competition,
government regulations, technological advances, the overall economy, & the social &
cultural tendencies of society.
Example: A corporation that decides to expand its operation, launching a new
product, or developing of a new technology in a strong country may know little about
its culture, laws, economic environment, or politics. The political situation may be
so volatile that even experts cannot predict a possible change in government.

1.3. Quantitative Analysis Process


The three basic quantitative analysis processes are:
1. Model development
2. Data preparation
3. Model solution
1. Model development
Model is a representation of real objects/situations
Following are types of models:
a. Physical (Icon) model:
This is the representation of the situation, problem or object.
It is also called Static Model. It is given in two or three dimensions. It is a
representation of the real object.

Example:
 The structure of an atom
 Model of an airplane
 Photograph of a machine
 Layout drawing of a factory
 Globe

b. Analogue (Schematic) Models:


These are abstract models mostly showing inter and intra relationships between two or
more parameters. For example, it may show the relationship between an independent
variable (input) with that of a dependent variable (output). For instance; histogram,
frequency table, cause-effect diagram, flow charts, Gantt charts, price-demand graph,
world map, speedometer, thermometer and others.
c. Mathematical models:
This is also an abstract model. Here a set of relations is represented in the form of
mathematical equations, using symbols to represent various parameters.
Example:
1. (x + y)2=x2+2xy+y2
2. Max. Z=3000x1 +2500x2
Subject to:
2x1+x2 < 40
x1+3x2 < 45
x1< 12
x1, x2> 0
x1and x2 are decision variables
2. Data presentation
Data represent the values of inputs to the model.
Max. Z=3000x1 +2500x2
Subject to:
2x1+x2≤ 40
x1+3x2≤ 45
x1 ≤ 12
x1, x2≥ 0
3. Model solution
:Is optimal solution
From the above equation, x1=12, x2=11 and Max. Z= $6350

Trial and error method


In this method a certain algorithm is developed. One starting point is an initial
solution, which is the first approximation. The method of solution, is repeated with a
certain set of rules so that initial solution is gradually modified at each subsequent
solution; till optimal solution is reached. There are certain criteria laid down to check
whether the solution has become an optimal solution. These trial solutions are called
iterations and the method is called iterative process. The classical example of trial
and error method is Linear Programming
Then the next step after iteration is model testing and validation.

CHAPTER TWO
LINEAR PROGRAMMING
Linear Programming- is an optimization method, which shows how to allocate
scarce resources such as money, materials or time and how to do such allocation in
the best possible way subject to more than one limiting condition expressed in the
form of inequalities and/or equations. It enables users to find optimal solution to
certain problems in which the solution must satisfy a given set of requirements or
constraints.

Optimization in linear programming implies either maximization (such as profit,


revenue, sales, and market share) or minimization (such as cost, time, and distance) a
certain objective function. It implies that in LP we cannot max/min two quantities in
one model. It involves linearly related multi-variate functions, i.e., functions with
more than one independent variable. The goal in linear programming is to find the
best solution given the constraints imposed by the problem; hence the term
constrained optimization.

Linear Programming Models (LPM)


Linear Programming (LP) models are mathematical representations of LP problems.
Some LP models have a specialized format, whereas others have a more generalized
format. Despite this, LP Models have certain characteristics in common. Knowledge
of these characteristics enables us to recognize problems that are amenable to a
solution using LP models and to correctly formulate an LP model. The characteristics
can be grouped into two categories: Components and Assumptions. The components
relate to the structure of a model, whereas the assumptions reveal the conditions under
which the model is valid.

Components Assumptions
1. Objective function 1. Linearity
2. Decision variables Model 2. Divisibility Model
3. Constraints Structure 3. Certainty Validity
4. Parameters & RHSV 4. Non-negativity

Components of LP model
1. The Objective Function- is the mathematical or quantitative expression of the
objective of the company/model. The objective in problem solving is the criterion by
which all decisions are evaluated. In LPMs a single quantifiable objective must be
specified by the decision maker. For example, the objective might relate to profits, or
costs, or market share, but to only one of these. Moreover, because we are dealing
with optimization, the objective will be either maximization or minimization, but not
both at a time.
2.The Decision Variables - represent unknown quantities to be resolved for. These
decision variables may represent such things as the number of units of different
products to be sold, the amount of Birr to be invested in various projects, the number
of advertisements to be placed with different media. Since the decision maker has
freedom of choice among actions, these decision variables are controllable variables.

3. The constraints - are restrictions which define or limit the feasibility of a proposed
course of action. They limit the degree to which the objective can be pursued.
Atypical restriction embodies scarce resources (such as labor supply, raw materials,
production capacity, machine time, storage space), legal or contractual requirements
(e.g. product standards, work standards), or they may reflect other limits based on
forecasts, customer orders, company policies etc.

4. Parameters- are fixed values that specify the impact that one unit of each decision
variable will have on the objective and on any constraint it pertains to as well as to the
numerical value of each constraint.
 The components are the building blocks of an LP model. We can better
understand their meaning by examining a simple LP model as follows.

Example:
Maximize: 4X1 + 7X2 + 5X3 (Profit) ________________ objective function
Subject to:
2X1 + 3X2 + 6X3  300 labor hrs
5X1 + X2 + 2X3 200 lb raw material A System constraints
3X1 + 5X2 + 2X3 360
X1 = 30 Individual
X2 40 constraints
X1, X2, X3  0  Non-negativity constraints.
System constraints – involve more than one decision variables.
Individual constraints – involve only one decision variable.
None-negativity constraints specify that no variable will be allowed to take on a
negative value. The non-negativity constraints typically apply in an LP model,
whether they are explicitly stated or not.

Assumptions of LP Models
1. Linearity. The linearity requirement is that each decision variable has a linear
impact on the objective function and in each constraint in which it appears. Following
the above example, producing one more unit of product 1 adds Br. 4to the total profit.
This is true over the entire range of possible values of X1. The same applies to each of
the constraints. It is required that the same coefficient (from example, 2 lb. per unit)
apply over the entire range of possible value so the decision variable.
2. Divisibility. The divisibility requirement pertains to potential values of decision
variables. It is assumed that non-integer values are acceptable. For example: 3.5 TV
sets/hr would be acceptable  7 TV sets/2hrs.
3. Certainty. The certainty requirement involves two aspects of LP models.
i) With respect to model parameters (i.e., the numerical values) – It in assumed
that these values are known and constant e.g. in the above example each unit of
product 1 requires 2lab his is known and remain constant, and also9 the 300
lab/hr available is deemed to be known and constant.
ii) All the relevant constraints identified and represented in the model are as they
are.
4. Non-negativity. The non-negativity constraint is that negative values of variables are
unrealistic and, therefore, will not be considered in any potential solution; only
positive values and zero will be allowed.

Formulating LP Models
Once a problem has been defined, the attention of the analyst shifts to formulating a
model. Just as it is important to carefully define a problem, it is important to carefully
formulate the model that will be used to solve the problem. If the LP model is ill
formulated, ill-structured, it can easily lead to poor decisions.
Formulating linear programming models involves the following steps:
1. Define the problem/problem definition
* To determine the # of type 1 and type 2 products to be produced per month
so as to maximize the monthly profit given the restrictions.
2. Identify the decision variables or represent unknown quantities
* Let X1 and X2 be the monthly qualities of Type 1 and type 2 products
3. Determine the objective function
* Once the variables have been identified, the objective function can be
specified. It is necessary to decide if the problem is a maximization or a
minimization problem and the coefficients of each decision variable.
Note: a. The units of all the coefficients in the objective function must be the
same.
E.g. If the contribution of type 1 is in terms of Br so does for type 2.
b. All terms in the objective function must include a variable each term have to
have 1 variable.
c. All decision variables must be represented in the objective
function.
4. Identifying the constraints
- System constraints - more than one variable
- Individual constraints - one variable
- Non-negative constraints

Example 1: A firm that assembles computer and computer equipment is about to start
production of two new microcomputers. Each type of micro-computer will require
assembly time, inspection time and storage space. The amount of each of these
resources that can be devoted to the production of microcomputers is limited. The
manger of the firm would like to determine the quantity of each microcomputer to
produce in order to maximize the profit generated by sales of these microcomputers.
Additional information
In order to develop a suitable model of the problem, the manager has meet with
design and manufacturing personnel. As a result of these meetings, the manger has
obtained the following information:
Type 1 Type 2
Profit per unit Birr 60 Birr 50
Assembly time per unit 4hrs 10hrs
Inspection time per unit 2hrs 1hr
Storage space per unit 3cubic ft 3cubic ft
The manager also has acquired information on the availability of company resources.
These weekly amounts are:
Resource Resource available
Assembly time 100hrs
Inspection time 22hrs
Storage space 39 cubic feet
The manger also meet with the firm’s marketing manager and learned that demand for
the microcomputers was such that whatever combination of these two types of
microcomputer is produced, all of the output can be sold.
Required: Formulate the Linear programming model:
Solution:
Step 1: Problem Definition
- To determine the number of two types of microcomputers to be
produced (and sold) per week so as to maximize the weekly profit
given the restriction.
Step 2: Variable Representation
- Let X1 and X2 be the weekly quantities of type 1 and type 2
microcomputers, respectively.
Step 3: Develop the Objective Function
Maximize or Z max = 60X1 + 50X2
Step 4: Constraint Identification
System constraints: 4X1 + 10X2 100hrs Assembly time
2X1 + X2 22hrs inspector time
3X1 + 3X2 39 cubic feet Storage space
Individual constraint: No
Non-negativity constraint: X1, X2 0
In summary, the mathematical model for the microcomputer problem is:
Z max = 60X1 + 50X2
Subject to: 4X1 + 10X2 100
2X1 + X2 22
3X1 + 3X2 39
X1, X2 0
2. An electronics firm produces three types of switching devices. Each type involves a
two-step assembly operation. The assembly times are shown in the following table:
Assembly time per Unit (in minutes). Section #1
Section #2
Model A 2.5 3.0
Model B 1.8 1.6
Model C 2.0 2.2
Each workstation has a daily working time of 7.5 hrs. The manager wants to obtain
the greatest possible profit during the next five working days. Model A yields a profit
of Birr 8.25 per unit, Model B a profit of Birr 7.50 per unit and Model C a profit of
Birr 7.80 per unit. Assume that the firm can sell all it produces during this time, but it
must fill outstanding orders for 20 units of each model type.

Required: Formulate the linear programming model of this problem.


Solution:
Step 1. Problem definition
To determine the number of three types of switching devices to be produced
and sold for the next 5 working days so as to maximize the 5 days profit.
Step 2. Variable representation
Let X1, X2 and X3 be the number of Model A, B and C switching devices
respectively, to be produced and sold.
Step 3. Develop objective function
Z max: 8.25X1 + 7.50X2 + 7.80X3
Step 4. Constraint identification
2.5X1 + 1.8X2 + 2.0X3 2250 minutes Ass. time station 1 System
3.0X1 + 1.6X2 + 2.2X3 2250 minutes Ass. time station 2 constraints
X1  20 Model A
X2 20 Model B Individual constraint
X3 20Model C
X1, X2, X30 Non-negativity

In summary:
Z max: 8.25X1 + 7.50X2 + 7.80X3
: 2.5X1 + 1.8X2 + 2.0X3 2250 minutes
3.0X1 + 1.6X2 + 2.2X3 2250 minutes
X1  20 model A
X2 20 model B
X3 20 model C
X1, X2, X3 0 non-negativity
3. A diet is to include at least 140 mgs of vitamin A and at least 145 Mgs of vitamin B.
These requirements are to be obtained from two types of foods: Type 1 and Type 2.
Type 1 food contains 10Mgs of vitamin A and 20mgs of vitamin B per pound. Type 2
food contains 30mgs of vitamin A and 15 mgs of vitamin B per pound. If type 1 and 2
foods cost Birr 5 and Birr 8 per pound respectively, how many pounds of each type
should be purchased to satisfy the requirements at a minimum cost?
Vitamins
Foods A B
Type 1 10 20
Type 2 30 15
Solution:
Step 1. Problem definition
To determine the pounds of the two types of foods to be purchased to make the diet at
a minimum possible cost within the requirements.
Step 2. Variable representation
Let X1 and X2 be the number of pounds of type 1 and type 2 foods to be
purchased, respectively.
Step 3. Objective function
Z min: 5X1 + 8X2
4. Constraints
10X1 + 30X2 140 System constraints
20X1 + 15X2 145
X1, X2 0 non-negativity constraints.
4. A farm consists of 600 hectares of land of which 500 hectares will be planted with corn,
barley and wheat, according to these conditions.
(1) At least half of the planted hectare should be in corn.
(2) No more than 200 hectares should be barley.
(3) The ratio of corn to wheat planted should be 2:1
It costs Birr 20 per hectare to plant corn, Birr 15 per hectare to plant barley and Birr
12 per hectare to plant wheat.
a. Formulate this problem as an LP model that will minimize planting cost
while achieving the specified conditions.
Solution:
Step 1. Problem definition
To determine the number of hectares of land to be planted with corn, barley
and wheat at a minimum possible cost meeting the requirements.
Step 2. Decision variable representation
Let X1 be the number of hectares of land to be planted with corn, X2 be
the number of hectares of land to be planted with barley, and X3 be the
number of hectares of land to be planted with wheat.
Step 3. Objective function
Z min = 20X1 + 15X2 + 12X3

Step 4. Constraints
X1 + X2 + X3 = 500
X1  250
X2 200
X1 – 2X3 =0
X1, X2, X3 0
In summary
Z min: 20X1 + 15X2 + 12X3
S.t. X1 + X2 + X2 = 500
X1 – 2X3 =0
X1  250
X2 200
X1, X2, X3 0
Solution Approaches to Linear Programming Problems
There are two approaches to solve linear programming problems:
1. The Graphic solution method
2. The Algebraic solution/ simplex algorithm method

A. The Graphic Solution Method


It is a relatively straightforward method for determining the optimal solution to
certain linear programming problems. It gives as a clear picture. This method can be
used only to solve problems that involve two decision variables. However, most linear
programming applications involve situations that have more than two decision
variables, so the graphic approach is not used to solve them.

E.g.: 1. Solving the micro-computer problem with graphic approach


Z max = 60X1 + 50X2
S.t. 4X1 + 10X2 100
2X1 + X2 22
3X1 + 3X2 39
X1, X2 0
Steps:
1. Plot each of the constraints and identify its region – make linear
inequalities linear equations.
2. Identify the common region, which is an area that contains all of the points
that satisfy the entire set of constraints.
3. Determine the Optimal solution- identify the point which leads to
maximum benefit or minimum cost.
24
22 2X1 + X2 = 22

20

16

3X1 + 3X2 = 39
12
(0, 13) E
8
(5, 8)D 4X1 + 10X2 = 100
4 (9, 4) C

(0, 0) A 4 8 B 12 16 20 24 28

To identify the maximum (minimum) value we use the corner point approach or the
extreme point approach. The corner point/extreme point approach has one theorem: It
states that;

For problems that have optimal solutions, a solution will occur at an extreme, or
corner point. Thus, if a problem has a single optimal solution, it will occur at a corner
point. If it has multiple optimal solutions, at least one will occur at a corner point.
Consequently, in searching for an optimal solution to a problem, we need only
consider the extreme points because one of those must be optimal. Further, by
determining the value of the objective function at each corner point, we could identify
the optimal solution by selecting the corner point that has the best value (i.e.,
maximum or minimum, depending on the optimization case) at the objective function.

Determine the values of the decision variables at each corner point. Sometimes, this
can be done by inspection (observation) and sometimes by simultaneous equation.
Substitute the value of the decision variables at each corner point.
After all corner points have been so evaluated, select the one with the highest or lowest
value depending on the optimization case.

Points Coordinates How Determined Value of Objective function


X1 Z = 60X1 + 50X2
X2
A 0 0 Observation Birr 0
B 11 0 Observation Birr 660
C 9 4 Simultaneous Birr 740
equations
D 5 8 Simultaneous Birr 700
equations
E 0 10 Observation Birr 500

Basic solution:
X1 = 9, X2 = 4, Z = Birr 740

After we have got the optimal solution, we have to substitute the value of the decision
variables into the constraints and check whether all the resources available were used
or not. If there is an unused resource we can use it for any other purpose. The amount
of unused resources is known as SLACK-the amount of the scarce resource that is
unused by a given solution.
The slack can range from zero, for a case in which all of a particular resource is used,
to the original amount of the resource that was available (i.e., none of it is used).

Computing the amount of slack


Constraint Amount used with X1 Originally Amount of slack
= 9 and X2 = 4 available (available – Used)
Assembly time 4(9) + 10(4) = 76 100 hrs 100 – 76 = 24 hrs
Inspection time 2(9) = 1 (4) = 22 22 hrs 22 – 22 = 0 hr
Storage space 3(9) + 3(4) = 39 39 cubic ft 39 – 39 = 0 cubic ft

Constraints that have no slack are some time referred to as binding constraints since
they limit or bind the solution. In the above case, inspection time and storage space
are binding constraints; while assembly time has slack.

Knowledge of unused capacity can be useful for planning. A manager may be able to
use the assembly time for other products, or, perhaps to schedule equipment
maintenance, safety seminars, training sessions or other activities.

Interpretation: The Company is advised to produce9 units of type 1 microcomputers


and 4 units of type 2 microcomputers per week to maximize his weekly profit to Birr
740; and in do so the company would be left with unused resource of 24-assembly hrs
that can be used for other purposes.

2. Solving the diet problem with graphic approach


Cmin: 5X1 + 8X2
10X1 + 30X2 140
20X1 + 15X2 145
X1, X2 0
16 20X1 + 15X2 = 145

12

(0, 9.67) A
B (5, 3) 10X1 + 30X2 = 140
8
4

812 C (14, 0) 1620

Basic solution: X1= 5 pounds


X2 = 3 pounds
C = Birr 49

Interpretation: To make the diet at the minimum cost of Birr 49 we have to purchase
5
pounds of Type1 food and 3 pounds Type 2 food.

If there is a difference between the minimum required amount and the optimal
solution, we call the difference surplus: That is, Surplus is the amount by which the
Points Coordinates How Determined Value of the objective function
X1 Z = 5X1 + 8X2
X2
A 0 9.67 Observation Birr 77.30
B 5 3 Simultaneous Birr 49
equations
C 14 0 Observation Birr 70
optimal solution causes a  constraint to exceed the required minimum amount. It can
be determined in the same way that slack can: substitute the optimal values of the
decision variables into the left side of the constraint and solve. The difference
between the resulting value and the original right-hand side amount is the amount of
surplus. Surplus can potentially occur in a  constraint.

B. The Simplex Algorithm/Algebraic Solution Method


The simplex method is an iterative technique that begins with a feasible solution that
is not optimal, but serves as a starting point. Through algebraic manipulation, the
solution is improved until no further improvement is possible (i.e., until the optimal
solution has been identified). Each iteration moves one step closer to the optimal
solution. In each iteration, one variable that is not in the solution is added to the
solution and one variable that is in the solution is removed from the solution in order
to keep the number of variables in the basis equal to the number of constraints.

The optimal solution to a linear programming model will occur at an extreme point of
the feasible solution space. This is true even if a model involves more than two
variables; optimal solutions will occur at these points. Extreme points represent
intersections of constraints. Of course, not every solution will result is an extreme
point of the feasible solution space; some will be outside of the feasible solution space.
Hence, not every solution will be a feasible solution. Solutions which represent
intersections of constraints are called basic solutions; those which also satisfy all of
the constraints, including the non-negativity constraints, are called basic feasible
solutions. The simplex method is an algebraic procedure for systematically
examining basic feasible solutions. If an optimal solution exists, the simplex method
will identify it.

The simplex procedure for a maximization problem with all  constraints consists of
the following steps.
1. Write the LPM in a standard form: when all of the constraints are written as equalities,
the linear program is said to be in standard form. We convert the LPM in to a standard
form by applying the slack variables, S, which carries a subscript that denotes which
constraint it applies to. For example, S1 refers to the amount of slack in the first
constraint, S2 to the amount of slack in the second constraint, and so on. When slack
variables are introduced to the constraints, they are no longer inequalities because the
slack variable accounts for any difference between the left and right-hand sides of an
expression. Hence, once slack variables are added to the constraints, they become
equalities. Furthermore, every variable in a model must be represented in the
objective function. However, since slack does not provide any real contribution to the
objective, each slack variable is assigned a coefficient of zero in the objective
function.
Slack = Requirement – Production, surplus = Production – Requirement

Taking the microcomputer problem its standard form is as follows:


Z max = 60X1 + 50X2 Z max = 60X1 + 50X2 + 0S1 + S2 + 0S3
: 4X1 + 10X2 100 : 4X1 + 10X2 + S1 = 100
2X1 + X2 22 2X1 + X2 + S2 = 22
3X1 + 3X2 39 3X1 + 3X2 + S3 = 39
X1, X2 0 X1, X2, S1, S2, S3 0
2. Develop the initial tableau: the initial tableau always represents the “Do Nothing”
strategy, so that the decision variables are initially non-basic.
a) List the variables across the top of the table and write the objective function
coefficient of each variable jut above it.
b) There should be one row in the body of the table for each constraint. List the
slack variables in the basis column, one per raw.
c) In the Cj column, enter the objective function coefficient of zero for each slack
variable. (Cj - coefficient of variable j in the objective function)
d) Compute values for row Zj
e) Computer values for Cj – Zj.
Sol/n Cj 60 50 0 0 0
basis X1 X2 S1 S2 S3 RHSV Øj = bj/xj (aij)
S1 0 4 10 1 0 0 100 100/4 = 25
S2 0 2* 1 0 1 0 22 22/2 = 11 Leavin
S3 0 3 3 0 0 1 39 39/3 = 13 g
Zj 0 0 0 0 0 0 variabl
Cj-Zj 60 50 0 0 0 0 e

Entering variable Pivot column Pivot row


* Pivot Element
3. Develop subsequent tableaus
3.1. Identify the entering variable - a variable that has a largest positive value is the
Cj – Zj raw.
3.2. Identify the leaving variable - Using the constraint coefficients or substitution
rates in the entering variable column divide each one into the corresponding
quantity value. However do not divide by a zero or negative value. The smallest
non-negative ratio that results indicate which variable will leave the solution.
4. Find unique vectors for the new basic variable using row operations on the pivot
element.
Sol/n Cj 60 50 0 0 0
basis X1 X2 S1 S2 S3 RHSV Øj = bj/xj (aij)
S1 0 0 8 1 -2 0 56 56/8 = 7
X1 60 1 1/2 0 1/2 0 11 11/. 5 = 22
S3 0 0 3/2 0 -3/2 1 6 6/1.5 = 4
Zj 60 30 0 30 0 660
Cj-Zj 0 20 0 -30 0 0
Leaving variable

Entering Variable

Sol/n Cj 60 50 0 0 0
basis X1 X2 S1 S2 S3 RHSV Øj = bj/xj (aij)
S1 0 0 0 1 6 -16/3 24
X1 60 1 0 0 1 -1/3 9
X2 50 0 1 0 -1 2/3 4
Zj 60 50 0 10 40/3 740
Cj-Zj 0 0 0 -10 -40/3

Optimal solution: X1 = 9, X2 = 4, S1 = 24 hrs, Z = Birr 740

5. Compute the Cj – Zj raw


6. If all Cj – Zj values are zeros and negatives you have reached optimality.
7. If this is not the case (step 6), rehear step 2to5 until you get optimal solution.

“A simplex solution is a maximization problem is optimal if the Cj – Zj row consists


entirely of zeros and negative numbers (i.e., there are no positive values in the bottom
row).”

Note: The variables in solution all have unit vectors in their respective columns for
the constraint equations. Further, note that a zero appears is raw c - z in every
column whose variable is in solution, indicating that its maximum contribution to the
objective function has been realized.

Example 2
A manufacturer of lawn and garden equipment makes two basic types of lawn
mowers: a push-type and a self-propelled model. The push-type requires 9 minutes to
assemble and 2 minutes to package; the self-propelled mower requires 12 minutes to
assemble and 6 minutes to package. Each type has an engine. The company has 12 hrs
of assembly time available, 75 engines, and 5hrs of packing time. Profits are Birr 70
for the self-propelled models and Birr 45 for the push-type mower per unit.
Required:
1. Formulate the linear programming models for this problem.
2. Determine how many mower of each type to make in order to maximize the total
profit (use the simplex procedure).

Solution:
1. a)To determine how many units of each types of mowers to produce so as to
maximize profit.
b)Let X1 - be push type mower.
X2 - be self-propelled mower.
c) Determine the objective function
Z max = 45X1 + 70X2
d) Identify constraints
9X1 + 12X2 720 minutes Assembly time
2X1 + 6X2 300 minutes packing time
X1 + X2 75 engines Engines
X1, X2  0

In summary:
Z max = 45X1 + 70X2
: 9X1 + 12X2 720
2X1 + 6X2 300
X1 + X2 75
X1, X2 0
2. a. Write the LPM in a standard form
Z max = 45X1 + 70X2 + 0S1 + 0S1 + 0S3
: 9X1 + 12X2 + S1 = 720
2X1 + 6X2 + S2 = 300
X1 + X2 + S3 = 75
X1, X2, S1, S2, S3 o
a. Develop the initial tableau – in LP matrices are commonly called tableaus

Sol/n Cj 45 70 0 0 0
basis X1 X2 S1 S2 S3 RHSV Øj = bj/xj (aij)
S1 0 9 12 1 0 0 720 720/12 =60 Leavi
S2 0 2 6 0 1 0 300 300/6 =50 ng
S3 0 1 1 0 0 1 75 75/1 = 75 variab
Zj 0 0 0 0 0 0 le
Cj-Zj 45 70 0 0 0

Entering variable
b. Develop the subsequent tableaus
-Identify the entering variable
-Identify the leaving variable
Sol/n Cj 45 70 0 0 0
basis X1 X2 S1 S2 S3 RHSV Øj = bj/xj (aij)
S1 0 5 0 1 -2 0 120 120/5 = 24
X2 70 1/3 1 0 1/6 0 50 50/. 333 =150
S3 0 2/3 1 0 -1/6 1 25 25/.666 = 75
Zj 70/3 70 0 70/6 0 3500
Cj-Zj 65/3 0 0 -70/6 0

Leaving variable

Entering variable

Sol/n Cj 45 70 0 0 0
basis X1 X2 S1 S2 S3 RHSV Øj = bj/xj (aij)
X1 45 1 0 1/5 -2/5 0 24
X2 70 0 1 -1/15 3/10 0 42
S3 0 0 0 -2/15 1/10 1 9
Zj 45 70 13/3 3 0 4020
Cj-Zj 0 0 -13/3 -3 0

Optimal solutions: X1 = 24 units


X2 = 42 units
S3 = 9 engines Z = Birr 4020
Interpretation: The Company is advised to produce 24 units of push type mowers
and 42 units of self-propelled mowers so as to realize a profit of
Birr 4020. In doing so the company would be left with unused
resource of 9 engines which can be used for other purposes.

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