LINEAR PROGRAMMING

INTRODUCTION TO LINEAR PROGRAMMING

Linear Programming is a problem solving approach that has been developed to help managers to
make decisions. Linear Programming is a mathematical technique for determining the optimum
allocation of resources and obtaining a particular objective when there are alternative uses of the
resources, money, manpower, material, machine and other facilities.

FORMULATION OF THE LINEAR PROGRAMMING MODEL

Three components are:
1. The decision variable
2. The environment (uncontrollable) parameters
3. The result (dependent) variable

Linear Programming Model is composed of the same components.

TERMINOLOGY USED IN LINEAR PROGRAMMING PROBLEM

1. Components of LP Problem: Every LPP is composed of a. Decision Variable, b. Objective
Function, c. Constraints.
2. Optimization: Linear Programming attempts to either maximise or minimize the values of
the objective function.
3. Profit of Cost Coefficient: The coefficient of the variable in the objective function express
the rate at which the value of the objective function increases or decreases by including in
the solution one unit of each of the decision variable.
4. Constraints: The maximisation (or minimisation) is performed subject to a set of constraints.
Therefore LP can be defined as a constrained optimisation problem. They reflect the
limitations of the resources.
5. Input-Output coefficients: The coefficient of constraint variables are called the
Input Output Coefficients. They indicate the rate at which a given resource is unitized or
depleted. They appear on the left side of the constraints.
6. Capacities: The capacities or availability of the various resources are given on the right hand
side of the constraints.

FORMULATION OF LPP
STEPS
1. Identify decision variables
2. Write objective function
3. Formulate constraints

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EXAMPLE 1. (PRODUCTION ALLOCATION PROBLEM)

A firm produces three products. These products are processed on three different machines. The
time required to manufacture one unit of each of the three products and the daily capacity of the
three machines are given in the table below:

It is required to determine the daily number of units to be manufactured for each product. The profit
per unit for product 1, 2 and 3 is Rs. 4, Rs.3 and Rs.6 respectively. It is assumed that all the amounts
produced are consumed in the market. Formulate the mathematical (L.P.) model that will maximise
the daily profit.

Formulation of Linear Programming Model

Step 1
From the study of the situation find the key-decision to be made. In the given situation key decision
is to decide the extent of products 1, 2 and 3, as the extents are permitted to vary.
Step 2
Assume symbols for variable quantities noticed in step 1. Let the extents (amounts) of products 1, 2
and 3 manufactured daily be x1, x2 and x3 units respectively.
Step 3
Express the feasible alternatives mathematically in terms of variable. Feasible alternatives are those
which are physically, economically and financially possible. In the given situation feasible
alternatives are sets of values of x1, x2 and x3 units respectively.
where x1, x2 and x3 ≥ 0.
since negative production has no meaning and is not feasible.
Step 4
Mention the objective function quantitatively and express it as a linear function of variables. In the
present situation, objective is to maximize the profit.
i.e., Z = 4x1+ 3x2 + 6x3
Step 5
Put into words the influencing factors or constraints. These occur generally because of constraints
on availability (resources) or requirements (demands). Express these constraints also as linear
equations/inequalities in terms of variables.
Here, constraints are on the machine capacities and can be mathematically expressed as
2x1+ 3x2 + 2x3 ≤ 440
4x1+ 0x2 + 3x3 ≤ 470
2x1+ 5x2 + 0x3 ≤ 430

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EXAMPLE 2: PRODUCT MIX PROBLEM

A factory manufactures two products A and B. To manufacture one unit of A, 1.5 machine hours and
2.5 labour hours are required. To manufacture product B, 2.5 machine hours and 1.5 labour hours
are required. In a month, 300 machine hours and 240 labour hours are available.
Profit per unit for A is Rs. 50 and for B is Rs. 40. Formulate as LPP.

Solution:

There will be two constraints. One for machine hours availability and for labour hours availability.
Decision variables:
X1 = Number of units of A manufactured per month.
X2 = Number of units of B manufactured per month.
The objective function:
Max Z = 50x1+ 40x2
Subjective Constraints
For machine hours
1.5x1+ 2.5x2 ≤ 300
For labour hours
2.5x1+ 1.5x2 ≤ 240
Non negativity
x1, x2 ≥0

EXAMPLE: 3
A company produces three products A, B, C.
For manufacturing three raw materials P, Q and R are used.
Profit per unit
A - Rs. 5, B - Rs. 3, C - Rs. 4
Resource requirements/unit

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Maximum raw material availability:

P - 80 units; Q - 100 units; R - 150 units. Formulate LPP.

Solution:
Decision variables:
x1 = Number of units of A
x2 = Number of units of B
x3 = Number of units of C
Objective Function:
Since Profit per unit is given, objective function is maximisation
Max Z = 5x1+ 3x2 + 4x3
Constraints:
For P:
0x1+ 20x2 + 30x3 ≤ 80
For Q:
20x1+ 30x2 + 20x3 ≤ 100
For R:
50x1+ 0x2 + 40x3 ≤ 150
(for B, R is not required)
X1, X2, X3 ≥ 0

EXAMPLE 4: PORTFOLIO SELECTION (INVESTMENT DECISIONS)

An investor is considering investing in two securities 'A' and 'B'. The risk and return associated with
these securities is different.
Security 'A' gives a return of 9% and has a risk factor of 5 on a scale of zero to 10. Security 'B' gives
return of 15% but has risk factor of 8.
Total amount to be invested is Rs. 5,00,000/- Total minimum returns on the investment should be
12%. Maximum combined risk should not be more than 6. Formulate as LPP.

Solution:
Decision Variables:
X1 = Amount invested in Security A
X2 = Amount invested in Security B
Objective Function:
The objective is to maximise the return on total investment.
⸫ Max Z = 0.09 X1 + 0.015 X2 ((% = 0.09, 15% = 0.15)

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Constraints:
1. Related to Total Investment:
X1 + X2 = 5, 00, 000
2. Related to Risk:
5X1 + 8X2 = (6 X 5, 00, 000)
5X1 + 8X2 = 30, 00, 000
3. Related to Returns:
0.09X1 + 0.15X2 = (0.12 X 5, 00, 000)
⸫0.09X1 + 0.15X2 = 60, 000
4. Non-negativity
X1, X2 ≥ 0

EXAMPLE 5: INSPECTION PROBLEM

A company has two grades of inspectors, I and II to undertake quality control inspection. At least 1,
500 pieces must be inspected in an 8-hour day. Grade I inspector can check 20 pieces in an hour with
an accuracy of 96%. Grade II inspector checks 14 pieces an hour with an accuracy of 92%.
Wages of grade I inspector are Rs. 5 per hour while those of grade II inspector are Rs. 4 per hour.
Any error made by an inspector costs Rs. 3 to the company. If there are, in all, 10 grade I inspectors
and 15 grade II inspectors in the company, find the optimal assignment of inspectors that minimise
the daily inspection cost.

Solution:
Let x1 and x2 denote the number of grade I and grade II inspectors that may be assigned the job of
quality control inspection.
The objective is to minimise the daily cost of inspection. Now the company has to incur two types of
costs; wages paid to the inspectors and the cost of their inspection errors. The cost of grade I
inspector/hour is
Rs. (5 + 3 X 0.04 X 20) = Rs. 7.40.
Similarly, cost of grade II inspector/hour is
Rs. (4 + 3 X 0.08 X 14) = Rs. 7.36.
⸫ The objective function is
minimise Z = 8(7.40x1 + 7.36x2) = 59.20 x1 + 58.88x2.
Constraints are
on the number of grade I inspectors: x1 ≤ 10,
on the number of grade II inspectors: x2 ≤ 15
on the number of pieces to be inspected daily: 20 x 8x1 + 14 x 8x2 ≥ 1500
or 160x1 + 112x2 ≥ 1500
where, x1, x2 ≥ 0.

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EXAMPLE 6: MEDIA SELECTION

An advertising agency is planning to launch an ad campaign. Media under consideration are T.V.,
Radio & Newspaper. Each medium has different reach potential and different cost.
Minimum 10, 000, 000 households are to be reached through T.V. Expenditure on newspapers
should not be more than Rs. 10, 00, 000. Total advertising budget is Rs. 20 million.
Following data is available:

Medium Cost per Unit (Rs.) Reach per unit

(No. of households)

Television 2,00,000 20,00,000

Radio 80,000 10,00,000

Newspaper 40,000 2,00,000

Solution:
Decision Variables:
x1 = Number of units of T.V. ads,
x2 = Number of units of Radio ads,
x3 = Number of units of Newspaper ads.
Objective function: (Maximise reach)
Max. Z = 20, 00, 000 x1 + 10, 00, 000 x2 + 2, 00, 000x3
Subject to constraints:
20, 00, 000 x1 ≥ 10, 000, 000 ........ (for T.V.)
40, 000 x3 ≤ 10, 00, 000 ........... (for Newspaper)
2, 00, 000x1 + 80, 000x2 + 40, 000x3 ≤ 20, 000, 000 .......... (Ad. budget)
x1, x2, x3 ≥ 0

⸫ Simplifying constraints:
for T.V. 2 x1 ≥ 10 ⸫ x1 ≥ 5
for Newspaper 4 x3 ≤ 100 ⸫ x3 ≤ 25
Ad. Budget
20 x1 + 8 x2 + 4 x3 ≤ 2000
5 x1 + 2x2 + x3 ≤ 500
x1, x2, x3 ≥ 0

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EXAMPLE 7: DIET PROBLEM

Vitamins B1 and B2 are found in two foods F1 and F2. 1 unit of F1 contains 3 units of B1 and 4 units
of B2. 1 unit of F2 contains 5 units of B1 and 3 units of B2 respectively.
Minimum daily prescribed consumption of B1 & B2 is 50 and 60 units respectively. Cost per unit of
F1 & F2 is Rs. 6 & Rs. 3 respectively.
Formulate as LPP.
Solution:

Decision Variables:
x1 = No. of units of P1 per day.
x2 = No. of units of P2 per day.
Objective function:
Min. Z = 100 x1 + 150 x2
Subject to constraints:
3x1+ 5x2 ≥ 30 (for N1)
5x1+ 7x2 ≥ 40 (for N2)
x1, x2 ≥ 0

EXAMPLE 8: BLENDING PROBLEM

A manager at an oil company wants to find optimal mix of two blending processes. Formulate LPP.
Data:

Profit per operation: Process 1 (P1) = Rs. 4, 000

Process 2 (P2) = Rs. 5, 000
Maximum availability of crude oil: Grade A = 500 units
Grade B = 400 units
Minimum Demand for Gasoline: X = 300 units
Y = 200 units
Solution:
Decision Variables:
x1 = No. of operations of P1
x2 = No. of operations of P2

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Objective Function:
Max. Z = 4000 x1 + 5000 x2
Subjective to constraints:
6x1+ 5x2 ≤ 500
4x1+ 6x2 ≤ 400
6x1+ 5x2 ≥300
9x1+ 5x2 ≥200
x1, x2 ≥ 0

EXAMPLE 9: FARM PLANNING

A farmer has 200 acres of land. He produces three products X, Y & Z. Average yield per acre for X, Y
& Z is 4000, 6000 and 2000 kg.
Selling price of X, Y & Z is Rs. 2, 1.5 & 4 per kg respectively. Each product needs fertilizers. Cost of
fertilizer is Rs. 1 per kg. Per acre need for fertilizer for X, Y & Z is 200, 200 & 100 kg respectively.
Labour requirements for X, Y & Z is 10, 12 & 10 man hours per acre. Cost of labour is Rs. 40 per man
hour. Maximum availability of labour is 20, 000 man hours.
Formulate as LPP to maximise profit.
Solution:
Decision variables:
The production/yield of three products X, Y & Z is given as per acre.
Hence,
x1 = No. of acres allocated to X
x2 = No. of acres allocated to Y
x3 = No. of acres allocated to Z
Objective Function:
Profit = Revenue - Cost
Profit = Revenue - (Fertiliser Cost + Labour Cost)

Product X Y Z

Revenue 2 (4000) x1 1.5 (6000) x2 4 (2000) x3

(-) Less

Fertilizer cost 1 (200) x1 1 (200) x2 1 (100) x3

Labour Cost 40 (10) x1 40 (12) x2 40 (10) x3

Profit 7400 x1 8320 x2 7500 x3

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⸫ Objective function
Max. = 7400 x1 + 8320 x2 + 7500 x3
Subject to constraints:
x1 + x2 + x3 = 200 (Total Land)
10 x1 + 12 x2 + 10 x3 ≤ 20, 000 (Max Man hours)
x1, x2, x3 ≥ 0

MERITS OF LPP
1. Helps management to make efficient use of resources.
2. Provides quality in decision making.
3. Excellent tools for adjusting to meet changing demands.
4. Fast determination of the solution if a computer is used.
5. Provides a natural sensitivity analysis.
6. Finds solution to problems with a very large or infinite number of possible solution.

DEMERITS OF LPP
1. Existence of non-linear equation: The primary requirements of Linear Programming is the
objective function and constraint function should be linear. Practically linear relationship do
not exist in all cases.
2. Interaction between variables: LP fails in a situation where non-linearity in the equation
emerge due to joint interaction between some of the activities like total effectiveness.
3. Fractional Value: In LPP fractional values are permitted for the decision variable.
4. Knowledge of Coefficients of the equation: It may not be possible to state all coefficients in
the objective function and constraints with certainty.

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