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LINEAR PROGRAMMING
Linear programming1 is a mathematical technique that
enables a decision maker to arrive at the optimal
solution to problems involving the allocation of scarce
resources.

Typically, many economic and technical problems

involve maximization or minimization of a certain
objective subject to some restrictions.
1During World War II US army began to formulate certain linear optimization problems.
Their solutions were called plans or programs. Today important application areas
include airline crew scheduling, shipping or telecommunication networks, oil refining
and blending, and stock and bond portfolio selection.

The History of Linear Programming

George B. Dantzig

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Typical Applications of Linear Programming

1. A manufacturer wants to develop a production

schedule and inventory policy that will satisfy sales
demand in future periods and same time minimize the
total production and inventory cost.

2. A financial analyst must select an investment portfolio

from a variety of stock and bond investment
alternatives. He would like to establish the portfolio
that maximizes the return on investment.

Typical Applications of Linear Programming continued

3. A marketing manager wants to determine how best to

allocate a fixed advertising budget among alternative
advertising media such as radio, TV, newspaper, and
magazines. The goal is to maximize advertising
effectiveness.

4. A company has warehouses in a number of locations

throughout the country. For a set of customer demands
for its products, the company would like to determine how
much each warehouse should ship to each customer so
that the total transportation costs are minimized.

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Next we list what is required in order to construct a

linear programming model:
Constructing Linear Programming Models
1. Objective Function. There must be an objective (or
goal or target) the firm or organization wants to
achieve.

Constructing Linear Programming Models continued

2. Restrictions and Decisions. There must be alternative

courses of action or decisions, one of which will achieve
the objective.
3. Linear Objective Function and Linear Constraints. We
must be able to express the decision problem
incorporating the objective and restrictions on the
decisions using only linear equations and linear
inequalities.

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The three basic steps in constructing a linear

programming model:

Step I
Identify the unknown variables to be determined (decision
variables) and represent them in terms of algebraic
symbols.
Step II
Identify all the restrictions or constraints in the problem
and express them as linear equations or inequalities which
are linear functions of the unknown variables.
Step III
Identify the objective or criterion and represent it as a
linear function of the decision variables, which is to be
maximized or minimized.
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Example 1 Product-Mix Problem

The Handy-Dandy Company wishes to schedule the

production of a kitchen appliance which requires
two resources – labor and material. The company is
considering three different models of this appliance
and its engineering department has furnished the
following data:

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Resources required Product/Model Resources

to produce 1 unit A B C Available
Labour (hours/unit) 7 3 6 150
Material (lbs./unit) 4 4 5 200
Profit ($/unit) 4 2 3

The supply of raw materials is restricted to 200

pounds per day. The daily availability of
manpower is 150 hours. Formulate a linear
programming model to determine the daily
production rate of the various models of
appliances in order to maximize the total profit.

Step I Identify the Decision Variables.

LP MODEL:

Step II Identify the Constraints.

Step II Identify the objective function.

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2. You’re on a special diet and know that your daily requirement of five
nutrients is at least 60 milligrams of vitamin C, at least 1,000 milligrams of
calcium, at least 18 milligrams of iron, at least 20 milligrams of niacin, and
at least 360 milligrams of magnesium. You have two supplements to
choose from: Vega Vita and Happy Health. Vega Vita costs 20 cents per
tablet, and Happy Health costs 30 cents per tablet. Vega Vita contains 20
milligrams of vitamin C, 500 milligrams of calcium, 9 milligrams of iron, 2
milligrams of niacin, and 60 milligrams of magnesium. Happy Health
contains 30 milligrams of vitamin C, 250 milligrams of calcium, 2
milligrams of iron, 10 milligrams of niacin, and 90 milligrams of
magnesium. Formulate a linear programming model to determine how
many of each tablets should you take each day to meet your minimum
requirements while spending the least amount of money.

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Step I Identify the Decision Variables.

LP MODEL:

Step II Identify the Constraints.

Step II Identify the objective function.

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3. A company plans to make 3 models (A, B, and C) of their

main product next month. Production capacity is limited to
100 total - each model takes the same about of production
time. A supplier problem results in only 1,000 gallons being
available next month. Each Model A requires 5 gallons of
paint, each Model B requires 7 gallons and each Model C
requires 10 gallons. Marketing wants the following mix:
exactly 20 Model A's; at least 5 Model B's; and no more than
2 Model C's for every Model B produced. The firm wants to
select that product mix to maximize profit contribution. Here
are the numbers that go into profit contribution:

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Step I Identify the Decision Variables.

LP MODEL:

Step II Identify the Constraints.

Step II Identify the objective function.

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Exercise 1: Formulating an LP-Problem

Advertising Media Selection
An advertising company wishes to plan an advertising campaign in three
different media – television, radio, and magazines. The purpose of the
advertising program is to reach as many potential customers as possible. Result
of a market study are given below:
TV, TV,
day time prime time Radio Magazines
Cost of an
Advertising 40 000 75 000 30 000 15 000
unit, in $
# of potential
customers 400 000 900 000 500 000 200 000
reached/unit
# of women
customers 300 000 400 000 200 000 100 000
reached/unit
The company does not want to spend more than $800 000 on
advertising. It further requires that (1) at least 2 million exposures take place
among women; (2) advertising on TV be limited to $500 000; (3) at least 3
advertising units be bought on day time TV, and two units during prime time;
and (4) the number of advertising units on radio and magazines should each be
between 5 and 10. Formulate as an LP-problem.
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Exercise 2: Formulating an LP-Problem

A milk plant manufactures two types of products A and

B and sells them at a profit of $5 on type A and $3 on
type B. Each product is processed on two machines G
and H. Type A requires one minute of processing time
on G and two minutes on H; type B requires one
minute on G and one minute on H. The machine G is
available for not more than 6 hours 40 minutes, while
machine B is available for 8 hours 20 minutes during
any working day; formulate the problem as LP
problem.

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