Chapter (3)

Linear Programming Models

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 Chapter (3)
Linear Programming Models
Introduction
As we have studied before that the quantitative business analysis is a
concept addressing the decision making process. It is mainly based on
mathematical tools in solving organizational problems. The adequate
use of quantitative analysis techniques leads to convenient problem
solution in terms of accuracy, flexibility, affordability, and reliability.

One of the most management decisions is trying to make the most

effective use (allocation) of an organization’s resources. Resources
typically include machinery, labor, money, time, warehouse space, and
raw materials. These resources may be used to make products (such as
machinery, furniture, food, or clothing) or services (such as schedules for
airlines or production, advertising policies, or investment decisions).

The effective allocation of resources requires mathematical techniques to

distribute the available resources among the organizational activities.
These techniques are called the mathematical programming
techniques.

In this chapter, we will discuss the following points:

3.1 The Meaning of Linear Programming.

3.2 Requirements of a Linear Programming Problem.

3.3 Formulating LP Problems whether Maximization or Minimization

3.4 Graphical Solution to an LP Problem using Corner Points Method.

3.1 The Meaning of Linear Programming.

 Linear programming (LP) is a widely used mathematical

modeling technique designed to help managers in planning and
decision making relative to resource allocation. In the world of
management science, programming refers to modeling and solving
a problem mathematically.

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3.2 Requirements of a Linear Programming Problem.

 All problems seek to maximize or minimize some quantity, usually

profit or cost. We refer to this property as the objective function of
an LP problem.

 This objective must be stated clearly and defined

mathematically. It does not matter, by the way, whether profits
and costs are measured in cents, dollars, or millions of dollars.

 The second property that LP problems have in common is the

presence of restrictions, or constraints, that limit the degree to
which we can pursue our objective. For example, deciding how
many units of each product in a firm’s product line to manufacture
is restricted by available personnel and machinery.

 There must be alternative courses of action to choose from. For

example, if a company produces three different products,
management may use LP to decide how to allocate among them its
limited production resources (of personnel, machinery, and so on).

 The objective and constraints in LP problems must be expressed in

terms of linear equations or inequalities. Linear mathematical
relationships mean that all terms used in the objective function and
constraints are of the first degree (i.e., not squared, or to the third
or higher power.

 The term linear implies proportionality. Proportionality means

that if production of 1 unit of a product uses 3 hours, production of
10 units would use 30 hours.

 The term linear implies additivity. Additivity means that the total
of all activities equals the sum of the individual activities. If the
production of one product generated $3 profit and the production
of another product generated $8 profit, the total profit would be the
sum of these two, which would be $11.

 In LP problems, conditions of certainty are assumed to exist: that

is, any number in the objective and constraints are known with
certainty and do not change during the period being studied.

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  In LP problems, the divisibility assumption that solutions need not
be in whole numbers (integers).Instead, they are divisible and may
take any fractional value.

 In LP problems, all answers or variables are nonnegative.

Negative values of physical quantities are impossible; you simply
cannot produce a negative number of chairs, shirts, lamps, or
computers. However, there are some variables that can have
negative values, such as profit, where a negative value indicates a
loss.

3.3 Formulating LP Problems.

 The steps that should be followed in formulating a linear

programming problem are:

A. Completely understand the managerial problem being faced.

B. Identify the objective and the constraints.

C. Define the decision variables.

D. Use the decision variables to write mathematical expressions for

the objective function and the constraints.

 One of the most common LP applications is the product mix

problem. Two or more products are usually produced using
limited resources such as personnel, machines, raw materials, and
so on.

 The profit that the firm seeks to maximize is based on the profit
contribution per unit of each product. This contribution is already
calculated and given in the problem.

 The company would like to determine how many units of each

product it should produce (product mix) so as to maximize overall
profit given its limited resources.

Flair Furniture Company

The Flair Furniture Company produces inexpensive tables and chairs. The
production process for each is similar in that both require a certain

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number of hours of carpentry work and a certain number of labor hours in
the painting and varnishing department. Each table takes 4 hours of
carpentry and 2 hours in the painting and varnishing shop. Each chair
requires 3 hours in carpentry and 1 hour in painting and varnishing.
During the current production period, 240 hours of carpentry time are
available and 100 hours in painting and varnishing time are available.
Each table sold yields a profit of $70; each chair produced is sold for a
$50 profit.

Flair Furniture’s problem is to determine the best possible combination

of tables (T) and chairs (C) to manufacture in order to reach the
maximum profit. The firm would like this production mix situation
formulated as an LP problem.

First step is to formulate the objective function, which is to maximize the

profit:

Maximize Profit based on combination of tables and chairs

Second step is to formulate the constraints, which are the hours of

carpentry time used cannot exceed 240 hours per week and the hours of
painting time used cannot exceed 100 hours per week.

Third step is to determine the decision variables that represent the actual
decisions to be made.

T = number of tables to be produced per week

C = number of chairs to be produced per week

Fourth step is to formulate mathematical expressions for the objective

function and the constraints.

The objective function is

Maximize profit = $70T + $50C.

Constraints are
4T + 3C < 240 (carpentry constraint)

2T + 1 C < 100 (painting and varnishing constraint)

T, C > 0 (Non negativity constraints)

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What are the meanings of these constraints?

First Constraint:

The carpentry time will never exceed 240 hours, the time required to
produce one table is 4 hours and time required to produce one chair is 3
hours. Thus we need to know how many tables and chairs to produce
within the 240 hours available.

Second Constraint:

The painting and varnishing time will never exceed 100 hours, the time
required to paint one table is 2 hours and time required to paint one chair
is 1 hour. Thus we need to know how many tables and chairs to paint
within the 100 hours available.

The data of Flair Company can be summarized as follows:

Hours required to produce unit

Department Tables Chairs Available hours/ week

Carpentry 4 3 240

Painting 2 1 100

Profit per unit $ 70 $ 50

To solve this problem, we need to know what is called "The Feasible

Region" through Graphical Solution Approach.

Graphical Solution to LP Problem:

 The easiest way to solve a small LP problem such as that of the

Flair Furniture Company is with the graphical solution approach.

 The graphical procedure is useful only when there are two

decision variables (such as number of tables to produce, T, and
number of chairs to produce, C) in the problem.

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  When there are more than two variables, it is not possible to plot
the solution on a two-dimensional graph and we must turn to more
complex approaches. But the graphical method is valuable in
providing us with insights into how other approaches work.

 This solution approach starts with the graphical representation of

constraints through plotting the constraints on the graph to find out
the optimal solution and identify the "Feasible Region".

 This step is carried out through plotting each of the problem’s

constraints on a graph. The variable T (tables) is plotted as the
horizontal axis of the graph and the variable C (chairs) is plotted as
the vertical axis. The notation (T, C) is used to identify the points
on the graph. The non-negativity constraints mean that we are
always working in the first (or northeast) quadrant of a graph.

 To represent the constraints graphically, we have to convert the

inequalities into equalities:
4T + 3C = 240
2T + 1C = 100

 To draw the straight lines between two points that satisfy the
equations, we use the easiest points which are the points that
intersect the vertical and horizontal axes through substituting in
each for each variable by zero to find the value of other variable.

In constraint 1,

When Flair Furniture produces no tables, namely T = 0, it implies that

4(0) + 3C = 240
or
3C = 240
or
C = 80

In other words, if all of the carpentry time available is used to produce

chairs, 80 chairs could be made. Thus, this constraint equation crosses the
vertical axis at 80.

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To find the point at which the line crosses the horizontal axis, we assume
that the firm makes no chairs, that is, C = 0. Then

4T + 3(0) = 240
or
4T = 240
or
T = 60
In constraint 2,

When Flair Furniture paints no tables, namely T = 0, it implies that

2(0) + 1C = 100
or

C = 100

In other words, if all of the painting and varnishing time available is used
to paint chairs, 100 chairs could be made. Thus, this constraint equation
intersects the vertical axis at 100.

To find the point at which the line crosses the horizontal axis, we assume
that the firm paints no chairs, that is, C = 0. Then

2T + 1(0) = 100
or
2T = 240
or
T = 50

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 The shaded region now represents the area of solutions that does
not exceed either of the two Flair Furniture constraints. It is known
by the term area of feasible solutions or, more simply, the feasible
region.

 The feasible region in an LP problem must satisfy all conditions

specified by the problem’s constraints, and is thus the region where
all constraints overlap. Any point in the region would be a feasible
solution to the Flair Furniture problem; any point outside the
shaded area would represent an infeasible solution. Hence, it
would be feasible to manufacture 30 tables and 20 chairs (T = 30,
C = 20) during a production period because both constraints are
observed:

Carpentry constraint 4T + 3C < 240 hours available

(4) (30) + (3) (20) = 180 hours used✓

Painting constraint 2T + 1C<100 hours available

(2)(30) + (1) (20) = 80 hours used ✓

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But it would violate both of the constraints to produce 70 tables and 40
chairs, as we see here mathematically:

Carpentry constraint 4T + 3C <240 hours available

(4)(70) + (3) (40) = 400 hours used ⊗

Painting constraint 2T + 1C <100 hours available

(2)(70) + (1) (40) = 180 hours used ⊗

Furthermore, it would also be infeasible to manufacture 50 tables and

5chairs (T = 50, C = 5). Can you see why?

Carpentry constraint 4T + 3C < 240 hours available

(4)(50) + (3) (5) = 215 hours used ✓

Painting constraint 2T + 1C <100 hours available

(2) (50) + (1) (5) = 105 hours used ⊗

This possible solution falls within the time available in carpentry but
exceeds the time available in painting and varnishing and thus falls
outside the feasible region.

3.4 Graphical Solution using Corner Points Method.

 The mathematical theory behind LP states that an optimal solution

to any problem (that is, the values of T, C that yield the maximum
profit) will lie at a corner point, or extreme point, of the feasible
region. Hence, it is only necessary to find the values of the
variables at each corner; an optimal solution will lie at one (or
more) of them.

 The decision maker will select the corner point with the best
value of the objective function (either maximum profit or the
minimum cost); this will be the optimal solution.

 These are (0, 0), (50, 0), and (0, 80). The fourth corner point is
where the two constraint lines intersect, and the coordinates must
be found algebraically by solving the two equations
simultaneously for two variables.

 There are a number of ways to solve equations simultaneously, and

any of these may be used. We will illustrate the elimination
method here. To begin the elimination method, select a variable to
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 be eliminated. We will select T in this example. Then multiply or
divide one equation by a number so that the coefficient of that
variable (T) in one equation will be the negative of the coefficient
of that variable in the other equation. The two constraint equations
are:
4T + 3C = 240 (carpentry)

2T + 1C = 100 (painting)

To eliminate T, we multiply the second equation by -2:

-2(2T + 1C = 100) = -4T - 2C = -200

Then add: +4T + 3C = 240

C = 40
Doing this has enabled us to eliminate one variable, T, and to solve for C.
We can now substitute 40 for C in either of the original equations and
solve for T. Let’s use the first equation. When C = 40, then

4T + (3) (40) = 240

4T + 120 = 240
or
4T = 120

T = 30
Thus, the last corner point is (30, 40). The next step is to calculate the
value of the objective function at each of the corner points.

 The final step is to select the corner point with the best value,
which would be the highest profit in this example. The highest
profit is found to be $4,100, which is obtained when 30 tables and
40 chairs are produced. The following table will show the profit at
each corner point:
NUMBER OF TABLES (T) NUMBER OF CHAIRS (C) Profit _ $70T _ $50C
Number of Tables Number of Chairs Profit = $70 T + $50 C
0 0 $0
50 0 $3500
0 80 $4000
30 40 $4100

End of Lecture (6)

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