ProgrammingIhe Simplex Method 4.

13
Linear

Product Quantity 3 4 0
Mix
6 1
2 1 0
S
24 4 4 0

-1 0 -4
C-2
above table gives
) Looking at the C,-2, row, all entries are zero or negative; therefore the
and max z 24.
optimum solution. The optimum solution is:x, =0, x,6
first constraint, and it has C-2,=-4 in the final
)The slack variable s, corresponds to the
means that we could increase the
table. Thus the shadow price for machine I is + 4. This
hence it is the maximum
objective function by 4 if we had an additional unit of this machine;the second machine, the
machine. Similarly, for
price one should pay for 1 hour of this machine won't help, since this
shadow price is s,=0. An additional unit of the second
machine has not been fully utilised.
materials A and B are rèquired to construct tables
and book cases. For one
Example 5. Two
while for a book case 16 units of A and 8
table 12 units of A and 16 units of B are needed
case is ? 25 and 20 on a table. 100 units of
units of B are required. The profit on a book to
material A and 80 units of B are available.
How many book cases and tables be produced
have maximum profit ?
method.
Formulate this as a linear programming problem and solve by simplex
[Delhi Uni». B.Com. (H) 20141
denote the number of book cases produced.
Solution. Let x denote the number of tables and y
is:
Then the mathematical formulation of the problem

Maximize Z 20x + 25y

subject to the constraints:
12x+16y s 100
16x +8y 80
X, y 2 0

variables s, and s,, we can restate the problem in terms of equations:

Introducing slack
Z = 20x + 25y + Os + Os
Maximize
subject to the constraints:
12x+16y+ S = l00
16x +8y + S2 = 80

x, Y, S1, S22 0
100 and s, 80 =

An initial basic feasible solution is: x =0, y= 0, s,

=

to this solution is Tableau I.

at which Z=0. The initial simplex tableau corTesponding
4.14 Mathematics for Business Studies

Simplex Tableau
Basic Solution 20 25 0 Ratio
Variable
0 100 12 1 0 100/16 25/
4
0 S2 80 16 8 80/8 10
0 0 0 0

20 25 t 0 0
C-2
Since there is a positive C -2, entry, we must continue. The largest positiveentry, 25,.occurs
in the y-column. Thus y is the entering variable and y-column is the key column. To find the
departing variable, we divide each entry of the "solution" column by the corresponding
positive entry of the key column. The smallest nonnegative ratio is 25/4, so s, is the departing
variable and s- row is the key row. The key number, 16, is circled. Replacing key-and non
tableau.
key rows using the technique discussed in Section 4.4, we obtain second
Simplex Tableau ll

Basic Solution 20 25 0 0 Ratio

C
Variable S S2
25 25/4 3/4 1/16 0 25/3
0 30 0 - 1/2 3

625/4 75/4 25 25/16 0

5/4 t - 25/16 0
C-2
Note that the value of the objective function has been improved from 0 to 625/4 However,
since there is a positive entry in the C, -2, row, the current solution is not optimal and we
must continue our process. The entering variable is now x. The smallest nonnegative ratio is
3. Thus s, is the departing variable and the key number, 10, is circled. Replacing key-and non
key rows using the technique discussed in Section 4.4, we have Tableau III.

Simplex Tableau ll

C Basic Solution 20 25 0 0
Variable S
S2
25 1/10 -3/40
20 3 0 - 1/20 1/10
160 20 25 3/2 1/8

C-2 - 3/2 1/8

Since all C, - Z, entries in Tableau I are zero or negative, optimal solution has been
 Mathematics for Business Studies
4.18

s 35 2 y and s 12 + 3y
s20 y
Since s s2, Sz are nonnegative, we have y < 20, y< 35/2 and y2- 4. Hence y can increase
at most by 35/2. The condition y> - 4 has no influence in determining the maximum increase
12/(-3)=-4 is not considered in s- row
iny. That is why the quotient
Note. Although the simplex procedure that has been developed in this section applies to linear
programming problems of standard form, other forms may be adapted to fit this form as is
illustrated in the following example.

Example 8. Maximize Z 2x +X2 9

subject to the constraints:
2x2 - x3 2 -2

2 X20
Solution. This is a maximization problem in which the second constraint
- 2 x 2 - * 2 -2

has the inequality symbol 2. Thus this is not the standard form of a maximization problem.
However, multiplying both sides of this constraint by 1 , we get

+2x2 +*3 S 2
-
which is in the standard form. Thus, although the given problem as stated is not in standard
form, it can easily be modified to put in standard form. Now by introducing slack variables s,
and s, the problem can be restated in form of equations:

Maximize Z 2x +2 X3 +Os + Os2

subject to the constraints:
1
+2 +S =

+ 2x2 +X3 +S2 2

- =

An initial basic feasible solution is = =0, *2 = 0, x = 0, s = 1 and s = 2

Starting with this solution, we obtain a sequence of tableaux that leads to the final solution.

Simplex Tableau
Basic Solution 2 - 1 0 Ratio
Variable
1 0 0
0 2 2 0
Z, 0 0 0 0
C-2 2t - 1 0 0
Linear Programming-The Simplex Method 4.19

Simplex Tableau l
C
Basic Solution 2 - 1 0 Ratio
Variable
S
S2
2 1
1 0
0 S2 3 0 3 1 1
2 2 2 0 2 0
C-2 0 -1 -1 -2 0

Since all entries in C,-2, row are zero or negative, optimal solution has been obtained and
the maximum value of Z is 2 which occurs when
x,
=
1, x, =
0 and x, =
0.
 g CAalpie.

Example 22. Maximize

Z 2x +y
subject to the constraints:
x+y s 6 (1)
-x+y24 2)
x, y 2 0

Solution. Note that this is a maximization

problem which cannot be written in standard form.
To solve it, we convert each of the constraints
we introduce a
(1) and (2) into equations. For constraint (1),
nonnegative slack variable so that we have
s,

X+y+S1 = 6

For constraint (2), subtract

we a nonnegative surplus variable s, from -x +y so that we have
equality. Thus

-X+y-S2 = 4

We can now restate the

problem
Maximize Z 2x +y
subject to the constraints:
x+y +s = 6 ...(3)
-X+y -S2 = 4 .4)
20
X, y, S1, S2
Ontortunately, this problem does not have an obvious initial basic feasible solution because
nere is no
longer a slack variable to use as the initial basic variable for Eq. (4). The artificial
variable technique overcomes this difficulty by adding a
nonnegative variable A to the left side
4.50 Mathematics for Business
Studies
of Eq. (4) in which a surplus variable is introduced. The variable A is called an artificin
variable. Thus Eqs. (3) and (4) become

X+y+S = 6 .(5)
-X+y-S2 + A = 4 .6)
An obvious solution to Eqs. (5) and (6) is found by setting x, y and s, equal to 0. This gives
* y = 2 = 0, s = 6 and A = 4

Note that these values do not satisfy Eqs. (3) and (4). However, it is clear that any solution of
Eqs. (5) and (6) for which A = 0 will givea solution to Eqs. (3) and (4) and viceversa

We can eventually force 4 to be 0 if we alter the original objective function. Therefore, if the
original objective function Z 2x +y is changed to
Z* Z -

MA =2x + y -MA,
where M denotes some very large positive number. Then the maximum value of Z must occur
when 0 (A negative). Thus the modified problem is
cannot be
Z* 2xr + y - MA
Maximize
subject to the constraints: X+y+S1 = 6 .(7)
-X+y
-

S2 + A = 4 ..(8)
X, y, S1, S2, A 2 0

The simplex procedure is now applied to this problem until we obtain a B.F.S. in which the
artificial variable A equals 0. That solution will be an initial B.F.S. for the original problem
and we then proceed as before. An initial basic feasible solution to the modified problem is
x = y = S 2 = 0, sj = 6 and A = 4

In this B.F.., the basic variables s, and 4 corespond to the nonstructural variables in Eqs. (7)
and (8) that have positive coefficients. The corresponding value of Z* is Z" = - 4M, which 5
"extremely" negative. The initial simplex tableau corresponding to this solution is shown
below.
Simplex Tableau
Basic Solution 2 0 -M Ratio

Variable S2 A

0 6 6
- M A - 1 4
4 0
-4M M -
M 0 M -M

C-7 2M 1+ MT 0 - M

Since M is a large pOsitive number, I + M is the largest positive entry. Thus the enter
Linear
Programming-The Simpler Method 4.51
ariable is y. From the ratio column, we choose A as the departing variable. The key number,
1. is circled. Replacing key- and non-key rows using technique ofSection 4.4, we get Tableau
I1.
Slmplex Tableau II
Basic Solution 2 0 -M Ratio
1
Variable A

2
2
-1 0 - 1

4 1 - 1

C-2 3 0 -1-M
From Tableau l1, we have the following B.F.S. = 2, y = 4, r = 0, s2 = 0. A = 0

SinceA= 0, the values s, =2,y = 4, x =0 and s, = 0 form an initial B.F.S. for the original
problem! The artificial variable has served its purpose. For succeedingtableaux.,we shall
delete the A-column (since we want to solve the original problem) and change Z*'s to Z's
is
(since Z Z for A 0). From Tableaux II, the entering variable is x, the departing variable
=

we get Tableau Ili.

s, and the key number, 2, is circled. Proceeding (omitting the A-column),
Simplex Tableau lll

Basic Solution 2 0 0

Variable S
2 0 1/2 1/2
1/2 - 1/2
5 0
2 1 3/2 1/2
Z, - 1/2
0 0 -3/2
C-
Since all the entries in C, - 2, row are negative or zero, the optimum solution has been
obtained. The maximum value o f Z is 7 and it occurs when x = l and y = 5.

Remark. The above example involved only one "2" constraint. If a linear programming
problem has more than one, each would be handled in just the same way. Thus each such
Constraint would be given an artificial variable to serve as its initial basic variable and the

Same coefficient -M would be assigned to each of these variables in the objective function.
ne approach to other kinds of constraints requiring artificial variables is completely
dgous. For example, if a problem involves an equality constraint of the form

a 1 +a2 X2 t . + a, X,
=
b,
where b20, then an artificial variable A is inserted as follows
A =b
a X ta2 *2 + + a, x, +
Example 29. Use simplex method to solve the following LPP

Minimize Z 8x + 12y
subject to the constraints: 2y 21
2x+
x+3y 22
X, y 2 0

Soution. Introducing two surplus variables s. s and two artificial variables A, Az the
problem can be restated as

Minimize Z 8x + 12y +Os + Os + MA + MA

subject to the constraints: 2x+2y-s +A = 1 |

x+3y S2 +A = 2
X, Y, S1, S2, A4, A2 2 0

where M is a large positive number. Note that the artificial variables have + M as objective
function coeficients to ensure that they are driven out of the final solution.

Aninitial basic feasible solution is: x =

0, y =0, s =0, s2 =
0, 4 = 1 and 4 = 2
he initial simplex table for this problem is shown in simplex Tableau I.

Simplex Tableau
Basic Solution 8 12 0 0 M M Ratio

Variable S
A A
M
A 2 - 1 0 1 0 1/2
M
A 2 1 3 0 - 1 0 2/3

2, 3M 3M 5M - M - M M M

C-2 8-3M 12-5MT M M 0 0

4.64 Mathematics for Business Studies
The simplex criterion for optimality shows that the solution is not optimal, since both x andv
have negative C, 2, values. The largest negative, y, is chosen for the entering variable and
-

the quotients to the right show A, is outgoing. (Continue the rule of smallest non-negative
value as designating the outgoing variable). After revision, a second solution is generated in
Simplex Tableau lI.
Simplex Tableau ll

C Basic Solution 8 12 0 0 M M Ratio

Variable S2 A A
12 1/2 1 1 - 1/2 0 1/2 0
M A 1/2 -2 0 3/2) -

1 -

3/2 1+1/3

Z, 6+M/2 12-2M 12 .-6+3M2 - M 6-3M/2 M

C-2 -4+2M 0 6-3M/2 M -6+5MM2 0

Variable y has replaced A. Again, this solution is not optimal, since s, has negative C -Z,
value. As shown, s, will be the incoming variable and A, the outgoing variable. The third
solution is shown in Simplex Tableau III.

Simplex Tableau ll

C Basic Solution 3 12 0 0 M M

Variable S S 4
12 2/3 1/3 0 - 1/3 1/3
0 1/3 -4/3 0 1 -2/3 -1 2/3

Z, 8 12 -4 4
M M-4
C- 4 0 4

The BFS
corresponding to Tableau II has both artificial variables equal to 0. Thus the A and
AColumns are no longer needed. However, the entries in C - Z, row are nonnegative andd
hence an optimum solution has been reached. The solution is x =0, y = 2/3 with min Z= 8.
T2.6 Mathematics for Business Studies

Note 2. Once compound amount is obtained, compound interest may then be obtained by
using the following formula:
Compound Interest =S- P
ample 5. Find the compound amount of 7 2000 for 4 years at 6% converted
) Annually (ii) Semiannually
(ii) Quarterly (iv) Monthly
Solution. () When the interest is converted annually, we have
P 2000, i = 0.06 and n = 4

S P(1 +i" =
2000 (1.06)*
2000 (1.262476) (using Table I)
= 2524.95

(i) When the interest is converted semiannually, we have

i == 0.06/2 = 0.03 and n = 4(2) = 8

S P(1+)" =
(1.03
2000
2000 (1.266770) (using Table )
= 7 2533.544

(ii) When the interest is comverted quarterly, we have

i == 0.06/4 = 0.015 and n = 4(4) = 16

S =P(1 +i" =2000 (1.0156

= 2000 (1.268985)
(using Table I)
= 2537.97

(iv) When the interest is converted monthly, we have

=0.06/12 0.005
i =
and n =
4(12) = 48
S =
P(1 + i" 2000 (1.005)48
=

2000 (1.270489) (using Table )

= 2540.97
Example 28. How much should be invested at 6% per annum so that after 4 years the amount
will be 2500 when the interest is compounded:
annually ? ()quarterly? (i)monthly? (iv) continuously ?
Solution. We want to find the present value of R 2500 due in 4 years at 6% per annum when
) interest is compounded anmually

We use the formula P =S (1+i)", where S = 2500, i 0.06, n = 4

P 2500 (1 + 0.06) = 2500 (0.7920) (using Table 1)

= 1980
(i) interest is compounded quarterly
We use the formula:
P S (1 + i)", where S =
2500, i =
=0.06/4 =0.015,
=
n =4(4) = 16

(using Table l)
P 2500(1+0.015)*l6 =2500 (0.7880)
= 1970
(ii) interest is compounded monthly
We use the formula
P S(1+i)", where S =
2500, i = 0.06/12= 0.005, n =4(12) =48
P 2500 (1 + 0.005)*3 =
2500 (0.7870) = T1967.50

iv) interest is compounded continuously

In this case, we use the formula: P =

Se", where S =2500, r =0.06, and t= 4.

P=2500e-006(4) = 2500e-0.24 2500(0.7866) =T 1966.5.

=
 Y)=T8047.25.

Fvample 47. Find the amount of an annuity if payment of T 200 is made at the end of every
month for 3 years at the rate of 15% compounded monthly.

Solution. The amount of the annuity is given by using the formula

S Rsl where R =
200, n = 3 (12) = 36 and i = 0.15/12 = 0.0125

From Table II, we have z6loo12s 45.115505.

S 200 (45.115505) =7 9023.10.

Example 55. Find the present value of an annuity of 500 payable at the end of each year
for 8 years, if money is worth 5% effective.
Solution. The present value of the annuity is given by
P =Ra, where R =
500, n = 8 and i =
0.05.

From Table IV, zlo.05 6.463212.

P 500 ago.0s 500(6.463212) =73231.61

This means that 3231.61 is
now just as good as 8 annual payments of 500 each or just as
good as the amount of the
annuity 8 years hence.
Check. The single sum 3231.61, invested 5%
at effective, will amount in 8 years to
3231.61(1.05) =
3231.61(1.477455) =
4774.56
On the other hand, the amount of this annuity is given by
S =
500 sala os =
500(9.549108) =
T4774.56
Example 89. What sum of money deposited in a fund at thebeginning of each 6 months until
20 deposits have been made will accumulate to
10,000 at the end of 10 years, if the fund
earns interest 6%
compounded semiannually.
at

Solution. Let R be deposited in the fund at the

beginning of each 6 months for 10 years in
order to accumulate 7 10,000 at the rate of interest of 6%
is given by
compounded semiannually. Then R

10,000 R003-1 =
R(28.67648 -1) R(27.67648)
=

R 10,000 z361.32.
27.67648