Applicatio
Applicatio
Abstract
Rekha Dhananjay Chatare
Research Scholar, Cost is a major concern for any small new venture. It is really very
Department of Business Management, difficult for a new business to get a break even very soon. Recently the
Rashtrasant Tukadoji Maharaj Nagpur researcher has come across an entrepreneur, who is going to start her
University,
specialized clothing boutique, but was not sure about the product
Nagpur, Maharashtra, India.
quantities to be ordered from different suppliers. She was very clear
about the product's demand, designs, their sizes, suppliers, delivery cost
and her major focus was on minimization of the cost. This research paper
is about the problem statement of the boutique owner and how the Linear
Programming has helped the owner in deciding the variables (which can
impact the cost). LPP is an optimization technique in operation research,
which can be of two types i.e. maximization (Sales, Profit) &
minimization (Cost, Use of Resources, Waste Minimization). In this
research paper, cost minimization is achieved, with the help of LPP. To
determine the most economical product structure, a mathematical model
was created. With the help of the mathematical model, the decision
variables, objectives, constraints and non – negative constraints were
elaborated first and then Excel- Solver is used to solve the model. LPP
problem can be solved with different kind of methods; here the researcher
has used Excel- Solver to provide the optimal solution for the problem.
Keywords: Linear Programming, LPP, Optimization, Excel- Solver,
Decision Variable, Minimization
Introduction
LPP is considered as one of the simplest and useful tools in operation
research. Operation research deals with the optimization process. In
general optimization can be of two types. The first one is maximization –
where the objective involves attainment of maximum goal through the
decision variables. Optimization through maximization involves goals
like maximization of business profit, maximization of sales,
maximization of optimal product mix. The second one is minimization -
where the objective involves attainment of minimum of something,
which can be minimization of total cost, minimization of total distance
or minimum of waste generation.
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Volume 15 issue 4 October 2022
LPP is considered as the simplest and basic method to solve total supply cost should be minimum.The demand
all the problems of operations. It can be compared with information was available with the owner.
addition in math's. As in mathematics, the simplest tool for
Review of Literature
solving any problem is summation. We can solve all the
basic problems of mathematics like subtraction, Linear Programming problem is very useful technique for
multiplication and division with the help of simple solving the optimization problems in business.
addition. In same manner, we can solve different problems Yahya, W. B. (2004) considered LPP as one of the best
of Operations, with the help of LPP, be it Transportation methods for optimization the things in business. He has
problem, Assignment problem or Game theory. The only used the LPP for obtaining the best Product Mix at the
thing, we need to do is conversion of the problem into the minimum cost in a manufacturing industry. The study was
LPP format. If we want to solve any business problem, with done in KASMO industry limited, Osogbo, Nigeria.(1)
LPP, we need to make sure that the problem has certain As per Waheed (2012), LPP models are commonly used in
basic characteristics. The four important characteristics are OR & business management to answer the problems,
Linearity, additivity, constant over time and divisibility. related to limited and scare resources. They have also
Divisibility is characteristics of LPP, which says the presented the use of LPP model in profit maximizationin a
decision variable and objective function may have any product-mix company.(2)
value (integer or non-integer). If we want our objective and
Kanu ,Success Ikech, Ozurumba Benedict etall(2014)
decision variable should have just integer value, then we
stated that for any kind of LPP solution, certain assumption
can add one additional constraint(integer) along with other
and conditions should be met. The assumptions are
limitations.
classified as linearity, additivity, divisibility, deterministic
For LPP, first we need to identify the decision variable, parameters, Non-negativity, independence of variables,
through which, we are going to achieve our key variables and proportionality, He also described four components of
(Objective). Later we can construct a mathematical model, LPP, which are objective function, decision variables,
which will involve the objective, constraints and non- Structural constraint's and parameters. (3)
negative constraints. After formulation of the model, the
As per Akpan, N. P.&Iwok(2016), LPP is useful for the
solution can be obtained with different methods like
allocation of limited or scarce resources on the basis of the
Graphical (when only 2 decision variables are present),
given optimality conditions. They have successfully used
Simplex, or Excel-Solver. Solver is the easiest and quickest
the LPP technique for optimal use of raw material in bread
method to obtain the result.
manufacturing in Goretta bakery Limited.(4)
Problem- A clothing boutique owner, who wants to sell just
Marivic G. Molina (2018) have done a similar study to find
7 products in different sizes. The idea is not to make the
the Product Mix Optimization at for an Online Clothing
products by her own (to get the product from wholesale
Store. The objective of the study was to find the product mix
suppliers and sell them to the customers, after certain
with the minimum cost. He has also recommended LPP for
modifications). The products are going to include Seven
the maximization of business profit, when the business
Product lines: Kurtis, Tops, T-shirts, Leggings, Jeggings,
grows for the clothing store. (5)
Suits & Wedding Gowns in different sizes. Theses seven
Gaurav Agarwal, Vijay Kumar (2022) have also shown the
products are going to be delivered by three suppliers.
use of LPP to find the optimal product mix for a ready to eat
Suppliers are charging the product fee and shipping fee,
snacks factory (RTE snacks, Gurgaon). They have used
according to the different sizes & quantities. The owner of
LINDO for analysing and finding the solution of LPP. In
the business wants to know that how many of each clothing
their research, they have used the maximization technique
item, should be ordered from these suppliers, so that the
of optimization. With the use of LPP, they have obtained an
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Pacific Business Review (International)
optimal product mix for maximizing the business profit of gathering the information about the product line, demand
RTE snacks. (6) and shipping fee. Mathematical model was formulated to
get the equations. LPP- Excel- Solver is used to solving
Objective
these equations.
The owner of the business wants to know that how many of
each clothing item, should be ordered from the suppliers, so Data Collection & Analysis
that the total supply cost should be minimum. So, the The Clothing Boutique owner has provided information
objective of this study is to get the most economical plan for about the demand, product line and shipping fee. The
ordering the product quantity from the suppliers through information is used to make the mathematical model for the
the LPP technique. said problem. Table no. 1 indicates the demand of products,
Table No. 2 indicates price of the products, according to the
Research Methodology
sizes, and Table No. 3 indicates the shipping fee of different
For this study the data used was quantitative in nature. suppliers.
Personal Interview of the entrepreneur was taken for
Products S M L XL XXL
Kurtis 600 650 650 700 750
Tops 350 350 350 400 450
T-shirts 299 299 299 399 499
Leggings 399 399 399 499 599
Jeggings 475 499 499 575 675
Suits 1200 1250 1250 1300 1350
Wedding Gowns 2500 3000 3500 4000 4500
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Products S M L XL XXL
Kurtis 700 700 700 700 700
Tops 400 350 350 400 450
T-shirts 350 299 299 399 499
Leggings 435 399 399 499 599
Jeggings 500 500 500 500 500
Suits 1200 1250 1300 1300 1350
Wedding Gowns 2500 3000 3500 4000 4500
Products S M L XL XXL
Kurtis 650 650 650 700 700
Tops 350 350 350 400 400
T-shirts 380 380 380 400 400
Leggings 380 380 380 420 420
Jeggings 450 450 450 580 580
Suits 1200 1250 1250 1300 1350
Wedding Gowns 2500 3000 3500 4000 4500
LPP Model-After analyzing the nature of problem, the to define the no. of decision variables. Decision variables
researcher has found the said problem can be formed in LPP are the unidentified quantities of the products that are going
format. One additional condition is that the solution should to be projected from the Linear Programing solution. The
be in whole number, as the products can not have non- objective function is also expressed with the inclusion of
integer or decimal value. That's why the problem belongs to the decision variables. In this case the decision variables are
Integer LPP category. the quantities of the clothing item, which the boutique
STEP 1-The first step in formulation of any LPP problem is owner will orders from different suppliers. In this case, total
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seven no. of clothing items are present and each item has 5 X-large size Tops from supplier 2, b12- No. of X-large size
variants (small, medium, large, extra-large and double Tops from supplier 3
extra-large). Thus, the total number of products will be b13-No. of XLL size Tops from supplier 1,b14- No. of XLL
Thirty-five (7*5= 35). As these Thirty-five product items size Tops from supplier 2, b15- No. of XLL size Tops from
can be ordered from three suppliers, so the total no. of supplier 3
product and supplier combination will generate One-
c1-No. of small size T-shirts from supplier 1, c2- No. of
hundred five numbers of variable(35*3=105), Hence total
small size T-shirts from supplier 2, c3- No. of small size T-
number of decision variables will be 105 in this case.
shirts from supplier 3
Through these One-hundred five decision variables the key
objective will be achieved, which can be defined as c4-No. of medium size T-shirts from supplier 1,c5- No. of
“minimization of the cost” in this case. medium size T-shirts from supplier 2, c6- No. of medium
size T-shirts from supplier 3
First there is a need to assume some value to the said One-
hundred five numbers decision variables. Let the decision c7-No. of large size T-shirts from supplier 1, c8- No. of
variables are- large size T-shirts from supplier 2, c9- No. of large size T-
shirts from supplier 3
a1-No. of small size Kurtis from supplier 1, a2- No. of small
size Kurtis from supplier2,a3- No. of small size Kurtis from c10-No. of XL size T-shirts from supplier 1,c11- No. of XL
supplier 3 size T-shirts from supplier 2, c12- No. of XL size T-shirts
from supplier 3
a4-No. of medium size Kurtis from supplier 1,a5- No. of
medium size Kurtis from supplier2, a6- No. of medium size c13-No. of XLL size T-shirts from supplier 1,c14- No. of
Kurtis from supplier 3 XLL size T-shirts from supplier 2, c15- No. of XLL size T-
shirts from supplier 3
a7-No. of large size Kurtis from supplier 1, a8- No. of large
size Kurtis from supplier2, a9- No. of large size Kurtis from d1-No. of small size Leggings from supplier 1, d2- No. of
supplier 3 small size Leggings from supplier2, d3- No. of small size
Leggings from supplier 3
a10-No. of XL size Kurtis from supplier1,a11- No. of X-
large size Kurtis from supplier2, a12- No. of XL size Kurtis d4-No. of medium size Leggings from supplier 1, d5- No.
from supplier 3 of medium size Leggings from supplier 2, d6- No. of
medium size Leggings from supplier 3
a13-No. of XLL size Kurtis from supplier 1, a14- No. of
XLL size Kurtis from supplier2, a15- No. of XLL size d7-No. of large size Leggings from supplier 1, d8- No. of
Kurtis from supplier 3 large size Leggings from supplier 2, d9- No. of large size
Leggings from supplier 3
b1-No. of small size Tops from supplier 1, b2- No. of small
size Tops from supplier 2, b3- No. of small size Tops from d10-No. of XL size Leggings from supplier 1,d11- No. of
supplier 3 XL size Leggings from supplier 2, d12- No. of XL size
Leggings from supplier 3
b4-No. of medium size Tops from supplier 1, b5- No. of
medium size Tops from supplier2, b6- No. of medium size d13-No. of XLL size Leggings from supplier 1,d14- No. of
Tops from supplier 3 XLL size Leggings from supplier 2, d15- No. of XLL size
Leggings from supplier 3
b7-No. of large size Tops from supplier 1, b8- No. of large
size Tops from supplier 2, b9- No. of large size Tops from e1-No. of small size Jeggings from supplier 1, e2- No. of
supplier 3 small size Jeggings from supplier 2, e3- No. of small size
Jeggings from supplier 3
b10-No. of X-large size Tops from supplier 1, b11- No. of
e4-No. of medium size Jeggings from supplier 1, e5- No. of
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medium size Jeggings from supplier 2, e6- No. of medium No. of XLL size Wedding Gown from supplier 2,g15- No.
size Jeggings from supplier 3 of XLL size Wedding Gown from supplier 3
e7-No. of large size Jeggings from supplier 1, e8- No. of STEP 2-The second step in the LPP formulation is to
large size Jeggings from supplier 2, e9- No. of large size identify the constraints. Constraints are the basic
Jeggings from supplier 3 limitations associated with the business problem. In any
e10-No. of XL size Jeggings from supplier 1,e11- No. of XL business, we do not have the unlimited resources (man,
size Jeggings from supplier 2, e12- No. of XL size Jeggings machine, money and management). Most of the resources
from supplier 3 are scarce, that's why any kind of business objective will
come certain kind of limitations. Hence these limitations
e13-No. of XLL size Jeggings from supplier 1,e14- No. of
will act as constraints to the objective. In this problem, we
XLL size Jeggings from supplier 2, e15- No. of XLL size
have given with demand, product and shipping fee. We
Jeggings from supplier 3
need to make sure that demand of the business should be
f1-No. of small size Suits from supplier 1, f2- No. of small fulfilled with the minimum product and shipping cost.
size Suits from supplier 2, f3- No. of small size Suits from Other constraints can be non-negative constraints and
supplier 3 integer constraints in this case.
f4-No. of medium size Suits from supplier 1, f5- No. of Demand Constraints-The business is dealing with Thirty-
medium size Suits from supplier 2,f6- No. of medium size Five products, so total number of demand constraints will
Suits from supplier 3 be thirty-five. As the business will make sure that the total
f7-No. of large size Suits from supplier 1, f8- No. of large demand should be fulfilled, that's why the minimum order
size Suits from supplier 2,f9- No. of large size Suits from quantity will be greater than or equal to the given demand.
supplier 3 The demand of the products is going to make the right-hand
f10-No. of XL size Suits from supplier 1,f11- No. of XL size side of the constraints. As the demand will be fulfilled by
Suits from supplier 2,f12- No. of XL size Suits from three suppliers, so the left-hand side of the constraints will
supplier 3 be the product quantities ordered from three different
suppliers (decision variables). We can write all the
f13-No. of XLL size Suits from supplier 1, f14- No. of XLL
constraints with the help of decision variables.
size Suits from supplier 2,f15- No. of XLL size Suits from
supplier 3 1.a1+a2+a3>=20, 2.a4+a5+a6>=40, 3.a7+a8+a9>=40
4.a10+a11+a12>=25, 5.a13+a14+15>=10
g1-No. of small size Wedding Gown from supplier 1, g2-
No. of small size Wedding Gown from supplier 2, 6.b1+b2+b3>=30,7.b4+b5+b6>=45, 8.b7+b8+b9>=45
g3- No. of small size Wedding Gown from supplier 3 9.b10+b11+b12>=35, 10.b13+b14+b15>=20
g4-No. of medium size Wedding Gown from supplier 1, 11.c1+c2+c3>=15,12.c4+c5+c6>=25, 13.c7+c8+c9>=25
g5- No. of medium size Wedding Gown from supplier 2,g6- 14.c10+c11+c12>=20, 15.c13+c14+c15>=10
No. of medium size Wedding Gown from supplier 3 16.d1+d2+d3>=30, 17.d4+d5+d6>=50,
g7-No. of large size Wedding Gown from supplier 1, f8- 18.d7+d8+d9>=50 19.d10+d11+d12>=35,
No. of large size Wedding Gown from supplier 2,g9- No. of 20.d13+d14+d15>=20
large size Wedding Gown from supplier 3 21.e1+e2+e3>=15, 22.e4+e5+e6>=35, 23.e7+e8+e9>=35
g10-No. of XL size Wedding Gown from supplier 1,g11- 24.e10+e11+e12>=20, 25.e13+e14+e15>=5
No. of XL size Wedding Gown from supplier 2,g12- No. of 26.f1+f2+f3>=30, 27.f4+f5+f6>=30, 28.f7+f8+f9>=30
XL size Wedding Gown from supplier 3 29.f10+f11+f12>=30, 30.f13+f14+f15>=15
g13-No. of XLL size Wedding Gown from supplier 1,g14- 31.g1+g2+g3>=5, 32.g4+g5+g6>=10, 33.g7+g8+g9>=10
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34.g10+g11+g12>=10, 35.g13+g14+g15>=5 whole number. Fraction value and decimal values are not
Constraints for availing free shipping –The objective of allowed. So all the one hundred five decision variables
business is to minimize the total cost, that's why the should have integer value as well, the constraint can be
business owner will try to avail the free shipping from all written as
the three suppliers. To achieve the free shipping options, a1,a2,a3,a4,a5,a6,a7,a8,a9,a10,a11,a12,a13,a14,a15,b1,b2
from all the three suppliers, the minimum order quantity ,b3,b4,b5, b6,b7,b8,b9,b10,b11,b12,
should be ordered from the respective suppliers. In case of b13,b14,b15,c1,c2,c3,c4,c5,c6,c7,c8,c9,10,c11,c12,c13,c
first supplier the minimum quantity is twenty-one, in case 14,c15,d1,d2,d3,d4,d5,d6,d7,d8,d9,d10,d11,d12,d13,d14,
of second supplier, it is 31 and in third case it is 11. These d15,e1,e2,e3,e4,e5,e6,e7,e8,e9,10,e1 1,e12,e13,e14,e15,f1
quantities are going to be form the right-hand side of the ,f2,f3,f4,f5,f6,f7,f8,f9,f10,f11,f12,f13,f14,f15,g1,g2,g3,g4
shipping quantity constraints. The inequality will be of ,g5,g6,g7,g8,g9,10,g11,g12,g13,g14,g1 = should have the
greater than type, as these are the minimum quantity to be integer value
ordered. The left-hand side of the constraints will be formed Step-3 – The third step is to formulate the objective for the
by the decision variables related to each supplier. So total LPP.
three numbers of shipping constraints will be formed,
Objective-The objective function is also known as key
which are as follows.
variable, which we can achieve with the help of different
1.a1+a4+a7+a10+a13+b1+b4+b7+b10+b13+c1+c4+c7+c decision variables. This is the basic goal of the business can
10+c13+d1+d4+d7+d10+d13+e1+e4+e7+e10+e13+f1+f4 be of minimization or maximization type.The objective
+f7+f10+f13+g1+g4+g7+g10+g13>=21 function in this case is of minimization type, which is to
2.a2+a5+a8+a11+a14+b2+b5+b8+b11+b14+c2+c5+c8+c minimize the total cost. The objective function can be
11+c14+d2+d5+d8+d11+d14+e2+e.+e8+e11+e14+f2+f5 written with the help of decision variables as –
+f8+f11+f14+g2+g5+g8+g11+g14>=31 Zmin=600a1+700a2+650a3+650a4+700a5+650a6+650a7
3.a3+a6+a9+a12+a15+b3+b6+b9+b12+b15+c3+c6+c9+c +700a8+650a9+700a10+700a11+700a12+750a13+700a1
12+c15+d3+d6+d9+d12+d15+e3+e6+e9+e12+e15+f3+f6 4+700a15+350b1+400b2+350b3+350b4+350b5+350b6+
+f9+f12+f15+g3+g6+g9+g12+g15>=11 350b7+350b8+350b9+400b10+400b11+400b12+450b13
Non- Negative Constraints-Non- negative constraints +450b14+400b15+299c1+350c2+380c3+299c4+299c5+
means that all the decision variable should have positive 380c6+299c7+299c8+380c9+399c10+399c11+400c12+4
value. As in this case, the minimum order quantity of any 99c13+499c14+400c15+399d1+435d2+380d3+399d4+3
product can be zero, but it can-not be negative. So here, all 99d5+380d6+399d7+399d8+380d9+499d10+499d11+42
the one hundred five decision variables should have non- 0d12+599d13+599d14+420d15+475e1+500e2+450e3+4
negative value, means value greater than zero. The non- 99e4+500e.+450e6+499e7+500e8+450e9+575e10+500e1
negative constraint can be written as - 1+580e12+675e13+500e14+580e15+1200f1+1200f2+12
00f3+1250f4+1250f5+1250f6+1250f7+1300f8+1250f9+
a1,a2,a3,a4,a5,a6,a7,a8,a9,a10,a11,a12,a13,a14,a15,b1,b2
1300f10+1300f11+1300f12+1350f13+1350f14+1350f15
,b3,b4,b5,b6,b7,b8,b9,b10,b11,b12,b13,b14,b15,c1,c2,c3,
+2500g1+2500g2+2500g3+3000g4+3000g5+3000g6+35
c4,c5,c6,c7,c8,c9,10,c11,c12,c13,c14,c15,d1,d2,d3,d4,d5,
00g7+3500g8+3500g9+4000g10+4000g11+4000g12+45
d6,d7,d8,d9,d10,d11,d12,d13,d14,d15,e1,e2,e3,e4,e5,e6,e
00g13+4500g14+4500g15
7,e8,e9,10,e11,e12,e13,e14,e15,f1,f2,f3,f4,f5,f6,f7,f8,f9,f
10,f11,f12,f13,f14,f15,g1,g2,g3,g4,g5,g6,g7,g8,g9,10,g11 Result & Discussion-The LPP mathematical model can be
,g12,g13,g14,g15>=20 solved with the help of Graphical, Simplex and Excel-
Solver method. Graphical method is used, when we have
Integer ILP Constraints- Integer constraint means that
just two variables. The reason is that it will be difficult to
the decision variable should have only the value, which is in
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Volume 15 issue 4 October 2022
plot more than two variables in graph and to identify the the desired information there, Simplex option needs to be
feasible region will be even more difficult. Simplex can be selected for getting the LPP solution.
used for any no. of variables, but it is very complex and The researcher got the optimum solution of the LPP in this
tedious exercise. In this case the decision variable numbers case as all the optimality conditioned and constraints are
are very high, so use of simplex will not be feasible. So, for satisfied with the solution. Table no. 4 is depicting the value
solving the LPP, the researcher has used Excel-Solver in of all the one hundred five decision variables, which is
this case. Excel-solver option can be found in the data tab of received from the Excel solver.
the excel sheet, where the objective, decision variable and
constraints information need to be filled. After providing all
The number of each product with the corresponding value is presented in Table no. 5. Zmin value obtained through the Excel-
Solver is 6,18,415 Rs.
Table No. 5 – Optimal Product- Mix for the Clothing boutique owner
Products to be ordered Quan ty Price of the product Total cost
No. of small size Kurtis from supplier 1 20 600 12000
No. of medium size Kurtis from supplier 1 40 650 26000
No. of large size Kurtis from supplier 3 40 650 26000
No. of X-large size Kurtis from supplier 1 25 700 17500
No. of XXL size Kurtis from supplier 2 10 700 7000
No. of small size Tops from supplier 1 30 350 10500
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Pacific Business Review (International)
The Optimal Product mix will include 875 products from hundred twenty products from the supplier 3. The total cost
these three suppliers- of this optimal product mix will be 6,18,415 Rs. As of now
Supplier 1 will provide total- 520 products the business is just in starting stage, that's why more focus
was given to the minimization of cost. But as the business
Supplier 3 will provide total- 35 products
grows other optimization technique should also be used to
Supplier 3 will provide total- 320 products get more profit. The researcher recommends the
Conclusion & Recommendation-All the optimality entrepreneur should use LPP not only for minimization of
conditioned and constraints are satisfied with the solution. cost, it should also be used for profit maximization of the
According to the LPP solution, the clothing boutique owner business.
should order Five hundred twenty product items from
supplier-1,Thirty-five items from the Supplier - 2 and three
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prohibited without permission.