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Linear Programmin1 Summary

The document discusses linear programming (LP) as a mathematical technique for optimizing resource allocation in business organizations with limited resources. It outlines the requirements, assumptions, advantages, and disadvantages of LP, as well as its applications in various industries. Additionally, it provides a mathematical formulation example for maximizing profit in a production scenario involving tables and chairs.

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tum chris
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18 views12 pages

Linear Programmin1 Summary

The document discusses linear programming (LP) as a mathematical technique for optimizing resource allocation in business organizations with limited resources. It outlines the requirements, assumptions, advantages, and disadvantages of LP, as well as its applications in various industries. Additionally, it provides a mathematical formulation example for maximizing profit in a production scenario involving tables and chairs.

Uploaded by

tum chris
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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LINEAR PROGRAMMING

INTRODUCTION
Business organizations have various objectives which they have to meet using a certain
available resources that are usually in scarce supply, for instance:
i) A manufacturing company deems to provide quality products and make profit through
utilization of the limited resources like personnel, material, machine, lime, market etc.
ii) A hospital has the main objective of maintaining and restoring good health to its
patients at an affordable cost to the patients. Resources include medical personnel,
number of beds, pharmacies and laboratories.

In such examples, mathematical programming(MP)provides a technique that may be used


to make decision on the best way to allocate the limited resources in order to 235inimize
profit or minimize cost.
Programming refers to a mathematical technique which is iterative. Iteration is a
technique which converges towards an optimal solution using the same basic steps in a
repetitive manner. The solution keeps improving until it can improve no more i.e. until
the best solution is obtained given that circumstance.
Mathematical Programming therefore is a mathematical decision tool that aids managers
in seeking either the maximization n of profit, minimization of cost or both within an
environment of scarce/limited resources. Such scarce resources are called constraints e.g.
raw materials labour supply, market etc. The maximization of profit and in minimization
of cost are known as objectives. The decision problems can be formulated and solved as
mathematical programming problems. Mathematical programming involves optimization
of a certain function called the objective function subject to certain constraints.
The mathematical programming techniques can be divided into 7 categories namely:
1. linear programming
2. non-liner programming
3. integer programming
4. dynamic programming
5. stochastic programming
6. parametric programming
7. goal programming
QUANTITATIVE ANALYSIS
Contact: 0724398053 Page 237
1. Linear programming (LP) method
This method is a technique for choosing the best alternative from aset of feasible
alternatives whereby the objective function and constraints are expressed as linear
mathematical functions. In order to apply linear programming(LP), the following
requirements should be met:
i) There should be a clearly identifiable objective which is measured quantitatively.
ii) The activities to be included should be distinctly identifiable and measurable in
quantitative terms.
iii) The resources of the system should be identifiable and measurable quantitatively and
also in limited supply.
iv) The relationships representing objective function and the constraints equations or
inequalities must be linear in nature.
v) There should be a series of feasible alternative courses of action available to the
decision maker, which are determined by the resource constraints.

Business application of linear programming


a) Determination or optimal product mix in industries.
b) Determination of optimal machine and labour contribution
c) Determination of optimal use of storage and shipping facilities
d) Determining the best route in transport industry.
e) Todetermine investment plans.
f) To find the appropriate number of financial auditors
g) Assigning advertising expenditures to different media plans.
h) Determining theamount of fertilizer to apply per acre in the agricultural sector.
i) Determiningcampaign strategies in politics.
j) Determining the best marketing strategies.

Basic assumptions of linear programming (LP)


i. Certainty– values (numbers) in the objective and constraint are known with certainty
and do not change during the period being studied.
ii. Proportionality/linearity– a basic assumption of linear programming(LP) is that
proportionality exists in the objective function and the constraints inequalities- e.g. if a
production of 1unit of a product uses 3 hours of a particular scarce resource, then making
10 units use 30 hours of the resource.
iii. Additivity– the total of all the activities is given by the sum total of each activity
conducted separately. For instance, the total profit in the objective function is determined
by the sum of the profit contributed by each of the products separately.
iv. Divisibility/continuity– solutions need not be in whole numbers (integers) Instead,
they are divisible and may take any fractional value.
v. Non negativity/finite choice– negative values of physical quantities are impossible,
you simply cannot produce negative number of chairs, shirts, lamps or computers.
vi. Time factors are ignored. All production are assumed to be instantaneous.
QUANTITATIVE ANALYSIS
Contact: 0724398053 Page 238
vii. Costs and benefits which cannot be quantified easily like goodwill, liquidity and
labour stability are ignored.
viii. Interdependence between demand products is ignored, products may be
complementary or a substitute for one another.

Advantages of linear programming (LP)


i) Improves the quality of decisions.
ii) Helps in attaining the optimum use of production factors.
iii) It highlights the bottlenecks in the production process
iv) It gives insight and perspective into problem situations,
v) Improves the knowledge and skills of tomorrow’s executives,
vi) Enable one to consider all possible solutions to problems.
vii) Enables one to come up with better and more successful decisions
viii) It is a better tool for adjusting to meet changing conditions.

Disadvantages of Linear programming


i) It treats all relationships as linear.
ii) It is assumed that any activity is infinitely divisible.
iii) It takes into account single objective only i.e. profit maximization or cost
minimization
iv) It can be adopted only under the condition of certainty i.e. recourses, per unit
contribution, costs etc. are known with certainty. This does not hold in real situations

Mathematical formulation of linear programming problems


Formulating a linear program involves developing a mathematical model to represent the
managerial problem. The step in formulating a linear program follows:
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 expression for the objective function
and the constraints.

ILLUSTRATION
Maximization case
A company produces inexpensive tables and chairs. The production process for each is
similar in that both require a certain number of hours of carpentry work and a certain
number of labour hours in the painting department. Each table takes 4 hours of carpentry
and 2 hours in the painting shop. Each chair requires 3 hours of carpentry and 1 hour in
painting. During the current production period, 240 hours of carpentry time are available
and 100 hours in painting time are available. Each table sold yield a profit of $7 and each
chair produced is sold for a $5 profit.
Formulate this problem as a linear programming problem to determine as to how many
tables and chairs should be produced so that the firm can maximize the profit. Assume
that there are no marketing constraints so that all that is produced can be sold.
QUANTITATIVE ANALYSIS
Contact: 0724398053 Page 239
SOLUTION
The objective function:
The goal of the firm is the maximization of profit, which would be obtained by producing
and selling the tables and chairs.
It we let x1 be the number of tables, x2 be the number of chairs and Z be the total profit.
Then Z = 7x1 + 5x2 (this is the objective function which is linear in nature)
NB: since the problem calls for a decision about the optimal (best possible) values of x1
and x2, these are known as the decision variables.
Constraint
These are the resources which must be in limited supply. The mathematical relationship

involving ≤ or ≥ sign). Each table requires 4 hours of carpentry while a chair requires
which it used to explain this limitation is inequality (a mathematical relationship

3hours. Hence the total consumption of carpentry hours would be 4x1 + 3x2 , which

inequality of the form. 4x1 + 3x2≤ 240. Similarly, a table requires 2 hours of painting
cannot exceed the total availability of 240 hours. This constraint can be expressed as an

while a chair requires 1 hour, With the availability of 100 hours, we have 2x1 + x2≤ 100
as the painting constraint.
Non-negativity condition:

Symbolically, x1≥ 0 and x2≥ 0 (this is the non-negativity condition)


Obviously x1 and x2 being the number of units produced cannot have negative values.

Hence the above linear programming problem can be summarized as follows:


Maximize Z = 7x1 4x1 + 3x1≤ 240 (carpentry hours either the LPP
+ 5x2 (profit) this constraint) model
formulation is
called Subject to:
2x1 + x2≤ 100 (painting hours or Primal LP model
constraint)
x1 ≥0, x2≥0 (non-negativity restriction)

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