Optimization

Techniques for
Decision-Making

Session 2

Jan 2025

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 Learning from Session-1

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 From the session-1

The “Business Information”/ “Phenomenon”

Developing math model

Solve the model

(Input made available to solve, Algo to solve the model decided)

Get the optimal result (if it exists)

Post-optimal analysis (Decision Making)

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Let us consider a
business
situations…
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 Bag production

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 The Golf Bag Maker … Par Inc.

Par, Inc., is a small manufacturer of golf equipment and supplies whose management has
decided to move into the market for medium- and high-priced golf bags. Par’s distributor is
enthusiastic about the new product line and has agreed to buy all the golf bags Par produces
over the next three months.
After a thorough investigation of the steps involved in manufacturing a golf bag,
management determined that each golf bag produced will require the following operations:

1. Cutting and dyeing the material,

2. Sewing
3. Finishing (inserting umbrella holder, club separators, etc.)
4. Inspection and packaging
Production Time (hours)
Department Standard Bag Deluxe Bag
Cutting and Dyeing 7/10 1
Sewing 1/2 5/6
Finishing 1 2/3
Inspection and Packaging 1/10 1/4

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 A Simple Maximization Problem (3 of 4)

• Par, Inc.’s production is constrained by a limited number of hours

available in each department.
• The director of manufacturing estimates that 630 hours for cutting
and dyeing, 600 hours for sewing, 708 hours for finishing, and 135
hours for inspection and packaging will be available for the
production of golf bags during the next three months.
• The accounting department analyzed the production data and
arrived at prices for both bags that will result in a profit contribution
of $10 for every standard bag and $9 for every deluxe bag
produced.

• What do you recommend for the production level of each bag for
maximum profit?

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 What to di now!!!

The maths as a solution to such

decision-making problem…

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 The saviour …

Linear
Programming

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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© 2019 Cengage. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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 Linear Programming

• Linear programming has nothing to do with computer

programming.

• The use of the word “programming” here means “choosing

a course of action.”

• Linear programming involves choosing a course of action

when the mathematical model of the problem contains only
linear functions.

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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 Linear Programming

• The maximization or minimization of some quantity is the objective in

linear programming problems.

• All LP problems have constraints that limit the degree to which the
objective can be pursued.

• A solution method can be used to solve a linear program.

• A feasible solution satisfies all the problem's constraints.

• An optimal solution is a feasible solution that results in the largest

possible objective function value when maximizing (or smallest when
minimizing).

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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 Methods for solving LP

➢ Graphical Method
➢ Simplex Method
➢ Dual Simplex Method
➢ Interior-Point Methods
➢ Dual-Problem Method
➢ Network Flow Algorithms
➢ Integer Linear Programming (ILP) Methods
➢ Software and Optimization Libraries
➢ …….

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 Let’s try formulation !!!

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 Par Inc. Problem

Each golf bag produced will require the following

operations-

1. Cutting and dyeing the material

2. Sewing

3. Finishing (inserting umbrella holder, club separators,

etc.)

4. Inspection and packaging

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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 The Golf Maker … Par Inc.

Par, Inc., is a small manufacturer of golf equipment and supplies whose management has
decided to move into the market for medium- and high-priced golf bags. Par’s distributor is
enthusiastic about the new product line and has agreed to buy all the golf bags Par produces
over the next three months.
After a thorough investigation of the steps involved in manufacturing a golf bag,
management determined that each golf bag produced will require the following operations:

1. Cutting and dyeing the material,

2. 2. Sewing
3. Finishing (inserting umbrella holder, club separators, etc.)
4. Inspection and packaging
Production Time (hours)
Department Standard Bag Deluxe Bag
Cutting and Dyeing 7/10 1
Sewing 1/2 5/6
Finishing 1 2/3
Inspection and Packaging 1/10 1/4

© 2019 Cengage. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
16
 A Simple Maximization Problem

• Par, Inc.’s production is constrained by a limited number

of hours available in each department. The director of
manufacturing estimates that 630 hours for cutting and
dyeing, 600 hours for sewing, 708 hours for finishing, and
135 hours for inspection and packaging will be available
for the production of golf bags during the next three
months.
• The accounting department analyzed the production data
and arrived at prices for both bags that will result in a
profit contribution of $10 for every standard bag and $9 for
every deluxe bag produced.

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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 A Simple Maximization Problem (4 of 4)

The complete model for the Par, Inc., problem is as follows:

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 Model Formulation

1. Understand the problem thoroughly- Yes/No

2. Describe the objective- Maximize the Profit
3. Describe each constraint- Four constraints/limitations
4. Define the decision variables- “Number of Std. Bags (S)” and
“Number of Delux Bags (D)” to be produced.
5. Write the objective function in terms of the decision variables.
Max. 10*S+9*D
6. Write the constraints in terms of the decision variables.

⁷⁄₁₀S +1D <= 630 ……..Cutting and dyeing constraints

1⁄₂ S + ⁵⁄₆D <= 600 ……..Sewing constraints
1S + 2⁄₃D <= 708 ………..Finishing constraints
1⁄₁₀S + 1⁄₄D <= 135 ……….Inspection and packaging constraints
S, D >= 0

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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 From the session-1

✓ The “Business Information”/ “Phenomenon”

✓ Developing math model

Solve the model

(Input made available to solve, Algo to solve the model decided)

Get the optimal result (if it exists)

Post-optimal analysis (Decision Making)

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license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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Let’s solve …

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Many methods…

Let’s use one-

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 The solution approach-1 Graphical Method

The graphical method is a visual approach used to solve linear

programming problems with two decision variables.

Need all constraints to be drawn on 2D graph.

Assume all constraint equations

as equality

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 Graphical Solution Procedure

1. Convert the constraints into equality.

2. Take ⁷⁄₁₀S +1D = 630

3. put S=0 and get, (0,630)

put D=0 and get, (900,0)

4. Use S and D, along x and y coordinate

and use the above points to draw
constraints line.

5. Put an arrow on the line

as per sign < or = or >

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 Graphical Solution Procedure

Do the process for all constraints.

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 Graphical Solution Procedure

The final graph.

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 Feasible region
• The optimal solution lies on corners.
• Calculate the coordinates of the corner
points.
• Use coordinates to calculate the profit.
Use objective function equation to
calculate the profit.
1- (0,0)
2- (708,0)
3. (540,252)
4. (300, 420)
5. (0,540)

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 Graphical Solution Procedure

The optimal solution

S = 540
D = 252.

The optimal production

quantities are 540 standard
bags and 252 deluxe bags

Resulting profit contribution of

10(540) + 9(252) = $7,668.

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 Summary of the Graphical Solution Procedure

1. Prepare a graph of the feasible solutions for each of

the constraints.
2. Determine the feasible region that satisfies all the
constraints simultaneously.
3. Draw an objective function line.
4. Move parallel objective function lines toward larger
objective function values without entirely leaving the
feasible region.
5. Any feasible solution on the objective function line
with the largest value is an optimal solution.

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 Let’s relook the solution of problem 1 again.

To produce S = 540 and D = 252, Think about the status

of the resource utilized-

Hours Required forS = 540 and

Constraint D = 252 Hours Available Unused Hours
Cutting and Dyeing 7/10(540) + 1(252) = 630 630 0
Sewing 1/2(540) + 5/6(252) = 480 600 120
Finishing 1(540) + 2/3(252) = 708 708 0
Inspection and Packaging 1/10(540) + 1/4(252) = 117 135 18

*This information was not captured in math, but a post-optimal

insight!!!

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 Let’s practice with one more
example

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A startup produces two types of chocolates, A and B, using Milk
and Choco as resources. Each SKU unit of chocolate A requires 1
SKU unit of Milk and 3 SKU units of Choco, while each SKU unit of
chocolate B requires 1 SKU unit of Milk and 2 SKU units of Choco.

The store has a total of 5 SKU units of Milk and 12 SKU units of
Choco. The profit is Rs 6000 per SKU unit for A and Rs 5000 per
SKU unit for B. The company wants to maximize profit.

What is your suggestion to the company?

How many units of A and B should it produce respectively?

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 Guidelines for Model Formulation

Formulation for Par Inc.

1. Understand the problem thoroughly- Yes/No
2. Describe the objective- Maximize the Profit
3. Describe each constraint- Four constraints/limitations
4. Define the decision variables- “Number of A chocs (x)” and
“Number of B Chocs (y)”.
5. Write the objective in terms of the decision variables.
Max. 6000*x+5000*y
6. Write the constraints in terms of the decision variables.
1*x +1*y <= 5 ……..Milk
3*x + 2*y <= 12 ……..Coco
x, y >= 0

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 Plz solve using Graphical Method…
(Practice)

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 Let’s try…

Using Desmos

https://www.desmos.com/calculator

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 Thank
You !

*Sophie Germain (1776-1831). Number theory and elasticity theory.

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