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The document provides an overview of Operations Research (OR) and its application in optimizing decisions across various fields such as production, transportation, and finance. It introduces Linear Programming (LP) as a subset of OR, detailing its components, assumptions, and the steps to formulate LP problems. Examples illustrate the formulation of LP problems in different contexts, including maximizing profits and minimizing transportation costs.

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Rana Ben Fraj
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10 views4 pages

Chapter Summary For Revision

The document provides an overview of Operations Research (OR) and its application in optimizing decisions across various fields such as production, transportation, and finance. It introduces Linear Programming (LP) as a subset of OR, detailing its components, assumptions, and the steps to formulate LP problems. Examples illustrate the formulation of LP problems in different contexts, including maximizing profits and minimizing transportation costs.

Uploaded by

Rana Ben Fraj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Chapter 1: Formulation of Linear Programming (LP)

1. Introduction to Operations Research (OR)


Operations Research (OR), also known as Decision Science, is a discipline that applies scientific methods to help decision-
makers make optimal choices. It involves mathematical models, simulations, and optimization techniques to improve
business and industrial processes.

Key Characteristics of OR:


Optimizing Decisions: Helps find the best possible solution given constraints.
Scientific Approach: Uses mathematical and logical reasoning.
Wide Applications: Applied in finance, production, logistics, and more.

Fields of Applications of OR:


1. Production: Maximizing profits or minimizing costs in manufacturing.
2. Transportation: Optimizing routes, reducing costs, and managing capacities.
3. Project Planning: Efficient allocation of resources.
4. Finance and Investment: Portfolio optimization, risk minimization.

2. Scientific Steps in Operations Research


OR problems originate from real-world business scenarios. The solution process involves the following steps:
1. Problem Identification: Understanding and defining the problem.
2. Data Collection: Gathering relevant numerical data.
3. Mathematical Modeling: Converting the problem into a mathematical format.
4. Solution Finding: Applying optimization techniques to get results.
5. Validation and Implementation: Checking the accuracy of results and applying them.

3. Introduction to Linear Programming (LP)


Linear Programming is a subset of OR that focuses on optimizing a linear objective function subject to linear constraints.

Key Components of an LP Model:


1. Decision Variables: Unknowns that need to be determined.
2. Objective Function: The function to be maximized or minimized.
3. Constraints: Restrictions or limitations in the problem.

Linear Programming Assumptions:


1. Continuity: Decision variables are continuous (can take any fractional values).
2. Certainty: All parameters (coefficients, constraints) are known with certainty.
3. Proportionality: The effect of decision variables is proportional (e.g., if producing one unit costs $5, then producing two
units costs $10).
4. Independence: Decision variables do not interact (no synergies or dependencies).
4. Formulating a Linear Programming Problem
Step 1: Identify the Decision Variables
These are the unknown quantities we need to determine.
Types of Decision Variables:

Continuous Variables: Can take any real number values ≥ 0.


Integer Variables: Must be whole numbers.
Binary Variables: Can only be 0 or 1 (Yes/No decisions).

Step 2: Define the Objective Function


The function that needs to be maximized or minimized. It is always a linear function of the decision variables.

Maximize or Minimize Z = c1 x1 + c2 x2 + ... + cn xn


​ ​ ​ ​ ​ ​

Where:
Z = Objective Function (e.g., Profit, Cost)
x1 , x2 , ..., xn = Decision Variables
​ ​ ​

c1 , c2 , ..., cn = Coefficients (profit per unit, cost per unit, etc.)


​ ​ ​

Conversion Between Maximization & Minimization:

max f (x) = − min(−f (x))


Any maximization problem can be rewritten as a minimization problem by negating the objective function.

Step 3: Define the Constraints


Constraints are mathematical expressions representing the limitations of resources.
General Form of Constraints:

a1 x1 + a2 x2 + ... + an xn ≤ b
​ ​ ​ ​ ​ ​

or

a1 x1 + a2 x2 + ... + an xn = b
​ ​ ​ ​ ​ ​

or

a1 x1 + a2 x2 + ... + an xn ≥ b
​ ​ ​ ​ ​ ​

Each constraint must be a linear equation or inequality.


Non-Negativity Constraints:

x1 , x2 , ..., xn ≥ 0
​ ​ ​

This ensures that decision variables take only meaningful values (e.g., you can’t produce negative products).

5. Example 1: Apple Profits


A manager at an Apple manufacturer wants to determine the optimal number of iPods and iPhones to produce to maximize
profits.

Step 1: Identify Decision Variables


x1 = Number of iPhones produced.
​

x2 = Number of iPods produced.


​

Step 2: Formulate the Objective Function

max Z = 100x1 + 75x2 ​ ​

(Where 100 and 75 are the profits per unit for iPhones and iPods, respectively.)

Step 3: Identify Constraints


1. Assembly Time Constraint (Total available: 9000 hours)

3x1 + 2x2 ≤ 9000


​ ​

(Each iPhone takes 3 hours, each iPod takes 2 hours.)


2. Raw Material Supply Constraint (5000 circuit boards available)

2x1 + x2 ≤ 5000
​ ​

(Each iPhone requires 2 PCBs, each iPod requires 1 PCB.)


3. Consumer Demand Constraints

x1 ≥ 500, x2 ≥ 3000 ​

4. Non-Negativity Constraints

x1 , x2 ≥ 0
​ ​

6. Example 2: Transportation Problem


A company wants to optimize transportation costs from 3 plants to 4 warehouses.

Decision Variables
Xij = Quantity transported from plant i to warehouse j .
​

Objective Function (Minimizing Cost)

min Z = 4X11 + 6X12 + ... + 7X34


​ ​ ​

(Each coefficient represents cost per unit.)

Constraints
Production Capacity:

X11 + X12 + X13 + X14 ≤ 10


​ ​ ​ ​

(Each plant has a production limit.)


Warehouse Storage Capacity:

X11 + X21 + X31 ≤ 6


​ ​ ​

(Each warehouse can store only a limited amount.)


Non-Negativity:

Xij ≥ 0
7. Example 3: Investment Problem
A company needs to choose investment projects with limited budget.

Decision Variables
Xi = 1 if project i is selected, 0 otherwise.
​

Objective Function

max Z = 350X1 + 370X2 + 380X3 + 330X4


​ ​ ​ ​

Budget Constraints

60X1 + 80X2 + 100X3 + 70X4 ≤ 300


​ ​ ​ ​

90X1 + 100X2 + 70X3 + 80X4 ≤ 300


​ ​ ​ ​

Additional Constraints
At least 2 projects must be chosen:
X1 + X2 + X3 + X4 ≥ 2
​ ​ ​ ​

Projects 1 and 4 are mutually exclusive:


X1 + X4 ≤ 1
​ ​

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