LINEAR PROGRAMMING : FORMULATION AND GRAPHICAL METHOD 4.1 Inrropuction Linear programming, one of the important techniques of operations research has been applied to a wide range of business problems. This technique is useful in solving decision making problems which involve optimizing a linear objective function subject to a set of linear constraints. It aims to optimize performance under a set of resource constraints as specified by an organization. Before discussing further, let us first understand the meaning of the words, linear and programming. The word linear refers to linear relationship among variables in a model. Thus, a given change in one variable will always cause a resulting proportional change in another variable. The word programming refers to modelling and solving a problem mathematically that involves the economic allocation of limited resources by choosing a particular course of action or strategy among various alternative strategies to achieve the desired objective. 4.2 Some Crtep Derinitions The technique of linear programming was developed in 1947 by George B. Dantzing, Marshal Wood and their other associates who were employed in United Statos Air Force. “Linear Programming is a technique whichis applicable to those programming problems in-which the desired objective as well as the restrictions on the resources give rise to linear functions.” —George B. Daniaing - “Linear Programming is a mathematical device for determining the optimal solution of resources Be ert a particular objective where there are alternativ' \ i i ey etc. resources, i.e, Man, Material, Machinery and Money i Scanned with CamScannerGEMENT 42 A-rexrnook oF quaint TECHNIGUES FOR MANACERENT ofa number of variables “The analysis of problems in which linear function ore subject to a number is to be maximized (or minimized) when those variables of restraints in the form of linear Cee amuelson, DO rfman and Solow 4.3 Terminotocy Usep teri es and x, (® Objective Function + If ey, eyréy ae criterion valnes DE Sy Xp-ngt, are variables, then the linear fe 2 galled the “objective ¢, %, Which is to be maximized or minimized is function. (i) Constraints : The inequations or equ oe Linear Programming Problem which describe the conditions wae which the optimization (maximization or minimization, rt accomplished are called constraints. There may be any one of the three signs <, =, or 2 in constraints. Solution : A set of the values of the decision variables x,, x2,....%, whith satisfy all the constraints of the given linear programming problem is called the solution of that linear programming problem. (iv) Feasible Solution : A set of values of the variables 21, 2)... which satisfy all the constraints of a given LP and also the non- negafive conditions. Basie Solution : If there are m equations in n variables (n > m) then a solution obtained by solving m equations exactly for m variables and putting remaining (n ~ m) variables equal to zero is called a basic solution provided all the vectors associated with non- zero variables are linearly independent, i) Basic Feasible Solution : A feasible solution to a li u a a linear programming problem which is also a basic sol tnt” programming pro ‘0 a basic solution is calleda (oii) Optimal Solution : (R.T.U, MBA 2008) A basic féasible solution of a LPP which optirn: function Te known as optimal mila optimizes the given object (viii) Degenerate Basic Foasible ations in the variables of a (ii) ‘The steps involved in the formulat; . ulation o| Step I. Identify the decision Variabl ae i and express them a8 x, 25,5... es of int Step I. Ascertain the obj to minimize or to maximize, Step IIL. Ascertain the cost ( (in case of maximization problem case of mi Unit of P are as fol terest lows : to the decision m lective of the decision ™ al Scanned with CamScanneryr 1B LINEAR PROGRAMMING : FORMULATION AND GRAPHICAL METHOD 43 i i | ‘Step IV. Ascertain the constraints representing the maximum availability or minimum commitment or equality and represent them as less than or equal to (<) type inequality or greater than or equal to (2) type inequality or equal to (=) type respectively. | Step V. Put non-negative restrictions as under : x,2 0 ; j= 1, 2, +. || Step VI. Now formulate the linear programming problem as under Maximize (or Minimize) z = ¢, x, + ¢2 2, + ut Cy %q | subject to constraints : 04, Xy + Oy9 Xo + yy Ky + Oy Xy + i} +a,,%, (S,=,2)b, x | + dy, %, (S, | | gy Xy + Ogg Hy to + Ogg &y (Ss Ag Xz + Og Xo toe and Xy Xp, 2 0 (Non-negative restrictions) where x, denotes decision variables or choice variables, i. quantity of ** variable of interest to the decision maker, c, denotes constants representing per unit contribution (in case of maximization problem) or cost (in case of minimization problem) of the decision variable. a,, denotes constants representing exchange coéfficients of the j* decision variables in the i" constraint. b, denotes constants representing requirement or availability of i constraint. ‘The expression (<, =, 2) means that each constraint may take only one of the three possible forms < or = or 2. 4.5 Matrix rorm or Linear PROGRAMMING PROBLEM ) ‘The linear programming problem can be expressed in the matrix form as follows : Maximize or Minimize z = cx subject to Ax s,=,2b, b20 andx20 yy yy Ay Ay, a2 Ay, where A=[pop 6 | c= gS v 4 b= oN Scanned with CamiScannerR MANAGEMENT 44 A-TEXTBOOK OF QUANTITATIVE TECHNIQUES FO 4.6 Assumptions oF LINzaR PROGRAMMING A athe A linear programming problem is based on a number of assumptions. basic assumptions are : . (@ Linearity and Additivity : The primary assumption of lines programming is the linearity in the objective funtilet Tt ane requirement constraints. Also the activities a ty meade of total measure of effectiveness must be the sum of the effectiveness of each individual activity. Finiteness:Linear programming assumesthat! insupply andnumber of available alternatives are: maker is faced with an unlimited number : programming can no longer be used for findint Certainty : In all LP models, it is assumed that all model paren such as availability of resources, profit or cost contribution of a unit of decision variable and consumption of resources by a unit of decision variable must be known and may be constant. (iv) Divisibility : The solution values of decision variables are allowed to. assume continuous values. Variables which are not divisible, must be assigned integer values. Hence, if any of the variable can assume only integer values or are limited to discrete number of values, LP model is no longer applicable but an integer programming model may be applied to get the desired values. theresourcesare limited alsofinite. Ifadecision f alternatives linear ‘an optimal solution. wa 4.7 Avpuications oF LinEAR PROGRAMMING Linear programming is helpful in solving a variety of problems in finance, budgeting, investments, ete. The important applications of this technique are in the following areas : @ In Finance Sector : The technique of linear programming is very important in finance sector. A finance manager can use linear programming to make an optimum use of financial resources, In Industrial Sector: With thehelpoflinear programm , costseanbemininizedand productioncanbemaxiniced Theo ee are various constraints with a manufacturing concern b i li programming finds thebestsolution undor the provailnneoe oie ii) In Administrative Sector :In administrativeseetg en of linear programming can be used to yet the mace tee eehnique ‘To make the administrative work effective and eee eticiency. can choose the best method out of various nena ecient a manager In Defense Sector : The linear prog eee eal methods, Prvgramming can also be used i defense sector to make an o; pti i ‘Tien resources to get the goal, Ml Utilisation of limited defenst In Trade Sector : In trade sect be used very widely. With the het, re the linear of demand, price et be ma in (vi) In Transport Seetor ; Linear mn place in the determination oftray re ramming cost can be minimized with, the epetation cost of linea Gi (iv) ©) Programming rogramming estimati keeps an important The transportatic t. t Programming. Scanned with CamScanner1B LINEAR PROGRAMMING } ORMULATION AND GRAPHICAL METHOD 45 4.8 ADVANTAGES oF LiNEAR Proarammina It improves the quality of decisions. It indicates how the available Tesources can be used in a best way. Thus it ‘helps in attaining the optimum use of productive resources and manpower. It also ref] the drawbacks of the production Process. Linear Programming method allows th © modification of its mathematical solutions. 4.9 Limmrations or Linzar Pr OGRAMMING Besides the wide field of application in Practical situations, the linear programming technique fias certain limite ions as follows : 1. The linear Programming technique is applicable to that class of Applications only in which the objective function and the constraints oth involves iinear functions. F ‘tin many practical problems, it is Hot possible to express both jective function and the constraints in linear form, then this technique cannot be used. All practical | inear programming probl calculations and her » lems involve extensive nee requires the computations on computers., 8. Many times the decision variables may be required to have only integral values, while as LP. technique allows the solution variables to have any values, - In a linear Programming problem all the coefficients in the constraints and the objective functions must be completely known. constants, Contrary to it, ifsomeone of the coefficients are variables or random variables with certain probability, ' then linear “ programming technique cannot be used to solve the problem. 4.10 | Formutation As a Linear PRocRAMMING Problem: To formulate the linear Prog siven below, let us suppose % = Number of lots of product 1 produced per month 2 %, = Number of lots of product 2 produced per month 2 = Total profit per month from producing these two products where x, and x, are the decision variables for the model. gramming problem for the problem . Data for ABC Company Production time per lot (hours) |p a. available per month hours) Profit per lot Rs.) Scanned with CamScanner