Linear Programming
Linear Programming
Linear Programming
Programming
Linear Programming
The
technique
was
developed
by
the
and
extended
by
the
American
is expanding
quickly
involving
the
solve
complex
optimal
use
problems
of
many
However,
In economic theory the optimal solution is
Constraints
Technical (or functional) constraints, and
Non-negativity constraints.
The technical constraints are set by the state of
technology and the availability of factors of
production.
There
are
many
technical
constraints as the factors of production
They express the fact that the quantities of factors
which will be absorbed in the production of the
commodities cannot exceed the available
quantities of these factors. Thus, in our problem
X 0;Y 0
Z = 2X + 1Y
X 0; Y 0
(non-negativity constraints)
In linear programming the optimal solution is defined
by examining the set of possible alternatives solutions
and eliminating gradually the sub optimal ones until
the optimal is reached.
10
determination
of
the region of
feasible solutions,
Graphical
determination
of
the
objective
function, and
Determination of the optimal solution.
11
Y
x unitprofit ofx 2
2
X
y unitprofit ofy 1
13
14
Shadow Prices
Reference:
Koutsoyiannis,
Microeconomics,
London
A.
(1979),
Modern
Macmillan Press Ltd.,
17