Operations Research
(OR):
Linear Programming
Prepared by
May G. Tamala
2-1
Operations Research
A scientific approach to decision making,
which seeks to determine how to optimally
design and operate a system, usually under
conditions requiring the allocation of
scarce resources.
2-2
Major Phases of OR
I. Problem Description
II. Model Construction
III. Model Solution
IV. Analysis of the Results
V. Implementation
2-3
Linear Programming: An Overview
Objectives of business decisions frequently involve maximizing
profit or minimizing costs.
Linear programming uses linear algebraic relationships to
represent a firm’s decisions, given a business objective, and
resource constraints.
Steps in application:
1. Identify problem as solvable by linear programming.
2. Formulate a mathematical model of the unstructured problem.
3. Solve the model.
4. Testing the model and refine as needed
5. Implementation
2-4
Model Components
Decision variables - mathematical symbols representing levels
of activity of a firm.
Objective function - a linear mathematical relationship
describing an objective of the firm, in terms of decision variables
- this function is to be maximized or minimized.
Constraints – requirements or restrictions placed on the firm by
the operating environment, stated in linear relationships of the
decision variables.
Parameters - numerical coefficients and constants used in the
objective function and constraints.
2-5
Summary of Model Formulation Steps
Step 1 : Clearly define the decision variables
Step 2 : Construct the objective function
Step 3 : Formulate the constraints
2-6
Characteristics of Linear Programming Problems
A decision amongst alternative courses of action is required.
The decision is represented in the model by decision variables.
The problem encompasses a goal, expressed as an objective
function, that the decision maker wants to achieve.
Restrictions (represented by constraints) exist that limit the
extent of achievement of the objective.
The objective and constraints must be definable by linear
mathematical functional relationships.
2-7
Advantages of Linear Programming Model
It helps decision - makers to use their productive resource
effectively.
The decision-making approach of the user becomes more
objective and less subjective.
In a production process, bottle necks may occur. For example, in
a factory some machines may be in great demand while others
may lie idle for some time. A significant advantage of linear
programming is highlighting of such bottle necks.
2-8
LP Model Formulation
A Maximization Example (1 of 4)
Product mix problem - Beaver Creek Pottery Company
How many bowls and mugs should be produced to maximize
profits given labor and materials constraints?
Product resource requirements and unit profit:
Resource Requirements
Labor Clay Profit
Product
(Hr./Unit) (Lb./Unit) ($/Unit)
Bowl 1 4 40
Mug 2 3 50
2-9
LP Model Formulation
A Maximization Example (2 of 4)
2-10
LP Model Formulation
A Maximization Example (3 of 4)
Resource 40 hrs of labor per day
Availability: 120 lbs of clay
Decision x1 = number of bowls to produce per day
Variables: x2 = number of mugs to produce per day
Objective Maximize Z = $40x1 + $50x2
Function: Where Z = profit per day
Resource 1x1 + 2x2 40 hours of labor
Constraints: 4x1 + 3x2 120 pounds of clay
Non-Negativity x1 0; x2 0
Constraints:
2-11
LP Model Formulation
A Maximization Example (4 of 4)
Complete Linear Programming Model:
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x 1, x 2 0
2-12
Feasible Solutions
A feasible solution does not violate any of the constraints:
Example: x1 = 5 bowls
x2 = 10 mugs
Z = $40x1 + $50x2 = $700
Labor constraint check: 1(5) + 2(10) = 25 < 40 hours
Clay constraint check: 4(5) + 3(10) = 70 < 120 pounds
2-13
Infeasible Solutions
An infeasible solution violates at least one of the
constraints:
Example: x1 = 10 bowls
x2 = 20 mugs
Z = $40x1 + $50x2 = $1400
Labor constraint check: 1(10) + 2(20) = 50 > 40 hours
2-14
Graphical Solution of LP Models
Graphical solution is limited to linear programming models
containing only two decision variables (can be used with three
variables but only with great difficulty).
Graphical methods provide visualization of how a solution for
a linear programming problem is obtained.
Graphical methods can be classified under two categories:
1. Iso-Profit(Cost) Line Method
2. Extreme-point evaluation Method.
2-15
Coordinate Axes
Graphical Solution of Maximization Model (1 of 12)
X2 is mugs
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
X1 is bowls
Figure 2.2 Coordinates for Graphical Analysis
2-16
Labor Constraint
Graphical Solution of Maximization Model (2 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.3 Graph of Labor Constraint
2-17
Labor Constraint Area
Graphical Solution of Maximization Model (3 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.4 Labor Constraint Area
2-18
Clay Constraint Area
Graphical Solution of Maximization Model (4 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.5 Clay Constraint Area
2-19
Both Constraints
Graphical Solution of Maximization Model (5 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.6 Graph of Both Model Constraints
2-20
Feasible Solution Area
Graphical Solution of Maximization Model (6 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.7 Feasible Solution Area
2-21
Objective Function Solution = $800
Graphical Solution of Maximization Model (7 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.8 Objection Function Line for Z = $800
2-22
Alternative Objective Function Solution Lines
Graphical Solution of Maximization Model (8 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.9 Alternative Objective Function Lines
2-23
Optimal Solution
Graphical Solution of Maximization Model (9 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.10 Identification of Optimal Solution Point
2-24
Optimal Solution Coordinates
Graphical Solution of Maximization Model (10 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.11 Optimal Solution Coordinates
2-25
Extreme (Corner) Point Solutions
Graphical Solution of Maximization Model (11 of 12)
Maximize Z = $40x1 + $50x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.12 Solutions at All Corner Points
2-26
Optimal Solution for New Objective Function
Graphical Solution of Maximization Model (12 of 12)
Maximize Z = $70x1 + $20x2
subject to: 1x1 + 2x2 40
4x2 + 3x2 120
x1, x2 0
Figure 2.13 Optimal Solution with Z = 70x1 + 20x2
2-27
The Diet Problem
2-28
The Diet Problem
2-29
Production Process Model
2-30
Production Process Model
2-31
Inventory Model
2-32
Inventory Model
2-33
Multiperiod Financial Model
2-34
