QUAN T IT A T IV E

METHODS F O R C O S T
ACCOUNTS
PRO FIT M AXIMIZA TION
RA MM ING TE CHN IQ UES FOR
TOPIC:-LINEAR PROG
 # INTRODUCTION
Many management decisions involve trying to make the most effective use of
organizations' resource
Resources typically include machinary, Labour, money, time, warehouse space or raw
materials
Resources may be used to produced products ( such as machinery, furniture, food or
clothing ) or Services ( such as schedules for shipping & productions, advertising policies
or investment decisions )
Linear programming (LP) is widely used mathamatics technique designed to help
managers in planning & decision making relative to resource allocation
Despite the name linear programming & the more general category of techniques called “
mathamaticle programming” have very little to do with computer programming
• In the world of operations research programing refers to modeling and solving a
problem mathamatically
# MEANING
Linear programming (LP), also called linear optimization, is a method to achieve the best
outcome such as maximum profit or lowest cost in a mathematical model whose
requirements are represented by linear relationships. Linear programming is a special case
of mathematical programming that is called as Linear programming

(also known as mathematical optimization)

# DEFINATION
According to “ William M Fox “ defines
“ Linear programming is a planning technique that permits some objective functions
to minimized or maximized within the framework of given situational restrictions “
#. PROFIT MAXIMIZATION MEANING
Profit maximization means increasing profits by the business firms using a
proper strategy to equal marginal revenue and marginal cost that is called
profit maximization

# LINEAR PROGRAMMING TECHNIQUES FOR

PROFIT MAXIMIZATION
Linear programming is a mathematical technique used to optimize (maximize or
minimize) a linear objective function, subject to a set of linear constraints. When it
comes to profit maximization, linear programming can be a powerful tool for businesses
to determine the optimal allocation of resources and make informed decisions.
# Here are the steps involved in applying linear
programming techniques for profit maximization:
1. Define the Decision Variables

2. Formulate the Objective Function

3. Specify the Constraints

4. Model the Constraints

5. Solve the Linear Programming Problem

6. Interpret the Results

1) Define the Decision Variables:
2)
Identify the key variables that affect the profitability of your business. These variables could
include the quantity of products to produce, the amount of resources to allocate, or the
pricing strategy to adopt

2) Formulate the Objective Function:

Define an objective function that represents your profit or revenue. This function should
be linear and express the relationship between the decision variables and the profit.
For example, if you’re maximizing profit, the objective function might be to maximize
the total revenue minus the total cost.
3) Specify the Constraints:

Identify the constraints that limit the feasible solutions. These constraints can be related
to resource availability, production capacity, market demand, or any other relevant
factors. Ensure that the constraints are expressed as linear inequalities or equalities.

4) Model the Constraints:

Translate the constraints into mathematical equations using the decision variables.
Each constraint should be expressed as a linear equation or inequality. For example,
if you have a constraint on the availability of a resource, such as labor or raw
materials, you need to define an equation that represents the relationship between
the decision variables and the resource availability.
5) Solve the Linear Programming Problem:

Use an appropriate optimization algorithm or software to solve the linear

programming problem. The objective is to find the values of the decision variables
that maximize the objective function while satisfying all the constraints. The algorithm
will search for the optimal solution within the feasible region.

6) Interpret the Results:

Once the linear programming problem is solved, analyze the results to understand
the optimal values of the decision variables and the corresponding maximum profit.
This information can help you make informed decisions about resource allocation,
production levels, pricing strategies, and other factors that affect profitability
For example : 2x+5y

x+2y≤16
5x+3y≤45
x,y≥0

X,Y Decision Variables

They tell us what quantity to buy, produce, sale, transport and so on

2x + 5 y are objectives

Which going to maximize LP lead the maximise or minimise the objective

Constraints
x+2y≤16 …………C1
5x+3y≤45 …………C2
x,y≥0
Showing model graphically we begin by finding point that the satisfy the
constraints line
Since this constraints line less
than or equal to constraints their
will be satisfy in the region below
the line towards the origin,
therefore the region satisfy both
simultaneously one so that is
called as Feasible Region, so that
is any point in this region is the
feasible solution
In particular the optimal best
solution will occurs at extreem
point or corner point of the feasible
region
To decide which corner is optimal
we will find the cordinate of the
point plug them into the objective
function and choose the best
Optimal solution of the corner finds best results of objective
function Objective function is to maximise 2x + 5 y
Here we know point 2 is provided highest value OFV= 40 of the objective
function And that area is to consider the profit maximization
Conclusion :

It’s worth noting that linear programming assumes linearity in both the objective
function and constraints. In practice, this may not always hold true, but linear
programming can still provide useful approximations and insights for profit
maximization problems. If non-linear relationships exist, more advanced optimization
techniques, such as non-linear programming, may be required
 Thank you
“We must stand on our own feet and fight as best
as we can for our rights. So carry on your
agitation and organize your forces. Power and
prestige will come to you through struggle”