Quantitative

methods for
business
Chapter 7: Linear Programming Models:
Graphical Methods
Learning Objectives
After completing this chapter, students will be able to:

1. Basic concepts and assumptions

2. Graphically solve any LP problem that has only two
variables by both the corner point and isoprofit line
methods
3. Understand special issues in LP such as infeasibility,
unboundedness, redundancy, and alternative
optimal solutions
4. Understand the role of sensitivity analysis
 Machinery, labor, money, time,
Introduction warehouse space, raw materials
MANGEMENT
DECISION

LINEAR
PROGRAMMING

mathematical
• A widely used
modeling technique designed to
help managers in planning and decision making
relative to resource allocation.

• Applied over the past 50 years.

 Steps in Formulating LP Problems
1. Completely understand the
Developing a mathematical model managerial problem being faced
to represent the managerial problem
2. Identify the objective and
constraints

3. Define the decision variables

4. Use the decision variables to

mathematical
write

expressions for the

objective function and the
constraints
 Requirements of LP Problems and
LP Basic Assumptions
Requirements
• 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.
 Requirements of LP Problems and
LP Basic Assumptions
Assumptions
• Proportionality - a change in a variable results in a proportionate change in that variable's
contribution to the value of the function.

• Non-negativity

• Divisibility (Continuity) - the decision variables can be divided into non-integer values,
taking on fractional values.

• Additivity - the function value is the sum of the contributions of each term.

• Certainty; that is, that the coefficients are known and constant.
MAXIMIZATION PROBLEM
 Example - Flair Furniture Company

The Flair Furniture Company produces inexpensive tables

and chairs. Processes are similar in that both require a
certain amount of hours of carpentry work and in the
painting and varnishing department
Each table takes 4 hours of carpentry and 2 hours of
painting and varnishing
Each chair requires 3 of carpentry and 1 hour of painting
and varnishing
There are 240 hours of carpentry time available and 100
hours of painting and varnishing per week.
Each table yields a profit of $70 and each chair a profit of
$50
What is the best combination of chairs and tables per week
to maximize profit?
 Example: Flair Furniture Company

1. Completely understand the  The objective is to

managerial problem being faced Maximize profit
 The constraints are
1. The hours of carpentry time used
2. Identify the objective and cannot exceed 240 hours per week
constraints 2. The hours of painting and
varnishing time used cannot
exceed 100 hours per week
 The decision variables representing the
3. Define the decision variables
actual decisions we will make are
T = number of tables to be produced per
week
4. Use the decision variables to
write mathematical expressions for C = number of chairs to be produced per
week
the objective function and the
constraints
 Example: Flair Furniture Company
 The company wants to determine the best
combination of tables and chairs to produce to
reach the maximum profit
HOURS REQUIRED TO
PRODUCE 1 UNIT
(T) (C) AVAILABLE HOURS
DEPARTMENT TABLES CHAIRS THIS WEEK
Carpentry 4 3 240
Painting and varnishing 2 1 100
Profit per unit $70 $50

 The complete problem stated mathematically

Maximize profit = $70T + $50C

subject to

4T + 3C ≤ 240 (carpentry constraint)

2T + 1C ≤ 100 (painting and varnishing constraint)
T, C ≥ 0 (nonnegativity constraint)
 Example: Flair Furniture Company

 The complete problem stated mathematically

Maximize profit = $70T + $50C

subject to

4T + 3C ≤240 (carpentry constraint)

2T + 1C ≤100 (painting and varnishing constraint)
T, C ≥ 0 (nonnegativity constraint)
 Graphical Representation of a Constraint
C

100 –
– This Axis Represents the Constraint T ≥ 0
80 –
Number of Chairs

–
First constraint: T, C ≥ 0
60 –
–
40 – This Axis Represents the
– Constraint C ≥ 0
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
subject to Number of Tables
(nonnegativity constraint)
40(carpentry constraint)
00(painting and varnishing constraint)
 Graphical Representation of a Constraint
C  Any point on or below the constraint plot will
not violate the restriction (feasible region)
100 –
 Any point above the plot will violate the
–
restriction (infeasible region)
80 –
Number of Chairs

–
60 –
Second constraint: 4T + 3C <= 240
–
(30, 40) (70, 40)
40 –
–
20 –
(30, 20) Graph of carpentry constraint equation
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
subject to Number of Tables
(nonnegativity constraint)
40(carpentry constraint)
00(painting and varnishing constraint)
 Graphical Representation of a Constraint
C

100 – (T = 0, C = 100)
–
80 – Graph of painting and varnishing
Number of Chairs

– constraint equation
60 –
– Third constraint: 2T + 1C <= 100
40 –
–
(T = 50, C = 0)
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
subject to Number of Tables
(nonnegativity constraint)
40(carpentry constraint)
00(painting and varnishing constraint)
 Graphical Representation of a Constraint
C  Feasible solution region for Flair Furniture

100 –
–
80 – Painting/Varnishing Constraint
Number of Chairs

–
Which points lie on the feasible region?
60 –
(a) T = 30, C=20
–
(b) T= 70, C=40
40 – (c) T = 50, C=5
–
Carpentry Constraint
20 – Feasible
Region
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
subject to Number of Tables
(nonnegativity constraint)
40(carpentry constraint)
00(painting and varnishing constraint)
 Graphical Representation of a Constraint
A feasible solution does not violate any of the
constraints:
For the point (30, 20)

Carpentry 4T + 3C ≤ 240 hours available


constraint (4)(30) + (3)(20) = 180 hours used
Painting 2T + 1C ≤ 100 hours available

constraint (2)(30) + (1)(20) = 80 hours used
 An infeasible solution violates at least one of the constraints:
For the point (70, 40)

Carpentry 4T + 3C ≤ 240 hours available

constraint (4)(70) + (3)(40) = 400 hours used

2T + 1C ≤ 100 hours available
Painting
constraint (2)(70) + (1)(40) = 180 hours used

subject to
(nonnegativity constraint)
40(carpentry constraint)
00(painting and varnishing constraint)
 Graphical Representation of a Constraint

• For the point (50, 5)

Carpentry 4T + 3C ≤ 240 hours available

constraint (4)(50) + (3)(5) = 215 hours used
Painting 2T + 1C ≤ 100 hours available
constraint (2)(50) + (1)(5) = 105 hours used 

subject to
0(nonnegativity constraint)
240(carpentry constraint)
100(painting and varnishing constraint)
 Graphical Solution Methods
ISOPROFIT METHOD
1. Graph all constraints and find the feasible region.
2. Select a specific profit (or cost) line and graph it to find the slope.
3. Move the objective function line in the direction of increasing profit
(or decreasing cost) while maintaining the slope. The last point it
touches in the feasible region is the optimal solution.
4. Find the values of the decision variables at this last point and
compute the profit (or cost).
Isoprofit Line Solution Method
C
 Isoprofit line at $2,100
100 –
–
80 –
Number of Chairs

–
60 –
–
(0, 42) $2,100 = $70T + $50C
40 –
–
(30, 0)
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Isoprofit Line Solution Method
C
 Four isoprofit lines
100 –
–
$3,500 = $70T + $50C
80 –
Number of Chairs

– $2,800 = $70T + $50C

60 –
– $2,100 = $70T + $50C
40 –
– $4,200 = $70T + $50C
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Isoprofit Line Solution Method
C  Optimal solution to the
100 – Flair Furniture problem
–
80 –
Maximum Profit Line
Number of Chairs

–
60 – Optimal Solution Point
– (T = 30, C = 40)
40 –
– $4,200 = $70T + $50C
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
 Graphical Solution Methods

CORNER POINT METHOD

1. Graph all constraints and find the feasible region.
2. Find the corner points of the feasible region.
3. Compute the profit (or cost) at each of the feasible corner points.
4. Select the corner point with the best value of the objective function
found in Step 3. This is the optimal solution.
Corner Point Solution Method
C  Four corner points of the
100 – feasible region
2 –
80 –
Number of Chairs

–
60 –
–
3
40 –
–
20 –
–
1 |– | | | | | | | | | | |
0 20 40
4 60 80 100 T
Number of Tables
 Corner Point Solution Method
To find the coordinates for Point accurately we have to
solve for the intersection of the two constraint lines
 Using the simultaneous equations method,
method we multiply
the painting equation by –2 and add it to the carpentry
equation
4T + 3C = 240 (carpentry line)
– 4T – 2C = –200 (painting line)
C = 40
 Substituting 40 for C in either of the original equations
allows us to determine the value of T
4T + (3)(40) = 240 (carpentry line)
4T + 120 = 240
T = 30
 Corner Point Solution Method

Point 1 : (T = 0, C = 0) Profit = $70(0) + $50(0) = $0

Point 2 : (T = 0, C = 80) Profit = $70(0) + $50(80) =
$4,000
4
Point : (T = 50, C = 0) Profit = $70(50) + $50(0) =
3
$3,500
Point : (T = 30, C = 40) Profit = $70(30) + $50(40) =
 Because
$4,100 Point 3 returns the highest profit, this is the
optimal solution
3
Using QM for Windows

 Computer screen for input of data

Using QM for Windows

 Computer screen for input of data

Using QM for Windows

 Computer screen for output of solution

Using Solver – Excel QM
 Slack and surplus

The term slack is used for the amount of a resource that is not used.
Slack = (Amount of resource available) – (Amount of resource
used)
Example:
If the company decided to produce 20 tables and 25 chairs instead of the optimal solution,
the amount of carpentry time used (4T + 3C) would be: 4(20) + 3(25) = 155
Slack time in carpentry = 240 – 155 = 85

The term surplus is used with greater-than-or-equal-to constraints to indicate the

amount of by which the right-hand-side of a constraint is exceeded.
Surplus = (Actual amount) – (Minimum amount)
Example:
If there is a constraint requiring the total numbers of chairs and tables combined to be at
least 42 units.
For the optimal solution (30,40): the surplus would be: 70-42 = 28
MINIMIZATION PROBLEM
Solving Minimization Problems

• Minimizing an objective such as cost instead of

maximizing a profit function
• Minimization problems can be solved graphically by
first setting up the feasible solution region and then
using
• the corner point method
• or an isocost line approach
Holiday Meal Turkey Ranch
The Holiday Meal Turkey Ranch is considering buying two different brands of turkey feed and blending them to provide a good, low-cost diet for its turkeys. Each
feed contains, in varying proportions, some or all of the three nutritional ingredients (A, B, and C) essential for fattening turkeys: at least 90 ounces, 48 ounces,
and 1.5 ounces for ingredients A, B, and C respectively.
•Each pound of brand 1 purchased, for example, contains 5 ounces of ingredient A, 4 ounces of ingredient B, and 0.5 ounces of ingredient C.
•Each pound of brand 2 contains 10 ounces of ingredient A, 3 ounces of ingredient B, but no ingredient C.
•The brand 1 feed costs 2 cents a pound, while the brand 2 feed costs 3 cents a pound.
What is the lowest-cost combination diet that meets the minimum monthly intake requirement for each
nutritional ingredient?
Holiday Meal Turkey Ranch
 Holiday Meal Turkey Ranch data

COMPOSITION OF EACH POUND

OF FEED (OZ.)
MINIMUM MONTHLY
REQUIREMENT PER
INGREDIENT BRAND 1 FEED BRAND 2 FEED TURKEY (OZ.)
A 5 10 90
B 4 3 48
C 0.5 0 1.5
Cost per pound 2 cents 3 cents
Holiday Meal Turkey Ranch

Let
X1 = number of pounds of brand 1 feed purchased
X2 = number of pounds of brand 2 feed purchased
Minimize cost (in cents) = 2X1 + 3X2

subject to:
5X1 + 10X2 ≥ 90 ounces (ingredient constraint A)
4X1 + 3X2 ≥ 48 ounces (ingredient constraint B)
0.5X1 ≥ 1.5 ounces (ingredient constraint C)
X1 ≥ 0 (nonnegativity constraint)
X2 ≥ 0 (nonnegativity constraint)
 • Using the corner point method
Holiday Meal Turkey Ranch • First we construct the feasible solution
region
• The optimal solution will lie at on of the
corners as it would in a maximization
problem
X2
–
• Point a is the intersection
of ingredient constraints
20 – Ingredient C Constraint
C and B
4X1 + 3X2 = 48
X1 = 3 Pounds of Brand 2 15 – Feasible Region
Substituting 3 in the first a
equation, we find X2 = 12 10 –
• Solving for point b with Ingredient B Constraint
basic algebra we find X1 =
5– b Ingredient A Constraint
8.4 and X2 = 4.8
• Solving for point c we | | | | c | |
find X1 = 18 and X2 = 0 0–
5 10 15 20 25 X1
Pounds of Brand 1
Holiday Meal Turkey Ranch
• Substituting these value back into the objective function we
find

Cost = 2X1 + 3X2

Cost at point a = 2(3) + 3(12) = 42
Cost at point b = 2(8.4) + 3(4.8) = 31.2
Cost at point c = 2(18) + 3(0) = 36

 The lowest cost solution is to purchase 8.4

pounds of brand 1 feed and 4.8 pounds of brand 2
feed for a total cost of 31.2 cents per turkey
 Holiday Meal Turkey Ranch

• Using the isocost X2

approach –
Feasible Region
• Choosing an initial
cost of 54 cents, it is 20 –

clear improvement is
possible Pounds of Brand 2 15 – 54
¢=
Dir 2X
ctie 1 +
3X
on 2 Is
10 – of oco
31 D e st
.2¢ cre Li n
=2 asi e
X ng
1 + Co
5– 3X st
2

(X1 = 8.4, X2 = 4.8)

| | | | | |
0–
5 10 15 20 25 X1
Pounds of Brand 1
Holiday Meal Turkey Ranch

• QM for Windows can also be used to solve the Holiday Meal

Turkey Ranch problem
Holiday Meal Turkey Ranch
• Setting up Solver to solve the Holiday Meal Turkey Ranch
problem
Holiday Meal Turkey Ranch
• Solution to the Holiday Meal Turkey Ranch problem using
Solver
 Four Special Cases in LP
• No feasible solution (1/4)
• Exists when there is no solution to the problem that
satisfies all the constraint equations
X 2
X1 + 2X2 <= 6
2X1 + X2 <= 8
X1 >=7
8–
X1, X2, >=0
–
6–
– Region Satisfying
4– Third Constraint
–
2–
–
0– | | | | | | | | | |
2 4 6 8 X1
Region Satisfying First Two Constraints
Four Special Cases in LP
• Unboundedness (2/4)
• In a maximization problem, one or more solution variables, and
the profit, can be made infinitely large without violating any
constraints
• In a graphical solution, the feasible region will be open ended
• This usually means the problem has been formulated improperly
X2 Maximize profit = $3X1 + $5X2
X1 >= 5
X2 <=10
X1 ≥ 5 X1 + 2X2 >=10
15 – X1, X2 >= 0
X2 ≤ 10
10 –

Feasible Region
5–
X1 + 2X2 ≥ 15
| | | | |
0– 5 10 15 X1
Four Special Cases in LP
• Redundancy (3/4)
• A redundant constraint is one that does not affect the feasible
solution region
• Eliminating redundant constraints simplifies the model.
X2

30 –

25 –
2X1 + X2 ≤ 30
Maximize profit = $1X1 + $2X2
20 –
X1 + X2 <= 20 Redundant
2X1 + X2 <=30 Constraint
X1 <= 25 15 –
X1 ≤ 25
X1, X2 >= 0
10 – X1 + X2 ≤ 20
Feasible
5– Region

| | | | | |
0–
5 10 15 20 25 30 X1
Four Special Cases in LP
• Alternate Optimal Solutions (4/4)
• Occasionally two or more optimal solutions may exist
• Allow management great flexibility in deciding which combination to
select as the profit is the same at each alternate solution.
X2

8–

7–
A
Maximize profit = $3X1 + $2X2 6– Optimal Solution Consists of All
6X1 + 4X2 <= 24 Combinations of X1 and X2 Along the AB
5–
X1 <= 3 Segment
X1, X2 >= 0 4–

3– Isoprofit Line for $8

2–
B Isoprofit Line for $12 Overlays
1 – Feasible Line Segment AB
Region
0– | | | | | | | |
1 2 3 4 5 6 7 8 X1
 Sensitivity Analysis

• Sensitivity analysis is used to determine effects on the

optimal solution within specified ranges for
1. The objective function coefficients,
2. Constraint coefficients,
3. Right hand side (RHS) values.

• Sensitivity analysis provides answers to certain what-if

questions.
• What if the profit on product 1 increases by 10%?
• What if less money available in the advertising budget constraint?
• What if new technology will allow a product to be wired in one-third
the time it used to take?
Sensitivity Analysis
• The High Note Sound Company graphical solution
Maximize profit = $50X1

+ $120X2
Subject to 2X1
X2
(receivers) + 4X2
60 – ≤ 80
– Optimal Solution at Point a (hours of
X1 = 0 CD Players electrician’s time
40 – available)
X2 = 20 Receivers
3X1
a = (0, 20) – Profits = $2,400
b = (16, 12)
+ 1X2
20 –
Isoprofit Line: $2,400 = 50X1 + 120X2
≤ 60
10 –
| | | | | | (hours of audio
0–
10 20 30 40 50 60 X1 technician’s time
c = (20, 0) (CD players) available)
Sensitivity Analysis
1/3 Changes in the Objective Function Coefficient
• What if a technical breakthrough help raise the profit per receiver (X2) from $120 to $150?
• What if the coefficient for X2 is only $80?

X2

40 –
Profit per receiver (X2) Profit Line for 50X1 + 80X2
increased from $120 to (Passes through Point b)
$150, the solution at
30 –
point a (0, 20) is still
Profit Line for 50X1 + 120X2
optimal because the Optimal
(Passes through Point a)
lines still pass through point
20 – b
point a. The new profit
a Profit Line for 50X1 + 150X2
= 0($50) + 20($150) =
(Passes through Point a)
$3000 10 –

c
| | | | | |
0– 10 20 30 40 50 60 X1
If X2’s profit coefficient is now only $80, the slope of the profit line changes enough to cause
a new corner point b (16,12) to become optimal. The profit = 16($50) + 12($80) = $1760
 2/3- Changes in the Technological Coefficients
• Reflect changes in the state of technology  If fewer or more resources are
needed to produce a product such as a CD player or receiver, coefficients in
the constraint equations will change.
• These changes will have no effect on the objective function, but it can
produce a significant change in the shape of the feasible region may
cause a change in the optimal solution

(a) Original Problem (b) Change in Circled (c) Change in Circled

Coefficient Coefficient
X2 X2 X2
Fewer hrs of
60 – 60 – technicians for a CD 60 –
Stereo Receivers

3X1 + 1X2 ≤ 60 2 X1 + 1X2 ≤ 60 3X1 + 1X2 ≤ 60

40 – 40 – 40 – More hrs of
Optimal Still Optimal
Solution Optimal Solution
electricians
a a
20 – 20 – d 20 – for a
b 16 f g 2Xreceiver
2X1 + 4X2 ≤ 80 2X1 + 4X2 ≤ 80 1 + 5 X2 ≤ 80

|c | | | e | | | |c | |
0– 20 40 X1 0– 20 30 40 X1 0– 20 40 X1
CD Players
3/3 Changes in Resources or Right-Hand-Side
Values

• The right-hand-side values of the constraints often represent resources

available to the firm
• Reflect how much should be paid for additional resources and how much
more of a resource would be useful.
• If the right-hand side of a constraint is changed, the feasible region will
change (unless the constraint is redundant)  Often the optimal solution
will change
• The amount of change in the objective function value that results from a unit
change in one of the resources available is called the dual price or dual value
• The dual price is relevant only within limits.
3/3 Changes in Resources or Right-Hand-Side Values
Changes in the Electrician's Time for High Note Sound
X2 (a)

60 – If the available electricians’ hours are increased from 80 to 100

hours, the new optimal solution is at point a (0,25) and the
profit = 0($50) + 25($120) = $3000

40 – Constraint Representing 60 Hours of Audio

Technician’s Time Resource
a
25 –
b Changed Constraint Representing 100 Hours of
20 – Electrician’s Time Resource

| c | | |
0– 20 40 50 60 X1
The extra 20 hours of time resulted in an increase in profit of $600 = $3000 - $2400 or $30
per hour.
3/3 Changes in Resources or Right-Hand-Side Values
Changes in the Electrician's Time for High Note Sound

X2 (b)

60 – If the available electricians’ hours are reduced from 80 to 60

hours, the new optimal solution is at point a (0,15) and the
profit is $1800.

40 – Constraint Representing 60 Hours of Audio

Technician’s Time Resource

Changed Constraint Representing 60 Hours of

20 – a Electrician’s Time Resource
15 –
b
c | | | |
0– 20 30 40 60 X1
The reduced 20 hours of time resulted in an decrease in profit of $600 = $2400 - $1800 or
$30 per hour. This $30 per hour change in profit that results from a change in the hours
available is called dual price or dual value.
3/3 Changes in Resources or Right-Hand-Side Values
Changes in the Electrician's Time for High Note Sound
X2 (c)

60 – Changed Constraint Representing 240 Hours of

Electrician’s Time Resource

40 –

Constraint
Representing
60 Hours of Audio
20 – Technician’s
Time Resource

| | | | | |
0– 20 40 60 80 100 120
X1
If the total hours of electrician times were 240 hours, the optimal solution would
be (0, 60) and the profit would be $7200. Again, this is an increase of $30 profit per
hour (the dual price) for each 160 hours that were added to the original amount.
HOMEWORK

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