Quantitative Analysis for Management

Fourteenth Edition

Chapter 7
Linear Programming
Models: Graphical and
Computer Methods

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Learning Objectives
After completing this chapter, students will be able to:

7.1 Identify the basic assumptions and properties of linear programming (L P).

7.2 Formulate a linear programming problem algebraically.

7.3 Graphically solve any LP problem that has only two variables by both the
corner point and isoprofit line methods.

7.4 Use Excel spreadsheets to solve LP problems.

7.5 Understand the difference between minimization and maximization

objective functions.

7.6 Understand special issues in LP such as infeasibility, unboundedness,

redundancy, and alternative optimal solutions.

7.7 Understand the role of sensitivity analysis.

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Requirements of a Linear Programming
Problem
• Linear programming (LP)
– Mathematical modeling technique
– Resource allocation—product mix
• Four properties in common
– Maximize or minimize some quantity (the objective
function)
– Restrictions or constraints are present
– Alternative courses of action are available
– Linear equations or inequalities

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LP Properties and Assumptions
Table 7.1 LP Properties and Assumptions of Linear Programs
Properties of Linear Programs
1. One objective function
2. One or more constraints
3. Alternative courses of action
4. Objective function and constraints are linear—proportionality and
divisibility
5. Certainty
6. Divisibility
7. Nonnegative variables
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Formulating LP Problems
Steps in formulating a LP problem
1. Identify the objective and the constraints
2. Define the decision variables
3. Write mathematical expressions for the objective
function and the constraints in terms of the decision
variables

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Flair Furniture Company (1 of 3)
• Product mix problem
• Maximize profit based on combination of two products
• Limited resources available
Table 7.2 Flair Furniture Company Data
Hours Required to Hours Required to
Produce 1 Unit Produce 1 Unit Available Hours this
Department Tables (T) Chairs (C) Week
Carpentry 4 3 240

Painting and varnishing 2 1 100

Blank

Profit per unit $70 $50

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Flair Furniture Company (2 of 3)

Create objective function in terms of T and C where:

T = Number of Tables
C = Number of Chairs

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Flair Furniture Company (2 of 3)
• Create objective function in terms of T and C

Maximize profit = $70T + $50C

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 Flair Furniture Company (3 of 3)
• Create objective function in terms of T and C

Maximize profit = $70T + $50C

• Develop mathematical relationships for the two constraints
– For carpentry, total time used is lower or equals 240 hours

– For painting and varnishing, total time used is lower or equals 100

– Values for T and C must be nonnegative

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Flair Furniture Company (3 of 3)
• Create objective function in terms of T and C

Maximize profit = $70T + $50C

• Develop mathematical relationships for the two constraints
– For carpentry, total time used is
4T  3C 240 (hours of carpentry time available)
– For painting and varnishing
2T  1C 100 (hours painting and varnishing time)
– Values for T and C must be nonnegative
T ,C 0

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Linear Programming Model

Maximize profit = $70T + $50C

Subject to:
4T  3C 240
2T  1C 100
T ,C 0

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Solve the Model

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Graphical Representation of Constraints (1 of 7)

Figure 7.1 Quadrant Containing • Works with just two decision

All Positive Values variables
• Provides valuable insight into
how other approaches work

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Graphical Representation of Constraints (2 of 7)

• Plot each constraint equation on a graph

• Graph the equality portion of the constraint equations

4T + 3C = 240

Easiest way to plot 4T + 3C = 240 is to set T = 0 and solve

for C; then set C = 0 and solve for T. Then connect these
two points with a straight line.

4(0)  3C 240  C = 80 when T = 0

4T  3(0) 240  T = 60 when C = 0

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Graphical Representation of Constraints (3 of 7)

Figure 7.2 Graph of Carpentry Constraint Equation 4T + 3C = 240

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Graphical Representation of Constraints (4 of 7)

Figure 7.3 Region That Satisfies • Any point on or below the

the Carpentry Constraint constraint plot will not violate
the restriction
• Any point above the plot will
violate the restriction

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Graphical Representation of Constraints (5 of 7)

Figure 7.4 Region That Satisfies the Painting and Varnishing

Constraint 2T  1C 100

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Graphical Representation of Constraints (6 of 7)

• To produce tables and chairs, both departments must be

used
• Find a solution that satisfies both constraints
simultaneously
• A new graph shows both constraint plots
• The feasible region is where all constraints are satisfied
– Any point inside this region is a feasible solution
– Any point outside the region is an infeasible solution

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Graphical Representation of Constraints (7 of 7)

Figure 7.5 Feasible Solution Region for Test these combinations:

the Flair Furniture Company Problem
T = 30, C = 20
T = 70, C = 40
T = 50, C = 5

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Isoprofit Line Solution Method (1 of 5)
• Find the optimal solution from the many possible
solutions
• Speediest method is to use the isoprofit line
• Starting with a small possible profit value, graph the
objective function
• Move the objective function line in the direction of
increasing profit while maintaining the slope
• The last point it touches in the feasible region is the
optimal solution

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Isoprofit Line Solution Method (2 of 5)
• Choose a profit of $2,100
• The objective function is

$2,100 = 70T + 50C

• Solving for the axis intercepts, draw the graph

• Obviously not the best possible solution
• Further graphs can be created using larger profits
– The further we move from the origin, the larger the profit
• The highest profit ($4,100) will be generated when the i soprofit line
passes through the point (30, 40)

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Isoprofit Line Solution Method (3 of 5)
Figure 7.6 Profit Line of $2,100 Plotted for the Flair Furniture Company

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Isoprofit Line Solution Method (4 of 5)
Figure 7.7 Four Isoprofit Lines Plotted for the Flair Furniture Company

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Isoprofit Line Solution Method (5 of 5)
Figure 7.8 Optimal Solution to the Flair Furniture Problem

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Corner Point Solution Method (1 of 3)
• Solve for the intersection of the two constraint lines
• Using the elimination method to solve simultaneous
equations method, select a variable to be eliminated
• Eliminate T by multiplying the second equation by  2
and add it to the first equation
 2 2T  1C 100   4T  2C  200

4T  3C  240 carpentry 
 4T  2C  200 painting
C 40
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Corner Point Solution Method (2 of 3)
Figure 7.9 Four Corner Points of • Evaluate the objective function
the Feasible Region at every corner point of the
feasible region
• An optimal solution must lie at
one of the corner points or
extreme points

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Corner Point Solution Method (3 of 3)
• Substitute C = 40 into either equation to solve for T
4T  3 40   240
4T  120  240
4T 120
T  30 Thus, the corner point is (30, 40)
Table 7.3 Feasible Corner Points and Profits for Flair Furniture

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Slack and Surplus (1 of 2)
• Slack is the amount of a resource that is not used
– For a less-than-or-equal constraint
Slack (Amount of resource available)  (Amount Used)

– Ex. Flair decides to produce 20 tables and 25 chairs

240 = hours carpentry time available
4(20)  3(25) 155 hours carpentry time used
240  155 85 hours slack in carpentry

At the optimal solution, slack is 0 as all 240 hours are used

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Slack and Surplus (2 of 2)
• Surplus is used with a greater-than-or-equal-to constraint
to indicate the amount by which the right-hand side of the
constraint is exceeded
Surplus  Actual amount   Minimum amount 

– New constraint
T  C  42

– If T = 20 and C = 25, then

20 + 25 = 45
Surplus  45  42  3
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Summaries of Graphical Solution
Methods (1 of 2)
Table 7.4 Summaries of Graphical Solution Methods

Isoprofit Line 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).

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Summaries of Graphical Solution
Methods (2 of 2)
Table 7.4 [continued]
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.

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Using Excel’s Solver (1 of 7)
1. Enter problem data
– Variable names, coefficients for the objective function
and constraints, RHS values for each constraint
2. Designate specific cells for the values of the decision
variables
3. Write a formula to calculate the value of the objective
function
4. Write a formula to compute the left-hand sides of each
of the constraints

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Using Excel’s Solver (2 of 7)
Program 7.2A Excel Data Input for Flair Furniture Example

Program 7.2B Formulas for Flair Furniture Example

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Using Excel’s Solver (3 of 7)
Program 7.2C Excel Spreadsheet for Flair Furniture
Example

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Using Excel’s Solver (4 of 7)
Program 7.2D Starting Solver in Excel

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Using Excel’s Solver (5 of 7)
Program 7.2E Solver Parameters Dialog Box

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Using Excel’s Solver (6 of 7)
Program 7.2F Solver Add Constraint Dialog Box

Program 7.2G Solver Results Dialog Box

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Using Excel’s Solver (7 of 7)
Program 7.2H Flair Furniture Solution Found by Solver

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Holiday Meal Turkey Ranch (1 of 8)
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
Table 7.5 Holiday Meal Turkey Ranch data
Composition of Each Composition of Each Minimum Monthly
Pound of Feed (OZ.) Pound of Feed (OZ.) 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
Blank

Cost per 2 cents 3 cents

pound

This is a minimization problem—low cost is the objective.

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Holiday Meal Turkey Ranch (2 of 8)
• Let
X1  number of pounds of brand 1 feed purchased

X 2  number of pounds of brand 2 feed purchased

Minimize cost in cents   2 X1  3 X 2

subject to:
5 X1 + 10 X 2  90 ounces (ingredient A constraint)
4 X1 + 3 X 2  48 ounces (ingredient B constraint)
0.5 X1 1.5 ounces (ingredient C constraint)
X1  0 (nonnegativity constraint)
X 2 0 (nonnegativity constraint)
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Holiday Meal Turkey Ranch (3 of 8)
Figure 7.10 Feasible Region for the Holiday Meal Turkey Ranch
Problem

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Holiday Meal Turkey Ranch (4 of 8)
• Solve for the values of the three corner points
– Point a is the intersection of ingredient constraints C
and B
4 X1  3 X 2  48

X1  3

– Substituting 3 in the first equation, we find X 2 12

– Solving for point b we find X1  8.4 and X 2  4.8
– Solving for point c we find X1 18 and X 2  0

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Holiday Meal Turkey Ranch (5 of 8)
• Substituting these values back into the objective function
we find
Cost  2 X1  3 X 2
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
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Holiday Meal Turkey Ranch (6 of 8)
Figure 7.11 Graphical Solution to the • Move the isocost line
Holiday Meal Turkey Ranch Problem down and left.
Using the Isocost Line
• The last feasible point
touched is optimal.

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Holiday Meal Turkey Ranch (7 of 8)
Program 7.4 Solution to the Holiday Meal Turkey Ranch
Problem in QM for Windows

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Holiday Meal Turkey Ranch (8 of 8)
Program 7.5A Excel Solution for Holiday Meal Turkey Ranch Problem

• Program 7.5B Excel Solution showing formulas for Holiday Meal Turkey
Ranch Problem

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Four Special Cases in LP
• Four special cases and difficulties arise at times when
using the graphical approach
1. No feasible solution
2. Unboundedness
3. Redundancy
4. Alternate optimal solutions

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No Feasible Solution
• A common occurrence in Figure 7.12 A problem with
the real world no feasible solution
• No solution satisfies all
the constraints
• Generally, one or more
constraints are relaxed

X1  2 X 2  6
2X 1  X 2  8
X1  7

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Unboundedness
• Sometimes a linear Figure 7.13 A Feasible Region
program will not have a That Is Unbounded to the Right
finite solution
• In a maximization
problem, the profit, can
be made infinitely large
without violating any
constraints
• Usually means the
problem has been
formulated improperly
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Redundancy
• A redundant constraint is Figure 7.14 Example of a
one that does not affect Redundant Constraint
the feasible solution
region, eliminating it
simplifies the model
• One or more constraints
may be binding
• Very common
occurrence in the real
world

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Alternate Optimal Solutions
• Occasionally, two or more Figure 7.15 Example of
optimal solutions may exist Alternate Optimal Solutions
• Graphically, this occurs
when the objective
function’s isoprofit or isocost
line runs perfectly parallel to
one of the constraints
• Allows management great
flexibility in selecting
solutions

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Sensitivity Analysis
• One assumption using LP is certainty, but real-world
conditions are dynamic
• Analyze how sensitive a deterministic solution is to
changes in the assumptions of the model
• Sensitivity analysis (or postoptimality analysis, parametric
programming, optimality analysis) determine how
sensitive a solution is to changes.
• Can be conducted with trial and error or Excel sensitivity
report.

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High Note Sound Company (1 of 3)
• The company manufactures quality speakers and stereo
receivers
• Products require a certain amount of skilled artisanship which
is in limited supply
• Product mix LP model

Maximize profit = $50X 150 dollars X sub 1.

 $120X 2Plus 120 dollars X sub 2. blank Blank

subject to  4X 2  80 (hours of electricians’ time

2 X sub 1. Plus 4 X sub 2. Less than or equal to 80.

2X1
available)

 1X 2  60 (hours of audio technicians’

Blank 3 X sub 1. Plus 1 X sub 2. Less than or equal to 60.

3X1
time available)
0
Blank blank X sub 1, X sub 2. Greater than or equal to 0. Blank

X1 , X 2

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High Note Sound Company (2 of 3)
Figure 7.16 High Note Sound Company Graphical Solution

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High Note Sound Company (3 of 3)
• Electrician hours used are
2X1  4 X 2  2 0   4 20   80

– All hours are utilized so slack = 0

– Additional units of a binding constraint will generally
increase profits
• Technician hours used are
3X1  1X 2  3 0   120   20

– Available hours = 60 so slack  60  20  40

– Additional units of a nonbinding constraint will only
increase slack
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Changes in the Objective Function
Coefficient (1 of 2)
• Contribution rates in the objective functions fluctuate
– The feasible solution region remains exactly the same
– The slope of the isoprofit or isocost line changes
• Modest increases or decreases in objective function
coefficients may have no effect
• How much can an objective function coefficient change
before the optimal solution changes

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Changes in the Objective Function
Coefficient (2 of 2)
Figure 7.17 Changes in the Receiver Contribution Coefficients

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Excel Solver (1 of 3)
Program 7.7A Excel Spreadsheet for the High Note Sound
Company

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Excel Solver (2 of 3)
Program 7.7B Excel Solution and Solver Results Window
for the High Note Sound Company

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Excel Solver (3 of 3)
Program 7.7C Excel Sensitivity Report for the High Note Sound
Company

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Changes in the Technological
Coefficients (1 of 2)
• Changes in the technological coefficients often reflect
changes in the state of technology
• If the amount of resources needed changes, coefficients
in the constraint equations will change
• May produce significant change in the shape of the
feasible region
• May cause a change in the optimal solution

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Changes in the Technological
Coefficients (2 of 2)
Figure 7.18 Change in the Technological Coefficients for
the High Note Sound Company

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Changes in Resources or Right-Hand-
Side Values (1 of 3)
• Right-hand-side values of the constraints often represent
resources available to the firm
• Additional resources may lead to higher total profit
• Sensitivity analysis answers:
1. How much should be paid for additional resources
2. How much more of a resource would be useful

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Changes in Resources or Right-Hand-
Side Values (2 of 3)
• Changing the RHS will change the feasible region,
unless the constraint is redundant
• Often changes the optimal solution
• The dual price or dual value:
– The amount of change in the objective function value
that results from a unit change in one of the resources
– The dual price for a constraint is the improvement in
the objective function value that results from a one-
unit increase in the right-hand side of the constraint
– Can be thought of as a marginal return

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Changes in Resources or Right-Hand-
Side Values (3 of 3)
• The amount of possible increase in the RHS is limited
• If the RHS is increased beyond the upper bound, then the
objective function would no longer increase by the dual
price
• There would be excess (slack) resources
• The dual price is relevant only within limits

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Changes in the Electricians’ Time
Resource (1 of 3)
Figure 7.19 Changes in the Electricians’ Time Resource for the High
Note Sound Company

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Changes in the Electricians’ Time
Resource (2 of 3)
Figure 7.19 Changes in the Electricians’ Time Resource for the High
Note Sound Company

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Changes in the Electricians’ Time
Resource (3 of 3)
Figure 7.19 Changes in the Electricians’ Time Resource for
the High Note Sound Company

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