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Linear Programming - Maximization of Profit

The document provides an overview of linear programming, focusing on its formulation, characteristics, and assumptions. It outlines the steps for creating a linear programming model, including defining decision variables, constructing an objective function, and formulating constraints. An example involving a product mix problem is presented to illustrate the maximization of profit under resource constraints.

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Benj Jamieson Duag
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2 views15 pages

Linear Programming - Maximization of Profit

The document provides an overview of linear programming, focusing on its formulation, characteristics, and assumptions. It outlines the steps for creating a linear programming model, including defining decision variables, constructing an objective function, and formulating constraints. An example involving a product mix problem is presented to illustrate the maximization of profit under resource constraints.

Uploaded by

Benj Jamieson Duag
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Linear

Model
Programming:
Formulation and
Graphical
Solution

2-
Topics
 Linear Programming – An overview
 Model Formulation
 Characteristics of Linear Programming
Problems
 Assumptions of a Linear
Programming Model
 A Maximization Model Example

2-2
Linear Programming:An
Overview
 Objectives ofbusiness 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 2-3
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
2-4
Summary of Model
Formulation Steps

Step 1 : Clearly define the


decision variables

Step 2 : Construct the objective


function

Step 3 : Formulate the


constraints

2-5
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.
2-6
Assumptions of Linear
Programming Model
 Proportionality - The rate of change (slope) of
the objective
function and constraint equations is constant.
 Additivity - Terms in the objective function
and constraint equations must be additive.
 Divisibility -Decision variables can take on
any fractional value
and are therefore continuous as opposed to
integer in
nature.
 Certainty - Values of all the model parameters
are assumed to be known with certainty (non-
probabilistic). 2-7
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:
LaborResourceClay Profit
Requirements
Product
(Hr./Unit (Lb./Unit) (₱/Unit)
)
Bowl 1 4 40
Mug 2 3 50
40 120

2-8
LP Model Formulation
A Maximization Example
(2 of
4)

2-9
LP Model Formulation
A Maximization Example
(3 of
4)
Resourc 40 hrs of labor
e per day 120 lbs of
Availabil clay
ity:
Variable x1 = number of
Decision
s: x2 = number of mugs to
bowls to produce
per day per day Maximize Z =
produce
Objecti
ve ₱40x
1x +1 + ₱50x
40 hours
2 of
Functi 1
Where
2x Z= profit
labor 120per day
on: 2
4x + pounds of clay
Non-
Resourc
1 x1 0; x2
Negativity 3x2 0
e
Constraints
Constrai
: 2-
LP Model Formulation
A Maximization Example
(4 of
4)
Complete Linear
Programming Model:
Maximi Z = ₱40x1 + ₱50x2
ze
subject 1x1 + 2x2 40
to: 4x1 + 3x2
x1, x2
120
0

2-
Feasible Solutions

A feasible solution does not violate any of


the constraints:
Examp x1 = 5
le: x2 = 10 mugs
bowls
Z= 40x1 + ₱50x2 = ₱700

Labor constraint 1(5) + 2(10) = 25 < 40


check: Clay hours
constraint check: 4(5) + 3(10) = 50 < 120
pounds

2-
Infeasible Solutions

An infeasible solution violates at


least one of
the
Examp x1 = 10 bowls
constraints:
le: x2 = 20 mugs
Z = ₱40x1 + ₱50x2 =
₱1400
Labor constraint 1(10) + 2(20) = 50 >
check: 40 hours

2-
QUIZ 2

Determine the following:

1. Resource Availability
2. Objective Function A. Resource Requirements
3. Decision Variables
4. Constraints Labor Clay Profit
Product
(Hr./Unit (Lb./Unit) (₱/Unit)
Solve for the following: )
Bowl 2 12 90
Mug 4 9 110
1. Profit
2. Constraints 80 360
THANK YOU!

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