QUANTITATIVE ANALYSIS FOR

DECISION MAKING
CHAPTER – II
LINEAR PROGRAMMING

BY :Dessalegn Kebede (PhD candidate)

BY: Dessalegn K. 1
 UNIT - II
LINEAR PROGRAMMING
1. Introduction
2. Structure of Linear Programming Model
3. Application Area of LP
4. Graphical Solutions of LP
5. The Simplex Method
6. Duality in LPP

BY: Dessalegn K. 2
 LINEAR PROGRAMMING
Linear programming is a mathematical technique for finding the uses
of an organization’s resources.
Linear programming is a mathematical method for determining a way
to achieve the best outcome (such as maximum profit or lowest cost)
in a given mathematical model for some list of requirements
represented as linear relationship.
This technique is for the optimization of a linear objective function,
subject to linear equality and linear inequality constraints.
All business firms have to make decisions about how to allocate their
resources and no organizations operate permanently with unlimited
resources. Consequently managements must continually allocate
scarce resources to achieve the organization‟s objectives.

BY: Dessalegn K. 3
 STRUCTURE OF LINEAR PROGRAMMING
PROBLEM
The general structure of any linear programming model consists
essentially of three components. These are :-
1. The activities (variables) and their relationships.
2. The objective function. and
3. The constraints.
1. The activity values represent the extent to which each activity is
performed. These are represented by x1, x2, x3, ...........xn.
Example:
•In a product mix problem, the activities of interest are the production of
several products under consideration.
•The activities are also known as decision variables because they are under
the decision maker‟s control.
•These decision variables usually interrelated in terms of consumption of limited
resources, require simulations solutions.
•All decision variables are continuous, controllable and non-negative. That is
x1≥0, x2 ≥0,..........xn ≥0.
BY: Dessalegn K. 4
 Contd...
2. The objective function of each LP problem is a mathematical representation
of the objective in terms of measurable quantity such as profit, cost,
revenue etc.
•It is represented as
Optimize (maximize or minimize)
Z=C1x1+C2x2+ .....Cnxn.
Where, Z= measure of performance variable.
The C1, C2, ......Cn are parameters or uncontrollable variables. That
give the contribution of a unit of the representative variables x1, x2,
.....xn to the measure of performance Z.
3. There are always certain constraints on the use of limited resources.
(Labour, Machine, Raw material etc.).
•Such constraints must be expressed as linear equalities or inequalities in
terms of decision variables.
•The solution of LP model must satisfy these constraints.
BY: Dessalegn K. 5
 General Mathematical Model of Linear Programming
Problem
The linear programming problem with „n‟ decision variables and „m‟
constraints can be stated in the following form.

 Find the value of decision variables x1, x2, .......xn. so as to optimize

(Max. or Min.).
Z= C1x1+C2x2+..............+Cnxn.
Subject to the constraints.
a11x1+a12x2+........a1nxn (≤; =; ≥) b1
a21x1+a22x2+........a2nxn (≤; =; ≥) b2
-----------------------------------------------------------------
am1x1+am2x2+........amnxmn (≤; =; ≥) bm and x1, x2,....xn ≥ 0

BY: Dessalegn K. 6
 Steps of Linear Programming Model Formulation
STEP – I:
Define Decision Variables:
a. Express each constraint in words (for this, first see weather the
constraint is of the form ≥ or of the form ≤ or =).
b. Then express the objective function in words.
c. Step – I (a) and (b) should then allow us to verbally identify the
decision variables.
After completing step – I (a) through (c), we have to decide
symbolic notation for the decision variables and specify their units of
measurements.
Such specification of units of measurement would help in interpreting
the final solution of the LP problem.

BY: Dessalegn K. 7
 Contd...
STEP – II:
Formulate all the Constraints:
These are imposed by the resource availability and express them as
linear equality or inequality in terms of the decision variables
defined in Step – I.
STEP – III:
Formulate the Objective Function:
We have to define the objective function and determine weather the
objective function is to be maximized or minimized.
Then, it should be expressed as a linear function of decision
variables multiplied by their profit or contributions.
BY: Dessalegn K. 8
 Example – 1:
A firm manufactures two types of products A and B and sells them
at a profit of ₹. 2 on type A and ₹. 3 on type B. Each product is
processed on two machines G and H. Type A requires one minute of
processing time on G and two minutes on H; Type B requires one
minute on G and one minute on H. The machine G is available for
not more than 6 hours 40 minutes while machine H is available for
10 hours during any working day.
Formulate the problem as a linear programming problem.
Solution:
Let the firm produce x units of product A
and y units of product B

Since, the profit on type A is ₹. 2, so, 2x will be the profit on selling

„x‟ units of type A.
Similarly 3y will be the profit BY:
onDessalegn
selling K. „y‟ units of type B. 9
 Contd...
Therefore, the total profit on selling „x‟ units of A and „y‟ units of B
is given by
Z= 2x+3y
Since, machine G takes 1 minute on type A and 1 minute on type B,
The total number of minutes required on machine G is given by
x+y
Similarly, the total number of minutes required on machine H is
given by
2x+y
But, machine G is not available for more than 6 hours 40 minutes
(400 minutes).
Therefore, x+y ≤ 400 (First constraint)

BY: Dessalegn K. 10
 Contd...
Since, it is not possible to produce negative quantities, x ≥ 0 and y ≥ 0
(non-negative restrictions)

Hence, the allocation problem of the firm can be finally put in

the form:
Max. Z=2x+3y
Subject to
x+y ≥ 400
2x+y ≥ 600
x ≥ 0, y ≥ 0.

BY: Dessalegn K. 11
 Example – 2:
The manufacturer of patent medicines is proposed to prepare a
production plan for medicines A and B. There are sufficient ingredient
available to make 20000 bottles of medicine of A and 40000 bottles of
medicine B, but there are only 45000 bottles into which either of the
medicines can be filled. Further, it takes three hours to prepare enough
material to fill 1000bottles of medicine A and one hour to prepare
enough material to fill 1000 bottles of medicine B, and there are 66
hours available for this operation. The profit is Rs. 8 per bottle for
medicine A and Rs. 7 per bottle for medicine B.
Formulate this problem as a L.P problem.
Solution:
Suppose the manufacturer produces „x‟ and „y‟ thousands of bottles of
medicines of A and B respectively.

Since, it takes 3 hours to prepare 1000 bottles of medicine A, the time

required to fill „x‟ thousands of bottles of medicine A will be 3x hours.

BY: Dessalegn K. 12
 Contd...
Similarly, the time required to prepare „y‟ thousands of bottles of
medicine B will be „y‟ hours.
Therefore, the total time required to prepare „x‟ thousands bottles of
medicine A and „y‟ thousand bottles of medicine B will be 3x+y hours.

Now since the total time available for this operation is 66 hours.
3x+y ≤ 66

Since, there are only 45 thousand bottles available for filling

medicines A and B
x+y ≤ 45

There are sufficient ingredients available to make 20 thousand bottles

of medicine A and 40 thousand bottles of medicine B.
Hence, x ≤ 20 and y ≤ 40.
BY: Dessalegn K. 13
 Contd...
At the rate of Rs. 8 per bottle for type A medicine, and Rs. 7 per bottle
for the type B medicine.
The total profit on „x‟ thousand bottles of medicine A and „y‟ thousand
bottles of medicine B will become –
Z=8000x+7000y

Thus, the linear programming problem is

Max. Z=8000x+7000y
Subject to the constraints
3x+y ≤ 66,
x+y ≤ 45,
x ≤ 20, y ≤ 40 and x ≥ 0, y ≥ 0.

BY: Dessalegn K. 14
 Example – 3:
A company wants to produce 500 pounds of a mixture consisting of 2
ingredients P1 and P2. P1 costs Rs. 5 per pound and P2 costs Rs. 8 per
pound. The mixture should not contain more than 400 pounds of P1
and at least 200 pounds of P2.
Formulate a L.P model to determine the quantities of P1 and P2 to be
mixed so that the total cost of the mixture will be minimum.

Solution:
Let x pounds of P1 costs Rs. 5 and one pound of P2 costs Rs. 8.
The total cost function will be
5x+8y
Then the formulation will be
Minimum Z=5x+8y
Subject to the constraints
x ≤ 400, y ≥ 200,
x+y = 500, x ≥ 0, y ≥ 0.
BY: Dessalegn K. 15
 Example – 4:
A toy company manufactures two types of doll, a basic version doll A
and a deluxe version doll B. Each doll of type B takes twice as long to
produce as one of type A, and the company would have time to make a
maximum of 2000 per day. The supply of plastic is sufficient to produce
1500 dolls per day. (Both A and B combined). The deluxe version
requires a fancy dress of which there are only 600 per day available.
Assuming that the profit per doll are Rs. 3 and Rs. 5.
Formulate the problem as linear programming model in order to
determine how many of each doll should be produced per day in order
to maximize the total profit.

Solution:
Let the toy company produces „x‟ units of basic version of dolls A, and
„y‟ units of deluxe version dolls B.
Since, the profit per doll A is Rs. 3, 3x will be the profit on selling „x‟
units of dolls A, similarly, 5y will be the profit on „y‟ units of dolls B.
Therefore, Max. Z=3x+5y.
BY: Dessalegn K. 16
 Contd...
Since, each doll of type B takes as long to produce as one type of doll A
Therefore, x+ 2y

Subject to the constraints.

x+2y ≤ 2000 (Time restraint)
x+y ≤ 1500 (Plastic restraint)
y ≤ 600 (Dress restraint)
And nonnegative restrictions
x ≥ 0; y ≥ 0.

BY: Dessalegn K. 17
 Graphical Method of the solution of Linear
Programming Problems
In this method, the entire set of feasible solutions can be displayed
graphically by plotting linear constraints to locate a optimal (Best)
solution.
This technique is used to identify the optimal graphical solution and it
is extreme point enumeration approach.

Solution:
Solution values of decision variables xj (j=1,2,3,.........n) which satisfy
the constraints of a general LP model is called the solution to that LP
model.

Feasible Solution:
Solution values of decision variables xj (j=1,2,3,.........n) which satisfy
the constraints and non negativity conditions of a general LP model.
BY: Dessalegn K. 18
 Contd...
Basic Solution:
For a set of „m‟ equations in „n‟ variables (n>m), a solution obtained
by setting (n-m) variables equal to zero and solving for remaining „m‟
equations in „n‟ variables is called a basic solution.
The (n-m) variables whose value did not appear in this solution are
called non basic variables and the remaining are called basic variables.

Basic Feasible Solution:

A feasible solution to an LP problems which is also the basic solution
is called the basic feasible solution, i.e., all basic variables assume
nonnegative values.
Basic feasible solutions are of two types.
A) Degenerate: A basic feasible solution is called degenerate if at
least on basic variable possesses zero value.
B) Non degenerate: A basic feasible solution is called non-
degenerate if all „m‟ basic variables are nonzero and
positive.
BY: Dessalegn K. 19
 Contd...
Optimum Basic Feasible Solution:
A basic feasible solution which optimizes (Maximizes or Minimizes) the
objective function of the given LP model is called optimum basic
feasible solution.

Unbounded Solution:
A solution which increases or decreased the value of objective function
of LP problem indefinitely is called unbounded solution.

BY: Dessalegn K. 20
 Extreme Point Enumeration Approach
This solution method for an LP problem is divided into 5 steps.
STEP – 1:
State the given problem in the mathematical form.
STEP – 2:
Graph the constraints, by temporarily ignoring the inequality sign and decide
about the area of feasible solutions according to the inequality sign of the
constraints.
Indicate the area of feasible solutions by a shaded area, which forms a convex
polyhedron.
STEP – 3:
Determine the coordinates of the extreme points of the feasible solution space.
STEP – 4:
Evaluate the value of the objective function at each extreme point
STEP – 5:
Determine the extreme point to obtain the optimum (best) value of the objective
function. BY: Dessalegn K. 21
 Example – 1:
Use graphical method to solve the following LP problem.
Maximize Z=2x+y
Subject to the constraints,
x+2y ≤ 10
x+y ≤ 6
x-y ≤ 2
x-2y ≤ 1
x,y ≥ 0.
Solution:
Consider the equation
x+2y = 10
When x = 0, y = 5
y = 0, x = 10

BY: Dessalegn K. 22
 Contd...
These values are tabulated below.
X 0 10
Y 5 0
In this way we construct tables for other equations under consideration.
x+y = 6
X 0 6
Y 6 0
x-y = 2
X 0 1
Y -2 0

BY: Dessalegn K. 23
 Contd...
x-2y = 1
X 0 1
Y -0.5 0

The constraints
x+2y ≤ 10
x+y ≤ 6
x-y ≤ 2
x-2y ≤ 1 are plotted on the graph and indicated by the shaded
area.

BY: Dessalegn K. 24
 Contd...
10
9
8
7
6 x-y=2

5 x-2y=1
4
3
Feasible
2 Region x+2y=10
1 x+y=6

0
1 2 3 4 5 6 7 8 9 10

BY: Dessalegn K. 25
 Contd...
The value of the objective function at each of these extreme points is as
follows.
Extreme Points Coordinates (x, y) Objective
Function
Z = 2x+y Value
O (0,0) 2(0)+1(0)=0
A (1,0) 2(1)+1(0)=2
B (3,1) 2(3)+1(1)=7
C (4,2) 2(4)+1(2)=10
D (2,4) 2(2)+1(4)=8
E (0,5) 2(0)+1(5)=5

The maximum value of the objective function Z=10 occurs at the

extreme point „C‟ (4,2).
Hence, the optimal solution to the given LP problem is x=4, y=2 and
Max. Z = 10
BY: Dessalegn K. 26
 Example – 2:
Use graphical method to solve the following LP problem.
Max. Z= 3x+5y
Subject to restrictions
x+2y ≤ 2000
x+y ≤ 1500
y ≤ 600 and
x ≥ 0, y ≥ 0.

Solution:
Consider the equation
x+2y = 2000
When x = 0, y = 1000
y = 0, x = 2000
BY: Dessalegn K. 27
 Cond...
These values are tabulated below

X 0 2000
Y 1000 0
In this way we construct tables for other equations under consideration
x+y = 1500

X 0 1500
and y = 600
Y 1500 0

The constraints x+2y = 2000

x+y = 1500
y = 600 are plotted on the graph and indicated by
the shaded area.
BY: Dessalegn K. 28
 Cond...
3000

2500

2000

1500 x+y=1500

1000
Y=600
500
Feasible Region x+2y=2000

0
500 1000 1500 2000 2500 3000

BY: Dessalegn K. 29
 Cond...
The values of the objective function at each of these extreme points is as
follows.
Extreme Coordinates (x,y) Objective Function Value
Points Max. Z=3x+5y
O (0,0) 3(0)+5(0)=0
A (1500,0) 3(1500)+5(0)=4500
B (1000,500) 3(1000)+5(500)=5500
C (600,600) 3(600)+5(600)=4800
D (0,600) 3(0)+5(600)=3000

The maximum value of the objective function Z=5500, occures at the

extreme point „B‟ (1000,500).

Hence, the optimal solution to the given LP problem is x=1000, y=500

and Max. Z=5500.
BY: Dessalegn K. 30
 Example – 3:
Use graphical method to solve the following LP problem.
Maximize Z=10x+15y
Subject to the constraints
2x+y ≤ 26
2x+4y ≤ 56
-x+y ≤ 5 and
x, y ≥ 0.

Solution:
Consider the equation
2x+y = 26
When x = 0, y = 26
y = 0, x = 13

BY: Dessalegn K. 31
 Cond...
These values are tabulated below.
X 0 13
Y 26 0
In this way we construct tables for other equations under consideration.
2x+4y = 56
X 0 28
Y 14 0
-x+y = 5
X 0 -5
Y 5 0
The constraints
2x+y ≤ 26
2x+4y ≤ 56
-x+y ≤ 5 are plotted on the graph and indicated by the shaded area.

BY: Dessalegn K. 32
 Cond...
30
28
26
24
2x+y=26
22 -x+y=5
20
18
16
14
12
10
8 2x+4y=56
6 Feasible
4 Region
2
0
2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
BY: Dessalegn K. 33
 Cond...
The value of the objective function at each of these extreme points is
as follows.
Extreme Coordinates Objective Function Value
Points (x,y) Max. Z=10x+15y
O (0,0) 10(0)+15(0)=0
A (13,0) 10(13)+15(0)=130
B (8,10) 10(8)+15(10)=230
C (6,11) 10(6)+15(11)=225
D (0,5) 10(0)+15(5)=75

The maximum value of the objective function Z=230, occurs at the

extreme point „B‟ (8,10).

Hence, the optimal solution to the given LP problem is

x = 8, y = 10 and Max. Z = 230.

BY: Dessalegn K. 34
 Example – 4:
Use the graphical method to solve the following LP problem.
Minimize Z=3x+2y
Subject to the constraints
5x+y ≥ 10
x+y ≥ 6
x+4y ≥ 12 and
x,y ≥ 0.

Solution:
Consider the equation
5x+y = 10
When x = 0, y = 10
y = 0, x = 2

BY: Dessalegn K. 35
 Cond...
These values are tabulated below
X 0 2
Y 10 0
In this way we construct tables for other equations under consideration.
x+y=6 X 0 6
Y 6 0
x+4y=12
X 0 12
Y 3 0
The constraints
5x+y ≥ 10
x+y ≥ 6
x+4y ≥ 12 are plotted on the graph and indicated by the shaded
area.

BY: Dessalegn K. 36
 Cond...

16
14
12 5x+y=10
10
Feasible Region
8
6
4
2 x+4y=12
0 x+y=6

2 4 6 8 10 12 14 16
BY: Dessalegn K. 37
 Cond...
The value of the objective function at each of these extreme points is as
follows.
Extreme Coordinates (x,y) Objective Function Value
Points Minimize Z=3x+2y
A (12,0) 3(12)+2(0)=36
B (4,2) 3(4)+2(2)=16
C (1,5) 3(1)+5(5)=13
D (0,10) 3(0)+2(10)=20

The minimum value of the objective function Z=13, occurs at the

extreme point „C‟ (1,5).

Hence, the optimal solution to the given LP problem is

x=1, y=5 and Min. Z=13.

BY: Dessalegn K. 38
 SIMPLEX METHOD FOR
LINEAR PROGRAMMING PROBLEM

BY: Dessalegn K. 39
 BASIC DEFINITIONS IN SIMPLEX METHOD

• Before using the simplex method, let us examine and

understand certain basic terms involved in the
procedure.
• 1. Basic Feasible Solution: When a basic solution
satisfies even the non-negativity requirement, it is
called Basic Feasible Solution.
• 2. Basis: The set of variables which are not set to
zero and figure in the column of “Product Mix” are
said to be in the „Basis‟. Other than these figuring in
the product mix column are termed as non-basic
variables.
BY: Dessalegn K. 40
• 3. Cj Row: It is the row containing the coefficients of all
the variables (decision variables, slack or artificial
variables) in the objective function.
• 4. Cj – Zj = j or Index Row: The row containing net
profit or loss resulting from introducing one unit of the
variable in the column in the solution. A positive number in
the this row would indicate an algebraic reduction or
increment in the objective function if one unit of the
variable of that column is introduced in the basis.
• 5. Constraints: Restrictions on the problem solution arising
from limited resources.
• 6. Iteration: Since the simplex procedure is that of constant
improvement type from one basic feasible solution to
another, these steps of moving from one solutions to
another to reach optimal solution are called Iterations.
BY: Dessalegn K. 41
• 7. Key Column: The column with the largest positive
number in Cj – Zj row in a maximization problem or the
smallest number in a minimization problem is called Key
column. This indicates the variable entering the solution in
the next iteration by replacing an appropriate variable.
• 8. Key Row: When we work out the ratio of quantities bi‟s
and the elements of the key column, we get the last column
of the simplex table. The outgoing variable to be replaced
by the entering variables would be with the smallest
positive value of the ratio column. That is called Key Row.
• 9. Key Element: The element at the point of intersection of
the key column and key row is called the Key Element.
• 10. Optimal Solution: The best of all feasible solutions.

BY: Dessalegn K. 42
• 11. Simplex Table: A table used for calculation during
various iterations of the simplex procedure is called
Simplex table.
• 12. Slack or Artificial Variables: These have also been
explained under an appropriate heading. Their physical
significance have also been clarified . These are generally
designated as S1, S2,…..etc. and A1, A2……etc.
respectively. Whereas the slack variables indicate spare
capacity of the constraints, artificial variables are imaginary
variables added for standard form.
• 13. Standard Form: With linear relationships of objective
function and constraints, making RHS of constraints as
equal produces standard form, whereas the inequality
situation is called canonical form.
BY: Dessalegn K. 43
 SIMPLEX METHOD FOR LINEAR PROGRAMMING

• Simplex method, which was developed by George B.

Danzig in 1947.
• The simplex method is an algebraic procedure that
starts with a feasible solution that is not optimal and
systematically moves from one feasible solution to
another until an optimal solution is found.
• Constraints are generally expressed using inequalities
either in „less than‟ or „greater than‟ or in mixed
form. Thus, the constraints are not in standard form,
meaning they should be converted into equalities.
BY: Dessalegn K. 44
 STEPS IN SIMPLEX METHOD
STEP – 1:
• Formulate the linear programming model of the
real world problem. i.e – obtain a mathematical
representation of the problem‟s objective function
and constraints.
STEP – 2:
• Express the mathematical model of LP problem in
the standard form by adding slack variables in the
left-hand side of the constraints and assign a zero
coefficient to these in the objective function.

BY: Dessalegn K. 45
• Thus, we can restate the problem in terms of
equations:
Max. Z = C1X1+C2X2+……+CnXn+0S1+0S2+……+0Sm
Subject to the constraints
a11X1+a12X2+………+a1nXn+S1=b1
a21X1+a22X2+……..+a2nXn+S2=b2
. . .
. . .
am1X1+am2X2+…….+amnXn+Sm=bm
• Where X1, X2 …….Xn and S1, S2,…..Sm are non-
negative.
• Note: The slack variables have been assigned zero
coefficients in the objective function. The reason is
that these variables typically contribute nothing to
the value of the objective function.
BY: Dessalegn K. 46
STEP – 3:
• Design the initial feasible solution. An initial
basic feasible solution is obtained by setting the
decision variables to zero.
• X1=0, X2=0,……..Xn=0. Thus, we get S1=b1,
S2=b2,……..Sm=bm.
STEP – 4:
• Set up the initial simplex tableau. For
computational and simplicity, the initial basic
feasible solution, the constraints of the standard
LPP as well as the objective function can be

BY: Dessalegn K. 47
 Simplex Tableau

Cj C1 C2….. Cn 0 0… 0 Quantity Ratio

Contribution per unit … Column

Basic Variable CB X1 X2….. Xn S1 S2.. Sm b

S1 CB1 a11 a12 …. a1n 1 0… 0 b1

S2 CB2 a21 a22 …. a2n 0 1… 0 b2

Sm CBm am1 am2... amn 0 0… 1 bm

Zj = ∑CBjXj 0 0….. 0 0 0… 0 ∑CBjXj

Cj – Zj C1-Z1 C2-Z2.. Cn-Zn

(Net Contribution per
unit)

BY: Dessalegn K. 48
• The interpretation of the data in the above tableau is
given as under. Other simplex tableau will have
similar interpretations.
• In the first row labeled “Cj”, we write the coefficients
of the variables in the objective function. These
values will remain the same in subsequent tableaus.
• The second row shown the major column headings.
• In the first column of the second row, under the label
“Basic Variable” (also called product mix column),
the basic variables are listed.
• In the second column of the second row, under the
label “CB”, the coefficients of the current basic
variables in the objective function are listed. Thus,
the coefficients of S1, S2,…..Sm, which are included
in the initial feasible solution, are written in the “CB”
column.
BY: Dessalegn K. 49
• The values listed under the non-basic variables (X1, X2…..Xn)
in the initial simplex tableau consists of the coefficients of the
decision variables in the constraint set. They can be interpreted
as physical rates of substitution.
• The values listed under the basic variables (S1, S2……Sm) in
the initial simplex tableau represents the coefficients of the
slack variables in the constraint set.
• In the next column (also called Quantity column), we write the
solution values of the basic variables.
• To find an entry in the “Zj” row under a column, we multiply
the entries of that column by the corresponding entries of “CB”
column and add the results, i.e – Zj=∑CBjXj.
• The “Zj” row entries will all be equal to zero in the initial
simplex tableau. The other “Zj” entries represent the decrease
in the value of objective function that would result if one of the
variables not included in the solution were brought into the
solution.
• The “Zj” entry under the Quantity column gives the current
value of the objective function.
BY: Dessalegn K. 50
• The last row labeled “Cj – Zj”, called the “Index Row” or
“Net Evaluation Row” is used to determine whether or not
the current solution is optimal? The calculation of “Cj – Zj”
row simply involves subtracting each “Zj” value from the
corresponding “Cj” value for that column, which is written
at the top of that column. We observe that “Cj – Zj” values
are meaningful for the non-basic variables only.
• Note: the entries in the “Cj – Zj” row represent the net
contribution to the objective function that results by
introducing one unit of each of the respective column
variables.
• A plus value indicates that a greater contribution can be
made by brining the variable for that column into the
solution.
• A negative value indicates the amount by which
contribution would decrease if one unit of the variable for
that column was brought into the solution.

BY: Dessalegn K. 51
STEP – 5:
• We test if the current solution is optimum or not. If
all the elements or entries in the “Cj – Zj” row (i.e –
Index Row) are negative or zero, then the current
solution is optimum.
• If there exists some positive number, the current
solution can be further improved by removing one
basic variable from the basis and replacing it by some
non-basic one.
• So, start trying to improve the current solution in line
with the following steps.

BY: Dessalegn K. 52
STEP – 6:
• Further, iterate towards an optimum solution. To
improve the current feasible solution, we replace
one current basic variable (called the departing
variable) by a new non-basic variable (called the
entering variable).
• We now determine the variable to enter into the
solution mix, „the entering variable‟. One way of
doing this is by identifying the column with the
largest positive value in “Cj – Zj” row of the
simplex tableau. The column with the largest
positive entry in the “Cj – Zj” row is called the
“Key or Pivot Column”. The non-basic variable at
the top of the key column is the entering variable
that will replace a basic variable.
•
BY: Dessalegn K. 53
• Next, we determine the departing variable to be
replaced in the basic solution. This is accomplished
by dividing each number in the quantity column by
the corresponding number in the key column
selected in identifying the entering variable.
• We compute the ratio b1/a1j, b2/a2j……bm/amn.
This is called “Replacement Ratio”.
• Replacement Ratio = Solution Quantity /
Corresponding values in pivot column.

BY: Dessalegn K. 54
• The row with the minimum ratio is the “Key or Pivot
Row”. The corresponding variable in the key row
(the departing variable) will leave the basis.
• The element at the intersection of the key column
and key row is called “Key Element”.
STEP – 7:
• Evaluate the new solution by constructing a second
simplex tableau. After identifying the entering and
departing variable, all that remains is to find the new
basic feasible solution by constructing a new simplex
tableau from the current one.
• Now we evaluate or update the new solution in the
following way. BY: Dessalegn K. 55
• New values for the key row are computed by simply
dividing every element of the key row by the key element
to obtain a Unit Vector (1) in the key element.
• The new values of the elements in the remaining rows for
the new simplex tableau can be obtained by performing
elementary row operations on all rows so that all elements
except the key element (1) in the key column are zero. i.e –
unit vector.
• New entries in the “CB” column and “XB” column are
entered in the new table of the current solution.
• Compute the values of the “Cj – Zj” row. If all the numbers
in “Cj – Zj” row are either negative or zero, an optimum
solution has been obtained.
STEP – 8:
• If any of the numbers in “Cj – Zj” row are positive, repeat
the steps (6 – 7) again until an optimum solution is
obtained.
BY: Dessalegn K. 56
• EXAMPLE:
Solve the following problem by simplex method.
Max. Z = 60X1 + 50X2
Subject to the constraints
4X1 + 10X2 ≤ 100
2X1 + X2 ≤ 22
3X1 + 3X2 ≤ 39 and
X1, X2 ≥ 0

BY: Dessalegn K. 57
Solution:
• Let the LPP convert into the standard form by adding slack
variables in the left hand side of the constraints and assign
a zero coefficient to these in the objective function.
• Thus, we can restate the problem in terms of equations:
Max. Z = 60X1 + 50X2 + 0S1 + 0S2 + 0S3
Subject to the constraints
4X1 + 10X2 + S1 = 100
2X1 + X2 + S2 = 22
3X1 + 3X2 + S3 = 39
• Where X1, X2 are decision variables and S1, S2, and S3 are
slack variables.
• Here, the number of variables (5) is greater than the
number of equations (3). Therefore, the decision variables
are set to zero and we have X1=0, X2=0, S1=100, S2=22
and S3= 39.
BY: Dessalegn K. 58
• As a result, the initial basic feasible solution is entirely
composed of the slack variables. So, X1 and X2 are non-basic
variables since they are not in a solution. S1, S2 and S3 are
basic variables since they are in solution.
• Initial Feasible Solution:
Cj 60 50 0 0 0 Quantity Ratio
Contribution per unit Column

Basic Variable CB X1 X2 S1 S2 S3 b

S1 0 4 10 1 0 0 100

S2 0 2 1 0 1 0 22

S3 0 3 3 0 0 1 39

Zj = ∑CBjXj 0 0 0 0 0 0

Cj – Zj 60 50 0 0 0
(Net Contribution per
unit)
BY: Dessalegn K. 59
Interpretation of the Initial Feasible Solution:
• To be noted first is that the values of each basic
variable (variables that are in solution) is composed
of a single “1” and the rest “0”s. This is called a
“Unit Vector”. Basic variables will have a unit
vector.
• The unit vector concept will help us in developing
subsequent tableaus when we want to change the list
of variables that are in solution.
• The “Zj” row in the quantity column indicates that
the value of the objective function is zero.
• The value in the “Cj – Zj” row indicates the net
contribution of the variables if one unit of each
variable is added into that solution.
BY: Dessalegn K. 60
• For example – The 60 in column “X1” indicates that
bringing of one unit of X1 would increase the value of the
objective function by 60 dollars. the same is true for the X2
column, i.e – bringing one unit of X2 would increase the
value of the objective function by 50 dollars.
• On the other hand, since, the slack variables are at their
maximum, their values in the “Cj – Zj” row are all zero.
According to what has been said before, we have the
following rule in order to identify an optimal solution.
• A simplex solution in a maximization problem is optimal if
the “Cj – Zj” row consists of entirely „0‟s and negative
numbers. i.e- there are no positive values in the row.
• So, in our case in the initial tableau, we have two positive
values under the non-basic variables, which indicate that
further improvement of the solution is possible. As a result
we go for the optimal solution by developing the second
simplex tableau.
BY: Dessalegn K. 61