Dr.

R K Singh
Professor, Operations Management
Management Development Institute,
Gurgaon
Objectives
To Understand the fundamentals of mathematical
model building process.
To learn different techniques commonly used in
various application areas along with assumptions and
limitations.
To apply such techniques in real life situations for
solving problems.
To develop an insight of scientific decision making
under limited resources.
Operations Research Definitions
Operations research is the application of the methods of
science to complex problems in the direction and
management of large systems of men, machines, materials
and money in industry, business, government and defence.
Operational Research Society, UK

Operations research is concerned with scientifically

deciding how to best design and operate manmachine
systems usually requiring the allocation of scarce
resources.
Operations Research Society, America
Operations Research Defined

These two definitions pointed out following

characteristics of decisions science:
Use of scientific method
Use of models to represent the complex
relationships
Interdisciplinary approach
Provision of a quantitative basis for decision
making
Applications of Operations
Research
Facilities planning
Manufacturing
Finance and Accounting
Purchasing, Procurement and Exploration
Marketing Management
Personnel management
Methodology of OR
Linear Programming
Many management decisions involve trying to make
the most effective use of an Organizations resources.
Resources typically include machinery, labour, money,
time, warehousing space, and raw materials.
These resources may be used to make products (such as
machinery, furniture, food, clothing etc.) or services
(such as schedules for airlines, or production,
advertising policies, or investment decisions etc.).
LP is a widely used mathematical modeling technique
designed to help managers in planning and decision
making relative to resource allocation.
Transportation and Assignment Problems
Transportation Model
The transportation model is a special class of linear
programs that deals with shipping a commodity from
sources (e.g., factories) to destinations (e.g.,
warehouses).
Objective is to determine the shipping schedule that
minimizes the total cost while satisfying supply and
demand limits.

Assignment Model-The best person for the job

Project Scheduling-CPM/PERT
Most realistic projects that organizations like
Microsoft, General Motors, or DRDO undertake
are large and complex.
It is a difficult problem, and the stakes are very
high.
Millions of dollars in cost overruns are wasted due
to poor planning of projects.
Unnecessary delays occurre due to poor
scheduling.
CPM/PERT
The first step in planning and scheduling a project
is to develop the work breakdown structure.
It involves identifying the activities that must be
performed in the project.
There may be varying levels of details, and each
activity may be broken into its basic components.
The time, cost, resource requirements,
predecessors, and person(s) responsible are
identified for each activity.
CPM/PERT
When this has been done, a schedule for the project
can be developed.
The Critical Path Method and Program Evaluation and
Review Technique are two popular analytical
techniques that help managers plan, schedule
monitor, and control large and complex projects.
Queuing Theory Models
The study of waiting lines, called queuing theory, is
one of the oldest and most widely used analytical
techniques.
Managers must deal with the trade-off between the
cost of providing good service and the cost of customer
waiting time. The latter may be hard to quantify.
One of the goals of queuing theory analysis is finding
the best level of service for an organization.
Statistical concept required: Poisson probability
distribution; exponential probability distribution
Simulation
Simulation is best thing to observe a real system.
It deals with a computerized imitation of the random
behavior of a system for the purpose of estimating its
measure of performance.
Simulation is one of the most widely used quantitative
analysis tools.
Over half of the US corporations use simulation in
corporate planning.
Simulation
The idea behind simulation is to imitate a real-world
situation mathematically, then to study its properties
and operating characteristics, and, finally, to draw
conclusions and make action decisions based on the
results of the simulation.
Nonlinear Programming
Linear programming assumes that a problems
objective function and constraints are linear.
That means that they contain no nonlinear terms such
3
as X1 , 1/X2, logX3 or X1X2.
In many mathematical problems, the objective
function and/or one or more of the constraints are
nonlinear.
Three categories of nonlinear programming (NLP)
problems are:
Nonlinear Programming
Nonlinear objective function and linear constraints

Linear objective function with nonlinear constraints

Both objective function and constraints are nonlinear

Linkages with Other Courses
Business Research Methods
Production and Operations Management
International Trade Logistics
Supply Chain Management
Advanced Analytics for International Business
Financial Risk Management
Linear Programming
Linear Programming was conceptually developed
before World War II by the outstanding Soviet
Mathematician and Statistician A N Kolmogorov.

Another Russian, Leonard Kantorovich, won the

Nobel prize in Economics in 1975 for advancing the
concept of optimal planning.
Shortcomings
Solution to problem often derived by simplifying
assumptions.

Models may not represent the realistic situations in

which decisions are made.

Often the decision maker is not fully aware of the

limitations of the model
Linear Programming: Application and Model
Formulation
 Definitions- Linear Programming
Linear programming is a mathematical technique useful for
allocation of scarce or limited resources, to several competing
activities on the basis of a given criterion of optimality.

The word linear refers to linear relationship among variables in

a model. That is, a change in one variable causes a resulting
proportional change in other variable.
The word programming refers to the solution of a problem that
involves the economic allocation of limited resources, by
choosing a particular course of action or strategy among various
alternative strategies in order to achieve a desired objective.
Structure of LP Model
Decision variables (activities) are usually denoted by x1,
x2, , xn. The value of these activities represents the extent
to which each of these is performed.

For example, in a product-mix problem, linear

programming (LP) approach may be used to decide how
many units of each of the product can be manufactured by
using limited resources (personnel, machinery, money,
material, etc.).

Contd...
 Structure of LP Model
The objective goal function is expressed in terms of decision
variables to optimize the criterion of optimality (a measure of
performance) such as profit, cost, revenue, distance, etc. The
general objective function of LP model is expressed as:
Optimize (maximize or minimize) Z = c1x1 + c2x2 + + cnxn
where, Z is the measure-of-performance variable, which is a
function of x1, x2, , xn. Quantities c1, c2, , cn are parameters that
represent the contribution per unit respective variable to the
measure-of-performance Z.

The constraints or limitations on the use of resources (e.g. labour,

machine, raw material, space, money, etc.) restrict the degree to
which an objective can be achieved.
Assumptions of a LP Model
Certainty: The LP model parameters, i.e. availability of
resources bi; profit (or cost) contribution of a unit of
decision variable cj; and consumption of resources by a unit
of decision variable aij, must be known as constant.

Additivity: The value of the objective function and the total

amount of each resource used (or supplied), must be equal
to the sum of the respective individual contribution (profit
or cost) by decision variables.

Contd
Assumptions of a LP Model
Linearity (or Proportionality): The amount of each resource
used (or supplied) and its contribution to the profit (or cost) in
objective function must be proportional to the value of each
decision variable. For example, if production of 1 unit of a
product uses 5 hours of a particular resource, then making 3
units of that product must use 3 5 = 15 hours of that resource.

Divisibility (or Continuity): The value of decision variables is

allowed to assume continuous value. If any of the variables can
assume only integer value or is limited to discrete number of
values, LP model is no longer applicable, but an integer
programming model may be applied to get the desired values.
 Advantages of Linear Programming
Linear programming helps in attaining the optimum use of
productive resources.

Linear programming technique improves the quality of decisions. In

other words, decision-making approach becomes more objective and
less subjective.

Linear programming technique provides possible and practical

solutions by taking into account the constraints operating outside the
problem.

Linear programming also helps in re-evaluation of the outcome due

to a course of action under changing conditions.
Limitations of Linear Programming
Linear programming treats all relationships among decision
variables as linear.
While solving an LP model, there is no guarantee to get an
integer valued solution.
Linear programming model does not take into
consideration the effect of time and uncertainty.
Parameters of LP model are assumed to be constant but in
real-life situations, they are neither known nor constant.

A LP model has single objective function, whereas in real-

life situations we may come across conflicting multi-
objective problems. In such cases, a goal programming
model is used to get satisfactory value of such objectives.
Guidelines on LP Model Formulation
Step 1: Identify the Decision Variables
What decisions must be made in order to optimize the objective
function?

Step 2: Identify the Problem Data

To identify the problem data so as to determine the value for the
decision variables.

Contd...
Guidelines on LP Model Formulation

Step 3: Formulate the Constraints

Convert the the constraints imposed by the resource availability as
linear equality (or inequality) in terms of the decision variables
defined in Step 1.

Step 4: Formulate the Objective Function

Identify whether the objective function is to be maximized or minimized.
Then convert it into a linear mathematical expression in terms of decision
variables multiplied by their profit or cost contributions.

Contd...
General Mathematical Model of LP Problem

The general linear programming problem (or model) with

n decision variables and m constraints can be stated as:
Optimize (maximum or minimum) Z = c1x1 + c2x2 + + cnxn

subject to the linear constraints,

a11x1 + a12x2 + ... + a1nxn(, =, )b1
a21x1 + a22x2 + ... + a2nxn(, =, )b2
am1x1 + am2x2 + ... + amnxn(, =, )bm
and x1 0, x2 0, , xn 0.

Contd...
 General Mathematical Model of LP Problem
where, the cjs are coefficients representing the per unit
contribution of decision variable xj, to the value of objective
function. The aijs are called the technological coefficients or input-
output coefficients and represents the amount of resource, say i,
consumed per unit of variable (activity) xj. The bi represents the
total availability of the ith resource. If any bi < 0, then both sides of
constraint i can be multiplied by 1 to make bi > 0 and reverse the
inequality of the constraint. In the general LP problem, the
expression (, =, ) implies that each constraint may take only
one of the three possible forms: (i) less than or equal to (); (ii)
equal to (=); (iii) greater than or equal to ()
 Examples of LP Model Formulation
Examples on Production
Example 1: A manufacturing company is engaged in producing three types of
products: A, B and C. The production department produces, each day,
components sufficient to make 50 units of A, 25 units of B and 30 units of C.
The management is confronted with the problem of optimizing the daily
production of products in assembly department where only 100 man hours are
available daily to assemble the products. The following additional information
is available. Type of Profit Contribution Assembly Time per
Product per Unit of Product Product (h)
(Rs )
A 12 0.8
B 20 1.7
C 45 2.5
 Example 1
The company has a daily order commitment for 20 units of products A and a
total of 15 units of products B and C. Formulate this problem as an LP model
so as to maximize the total profit.

Solution
LP Model Formulation: The data of the problem is summarized as follows:

Resources/Constraints Product Type Total

A B C

Production capacity (units) 50 25 30

Man hours per unit 0.8 1.7 2.5 100

Order commitment (units) 20 15 (both for B and C)

Profit contribution (Rs/unit) 12 20 45

Example 1
Decision Variables: Let x1, x2 and x3 = Number of units of products
A, B and C to be produced, respectively.

The LP Model: Maximize (total profit) Z = 12x1 + 20x2 + 45x3

subject to the constraints
Labour and materials constraints
0.8x1 + 1.7x2 + 2.5x3 100
x1 50
x2 25
x3 30
Order commitment constraints
x1 20
x2 + x3 15
and x1, x2, x3 0
Examples of LP Model Formulation
Example 2: A company has two grades of inspectors 1 and 2, who
are to be assigned for a quality control inspection. It is required
that at least 2,000 pieces be inspected per 8-hour day. Grade 1
inspector can check pieces at the rate of 40 per hour, with an
accuracy of 97 per cent. Grade 2 inspector checks at the rate of 30
pieces per hour with an accuracy of 95 per cent.
The wage rate of a Grade 1 inspector is Rs 5 per hour while that of
a Grade 2 inspector is Rs 4 per hour. An error made by an
inspector costs Rs 3 to the company. There are only nine Grade 1
inspectors and 11 Grade 2 inspectors available in the company.
The company wishes to assign work to the available inspectors so
as to minimize the total cost of the inspection. Formulate this
problem as an LP model so as to minimize daily inspection cost.
Example 2
LP Model Formulation: The data of the problem is summarized as
follows
Inspector
Grade 1 Grade 2
Number of inspectors 9 11
Rate of checking 40 pieces/h 30 pieces/h
Inaccuracy in checking 1 0.97 = 0.03 1 0.95 = 0.05
Cost of inaccuracy in checking Rs 3/piece Rs 3/piece
Wage rate/hour Rs 5 Rs 4
Duration of inspection = 8 h/day

Total pieces which must be 2,000

inspected
Decision Variables: Let x1 and x2 = number of Grade 1 and 2 inspectors to
be assigned for inspection, respectively.
Contd...
Example 2
The LP Model: Hourly cost for each of Grade 1 and 2 inspectors can be
computed as follows:
Inspector Grade 1: Rs (5 + 3 40 0.03) = Rs 8.60
Inspector Grade 2: Rs (4 + 3 30 0.05) = Rs 8.50
Minimize (Daily inspection cost), Z = 8 (8.60x1 + 8.50x2)
= 68.80x1 + 68.00x2
subject to the constraints
Total number of pieces that must be inspected in an 8-hour day constraint
8 40x1 + 8 30x2 2000
Number of inspectors of Grade 1 and 2 available constraint
x1 9; x2 11
and x1, x2 0
Examples of LP Model Formulation
Example 3: A pharmaceutical company produces two pharmaceutical
products: A and B. Production of both products requires the same process
I and II. The production of B results also in a by product C at no extra cost.
The product A can be sold at a profit of Rs 3 per unit and B at a profit of Rs 8
per unit. Some of this by-product can be sold at a unit profit of Rs 2, the
remainder has to be destroyed and the destruction cost is Re 1 per unit.
Forecasts show that only up to 5 units of C can be sold. The company gets 3
units of C for each unit of B produced. The manufacturing times are 3 hours
per unit for A on process I and II, respectively, and 4 hours and 5 hours per
unit for B on process I and II, respectively. Because the product C results from
producing B, no time is used in producing C. The available times are 18 and
21 hours of process I and II, respectively.
Formulate this problem as an LP model to determine the quantity of A and B
which should be produced, keeping C in mind, to make the highest total profit
to the company.
 Example 3
LP Model Formulation: The data of the problem is
summarized as follows:

Constraints/ Time (h) Availability

Resources Required by
A B C
Process I 3 4 18 h
Process II 3 5 21 h
By-product ratio 1 3 5 units (max. units that
Contd...
from B can be sold that can be
sold)
Profit per unit 3 8 2 & (Rs 1 destruction cost of
(Rs) C)
Example 3
Decision Variables
Let,
x1, x2 = Units of product A and B to be produced, respectively
x3, x4 = Units of product C to be produced and destroyed,
respectively
The LP Model
Maximize (total profit) Z = 3x1 + 8x2 + 2x3 x4
subject to the constraints
Manufacturing constraints for product A and B
3x1 + 4x2 18
3x1 + 5x2 21
Manufacturing constraints for by-product C
x3 5
3x2 + x3 + x4 = 0
and x1, x2, x3, x4 0
Examples on Marketing
Example 4: An advertising company wishes to plan an advertising
campaign for three different media: television, radio and a magazine. The
purpose of the advertising is to reach as many potential customers as
possible. The following are the results of a market study:
Television Radio (Rs) Magazine (Rs)

Prime Day Prime Time

(Rs) (Rs)

Cost of an adv. unit 40,000 75,000 30,000 15,000

No. of potential customers 4,00,000 9,00,000 5,00,000 2,00,000

reached per unit

No. of women customers 3,00,000 4,00,000 2,00,000 1,00,000

reached per unit
Contd...
Example 4

The company does not want to spend more than Rs 8,00,000 on

advertising. It is further required that
At least 2 million exposures take place amongst women
The cost of advertising on television be limited to Rs 5,00,000
At least three advertising units be bought on prime day and two units
during prime time.
The number of advertising units on the radio and the magazine should
each be between 5 and 10.

Formulate this problem as a LP model to maximize potential customer

reach.
Contd
Example 4
LP Model Formulation: Let x1, x2, x3 and x4 = Number of advertising units
bought in prime day and time on television, radio and magazine,
respectively
The LP Model
Maximize (Total potential customer reach)
Z = 4,00,000x1 + 9,00,000x2 + 5,00,000x3 + 2,00,000x4
subjects to the constraints
Advertising budget:
40,000x1 + 75,000x2 + 30,000x3 + 15,000x4 8,00,000
Number of women customers reached by the advertising campaign
3,00,000x1 + 4,00,000x2 + 2,00,000x3 + 1,00,000x4 20,00,000
Television advertising:
(a) 40,000x1 + 75,000x2 5,00,000; (b) x1 3; (c) x2 2
Radio and magazine advertising:
(a) 5 x3 10; (b) 5 x4 10 and x1, x2, x3 and x4 0
Examples on Marketing
Example 5: A businessman is opening a new restaurant and has budgeted
Rs 8,00,000 for advertisements in the coming month. He is considering
four types of advertising: 30 second television commercials, 30 second
radio commercials, half-page advertisement in a newspaper and full-page
advertisement in a weekly magazine that will appear four times during the
coming month.
The owner wishes to reach families with income both over and under Rs
50,000. The amount of exposure to families of each type and the cost of
each media is shown as:
Media Cost of Exposure to Families with Exposure to Families with Annual
Advertisement Annual Income Over Rs Income Under
(Rs) 50,000 Rs 50,000
Television 40,000 2,00,000 3,00,000
Radio 20,000 5,00,000 7,00,000
Newspaper 15,000 3,00,000 1,50,000

Magazine 15,000 1,00,000 1,00,000

Contd...
Example 5
To have a balanced campaign, the owner has determined the following
restrictions:
No more than four television advertisements
No more than four advertisements in the magazine
No more than 60 per cent of all the advertisements in newspaper and
magazine
There must be at least 45,00,000 exposures to families with incomes
over Rs 50,000.
Formulate this problem as a LP Model to determine the number of each
type of advertisement to be given so as to maximize the total number of
exposures.

LP Model Formulation: Let x1, x2, x3 and x4 = Number of television, radio,

newspaper, magazine, advertisements to pursue, respectively.
Contd...
Example 5
The LP Model Maximize (total number of exposures of both groups)
Z = (2,00,000 + 3,00,000)x1 + (5,00,000 + 7,00,000)x2 +
(3,00,000 + 1,50,000)x3 + (1,00,000 + 1,00,000)x4
= 5,00,000x1 + 12,00,000x2 + 4,50,000x3 + 2,00,000x4
Subject to the constraints
Available budget constraint
40,000x1 + 20,000x2 + l5,000x4 + 5,000x4 8,00,000
Maximum television advertisement constraint x1 4
Maximum magazine advertisement constraint x4 4
(because magazine will appear only four times in the next month)
Maximum magazine advertisement constraint
x3 x4
0.60 or 0.6x1 0.6x2 + 0.4x3 + 0.4x4 0
x1 x2 x3 x4
Exposure to families with income over Rs 50,000
Constraint 2,00,000x1 + 5,00,000x2 + 3,00,000x3 + 1,00,000x4
45,00,000 and x1, x2, x3, x4 0.
Examples on Finance
Example 6: XYZ is an investment company. To aid in its investment
decision, the company has developed the investment alternatives for a
10-year period, as given in the following table. The ROI is expressed as an
annual rate of return on the invested capital. The risk coefficient and
growth potential are subjective estimates made by the portfolio manager
of the company. The terms of investment is the average length of time
period required to realize the return on investment as indicated.
Investment Length of Annual Rate of Risk Coefficient Growth Potential
Alternative Investment Return (Year) Return (%)

A 4 3 1 18
B 7 12 5 10
C 8 9 4 10
D 6 20 8 32
E 10 15 6 20
F 3 6 3 7
Cash 0 0 0 0
Example 6
The objective of the company is to maximize the return on its investments.
The guidelines for selecting the portfolio are:
The average length of the investment for the portfolio should not
exceed 7 years.
The average risk for the portfolio should not exceed 5.
The average growth potential for the portfolio should be at least 10%.
At least 10% of all available funds must be retained in the form of cash
at all times.

Formulate this problem as an LP model to maximize total return.

Contd...
Example 6
LP Model Formulation
Let xj = proportion of funds to be invested in the jth investment
alternative ( j = 1, 2, , 7)
The LP Model
Maximize (total return) Z = 0.03x1 + 0.12x2 + 0.09x3 + 0.20x4 + 0.15x5 +
0.06x6 + 0.00x7
subject to the constraints
Length of investment constraint: 4x1 + 7x2 + 8x3 + 6x4 + 10x5 + 3x6 + 0x7
7
Risk level constraint: x1 + 5x2 + 4x3 + 8x4 + 6x5 + 3x6 + 0x7 5
Growth potential constraint:
0.18x1 + 0.10x2 + 0.10x3 + 0.32x4 + 0.20x5 + 0.07x6 + 0x7 0.10
Cash requirement constraint x7 0.10
Proportion of funds constraint:
x1 + x 2 + x3 + x4 + x5 + x6 + x7 = 1
and x1, x2, x3, x4, x5, x6, x7 0
 Linear Programming-Graphical Method-
Important Definitions
Solution: The set of values of decision variables xj (j = 1, 2, . . ., n) which
satisfy the constraints of an LP problem is said to constitute solution to that
LP problem.

Feasible solution: The set of values of decision variables xj (j = 1, 2, . . ., n)

which satisfy all the constraints and non-negativity conditions of an LP
problem simultaneously is said to constitute the feasible solution to that LP
problem.

Infeasible solution: The set of values of decision variables xj ( j = 1, 2, . . ., n)

which do not satisfy all the constraints and non-negativity conditions of an LP
problem simultaneously is said to constitute the infeasible solution to that LP
problem.

1-50
Basic feasible solution: That is, all basic variables assume non-negative
values. Basic feasible solutions are of two types:

Degenerate: A basic feasible solution is called degenerate if value of at

least one basic variable is zero.

Non-degenerate: A basic feasible solution is called non-degenerate if

values all m basic variables are non-zero and positive.

Optimum basic feasible solution: A basic feasible solution which optimizes

(maximizes or minimizes) the objective function value of the given LP
problem is called an optimum basic feasible solution.

1-51
Extreme Point Solution Method

Coordinates of all corner (or extreme) points of the feasible region (space or
area) are determined and then values of the objective function at these points
are computed and compared because an optimal solution to any LP problem
always lie at one of the corner (extreme) points of the feasible solution space.

Step 1: Develop LP model

State the given problem in the mathematical LP model.
Step 2: Plot constraints on graph paper and decide the feasible region

Replace the inequality sign in each constraint by an equality sign.

Draw these straight lines on the graph paper and decide each time the
area of feasible solutions according to the inequality sign of the
constraint. Shade the common portion of the graph that satisfies all the
constraints simultaneously drawn so far.

1-52
 The final shaded area is called the feasible region (or solution space) of
the given LP problem. Any point inside this region is called feasible
solution and provides values of x1 and x2 that satisfy all constraints.

Step 3: Examine extreme points of the feasible solution space

to find an optimal solution

Determine the coordinates of each extreme point of the feasible solution

space.
Compute and compare the value of the objective function at each
extreme point.
Identify extreme point that gives optimal (max. or min.) value of the
objective function.

1-53
LP Model: Example
RESOURCE REQUIREMENTS
Labor Clay Revenue
PRODUCT (hr/unit) (lb/unit) ($/unit)
Bowl 1 4 40
Mug 2 3 50

There are 40 hours of labor and 120 pounds of clay

available each day

Decision variables
x1 = number of bowls to produce
x2 = number of mugs to produce
LP Formulation: Example

Maximize Z = $40 x1 + 50 x2

Subject to
x1 + 2x2 40 hr (labor constraint)
4x1 + 3x2 120 lb (clay constraint)
x1 , x2 0

Solution is x1 = 24 bowls x2 = 8 mugs

Revenue = $1,360
Graphical Solution: Example
x2
50

40
4 x1 + 3 x2 120 lb
30

20 Area common to
both constraints
10
x1 + 2 x2 40 hr
0 | | | | | |
10 20 30 40 50 60 x1
Computing Optimal Values

x2
40
4 x1 + 3 x2 120 lb

30

20
x1 + 2 x2 40 hr
10
8

| x1
24
0 | | |
10 20 30 40
Z = $50(24) + $50(8) = $1,360
Extreme Corner Points
x1 = 0 bowls
x2 x2 = 20 mugs
x1 = 24 bowls
Z = $1,000
40 x2 = 8 mugs
Z = $1,360 x1 = 30 bowls
30 x2 = 0 mugs
20 A
Z = $1,200

10
B
0 | | | C|
10 20 30 40 x1
Example : Use the graphical method to solve the following LP problem.
Maximize Z = 15x1 + 10x2
subject to the constraints
4 x1 + 6 x2 360
3 x1 + 0 x2 180
0 x1 + 5 x2 200
and x1, x2 0.

1-59
 Feasible
Region Feasible
Region

Fig. 1 Graphical Solution of LP Problem Fig. 1 Graphical Solution of LP Problem

1-60
 i) The coordinates of extreme points of the feasible region are: O = (0, 0),
A = (60, 0), B = (60, 20), C = (30, 40), D = (0, 40).

ii) Evaluate objective function value at each extreme point of the feasible
region :

Extreme Point Coordinates Objective Function Value

(x1, x2) Z = 15x1 + 10x2
O (0, 0) 15(0) + 10(0) = 0
A (60, 0) 15(60) + 10(0) = 900
B (60, 20) 15(60) + 10(20) = 1,100
C (30, 40) 5(30) + 10(40) = 850
D (0, 40) 15(0) + 10(40) = 400

iii) Since maximum value of Z = 1,100 is achieved at the point extreme B (60,
20). Hence the optimal solution to the given LP problem is: x1 = 60, x2 = 20
and Max Z = 1,100.

1-61
Example 2: Use the graphical method to solve the following LP problem.

Maximize Z = 2x1 + x2
subject to the constraints
x1 + 2x2 10
x1 + x2 6
x1 x2 2
x1 2x2 1
and x1, x2 0

1-62
Maximize Z = 2x1 + x2
.
subject to the constraints
x1 + 2x2 10
x1 + x2 6
x1 x2 2
x1 2x2 1
and x1, x2 0
Feasible
Region

Fig. 3 Graphical Solution of LP Problem -2

1-63
 Extreme Point Coordinates Objective Function Value
(x1, x2) Z = 2x1 + x2

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 (4, 2). Hence, the optimal solution to the given LP problem is: x1 = 4, x2 =
2 and Max Z = 10.

1-64
Example 3: Use the graphical method to solve the LP problem.

Minimize Z = 3x1 + 2x2

subject to the constraints
5x1 + x2 10
x1 + x2 6
x1 + 4x2 12
and x1, x2 0

1-65
 Minimize Z = 3x1 + 2x2
subject to the constraints
5x1 + x2 10
x1 + x2 6
x1 + 4x2 12
and x1, x2 0

Fig. 4 Graphical Solution of LP Problem -3

1-66
 Extreme Point Coordinates Objective Function Value
(x1, x2) Z = 3x1 + 2x2

A (12, 0) 3(12) + 2(0) = 36

B (4, 2) 3(4) + 2(2) = 16

C (1, 5) 3(1) + 2(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: x1 = 1, x2 = 5, and Min Z = 13.

1-67
Example 4: Use the graphical method to solve the LP problem.

Minimize Z = x1 + 2x2
subject to the constraints

x1 + 3x2 10
x1 + x2 16
x1 x2 12
and x1, x2 10.

1-68
Minimize Z = x1 + 2x2
subject to the constraints

x1 + 3x2 10
x1 + x2 16
x1 x2 12
and x1, x2 10.

Feasible
Region

Fig. 5 Graphical Solution of LP Problem -4

1-69
 Extreme Point Coordinates Objective Function Value
(x1, x2) Z = x1 + 2x2

O (0, 0) 1(0) + 2(0) = 0

A (2, 0) 1(2) + 2(0) = 2

B (4, 2) 1(4) + 2(2) = 0

C (2, 4) 1(2) + 2(4) = 6

D (0, 10/3) 1(0) + 2(10/3) = 20/3

The minimum value of the objective function Z = 2 occurs at the

extreme point A (2, 0). Hence, the optimal solution to the given LP
problem is: x1 = 2, x2 = 0 and Min Z = 2.

1-70
Example 5: Use the graphical method to solve the LP problem.
Maximize Z = 2x1 + 3x2
subject to the constraints
x1 + x2 30
x2 3
0 x2 12
0 x1 20
x1 x2 0
and x1, x2 0
Maximize Z = 2x1 + 3x2
subject to the constraints
x1 + x2 30
x2 3
0 x2 12
0 x1 20
x1 x2 0
and x1, x2 0

Feasible
Region

Fig. 6 Graphical Solution of LP Problem -5

1-72
 Extreme Point Coordinates Objective Function Value
(x1, x2) Z = 2x1 + 3x2

A (3, 3) 2(3) + 3(3) = 15

B (20, 3) 2(20) + 3(3) = 49

C (20, 10) 2(20) + 3(10) = 70

D (18, 12) 2(18) + 3(12) = 72

E (12, 12) 2(12) + 3(12) = 60

The maximum value of the objective function Z = 72 occurs at the extreme

point D (18, 12). Hence, the optimal solution to the given LP problem is: x1
= 18, x2 = 12 and Max Z = 72.

1-73
Example 6: A firm makes two products X and Y, and has a total production
capacity of 9 tones per day, X and Y requiring the same production
capacity. The firm has a permanent contract to supply at least 2 tones of X
and at least 3 tones of Y per day to another company. Each tone of X
requires 20 machine hours of production time and each tone of Y requires
50 machine hours of production time. The daily maximum possible number
of machine hours is 360. All the firms output can be sold, and the profit
made is Rs. 80 per tone of X and Rs. 120 per tone of Y. It is required to
determine the production schedule for maximum profit and to calculate this
profit.

1-74
Fig. 7 Graphical Solution of LP Problem -6

1-75
 Extreme Point Coordinates Objective Function Value
(x1, x2) Z = 80x1 + 120x2

A (2, 3) 80(2) + 120(3) = 520

B (6, 3) 80(6) + 120(3) = 840

C (3, 6) 80(3) + 120(6) = 960

D (2, 6.4) 80(2) + 120(6.4) = 928

The maximum value of the objective function Z = 960 occurs at the

extreme point C (3, 6). Hence the company should produce, x1 = 3
tones of product X and x2 = 6 tones of product Y in order to yield a
maximum profit of Rs. 960.

1-76
Example 7: A manufacturer produces two different models: X and Y, of the
same product. Model X makes a contribution of Rs 50 per unit and model
Y, Rs 30 per unit towards total profit. Raw materials r1 and r2 are required
for production. At least 18 kg of r1 and 12 kg of r2 must be used daily. Also
at most 34 hours of labour are to be utilized.

A quantity of 2 kg of r1 is needed for model X and 1 kg of r1 for model Y.

For each of X and Y, 1 kg of r2 is required.

It takes 3 hours to manufacture model X and 2 hours to manufacture

model Y.

How many units of each model should be produced to maximize the

profit?

1-77
Fig. 8 Graphical Solution of LP Problem - 7
1-78
 Extreme Point Coordinates Objective Function Value
(x1, x2) Z = 50x1 + 30x2

A (6, 6) 50(6) + 30(6) = 480

B (2, 14) 50(2) + 30(14) = 520

C (10, 2) 50(10) + 30(2) = 560

Since the maximum value of Z = 560 occurs at the point C (10, 2), the
manufacturer should produce x1 = 10 units of model X and x2 = 2
units of Y to yield a maximum profit of Rs. 560.

1-79
Isoprofit Line Solution Method
Isoprofit Line Solution Method
Once the feasible region has been graphed, we need to
find the optimal solution from the many possible
solutions
The speediest way to do this is to use the isoprofit line
method
Starting with a small but 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
Kirti Furniture Company
The Kirti Furniture Company produces inexpensive tables
and chairs
Processes are similar in that both require a certain amount
of hours of carpentry work in Carpentry Dept and painting
and varnishing in the P&V Dept.
Each table takes 4 hours of carpentry and 2 hours of
painting and varnishing.
Each chair requires 3 hours of carpentry and 1 hour of
painting and varnishing.
There are 240 hours of carpentry time available and 100
hours of painting and varnishing.
Each table yields a profit of $70 and each chair a profit of
$50.
 Kirti 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

 Kirti Furniture Company

The values for T and C must be nonnegative

T 0 (number of tables produced is greater than or

equal to 0)
C 0 (number of chairs produced is greater than or
equal to 0)

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 C 0
80
Number of Chairs

60

40 This Axis Represents the
Constraint T 0
20

| | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Graphical Representation of a Constraint

The first step in solving the problem is to identify a

set or region of feasible solutions
To do this we plot each constraint equation on a
graph
We start by graphing the equality portion of the
constraint equations
4T + 3C = 240
We solve for the axis intercepts and draw the line
Graphical Representation of a
Constraint
C
Graph of carpentry constraint equation
100

80 (T = 0, C = 80)
Number of Chairs

60

40

(T = 60, C = 0)
20

| | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Graphical Representation of a
Constraint
C Any point on or below the constraint plot
will not violate the restriction
100
Any point above the plot will violate the
restriction
80
Number of Chairs

60

(30, 40) (70, 40)
40

20
(30, 20)
| | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Graphical Representation of a
Constraint
The point (30, 40) lies on the plot and exactly
satisfies the constraint
4(30) + 3(40) = 240
The point (30, 20) lies below the plot and
satisfies the constraint
4(30) + 3(20) = 180
The point (70, 40) lies above the plot and does
not satisfy the constraint
4(70) + 3(40) = 400
Graphical Representation of a
Constraint
C

100 (T = 0, C = 100)

80 Graph of painting and vanishing
Number of Chairs

constraint equation
60

40

(T = 50, C = 0)
20

| | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Graphical Representation of a
Constraint
To produce tables and chairs, both departments must
be used
We need to find a solution that satisfies both
constraints simultaneously
A new graph shows both constraint plots
The feasible region (or area of feasible solutions) is
where all constraints are satisfied
Any point inside this region is a feasible solution
Any point outside the region is an infeasible solution
Graphical Representation of a
Constraint
C
Feasible solution region for Kirti Furniture
100

80 Painting/Varnishing Constraint
Number of Chairs

60

40

Carpentry Constraint
20 Feasible
Region
| | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Isoprofit Line Solution Method
C Isoprofit line at $2,100

100

80
Number of Chairs

60
$2,100 = $70T + $50C
(0, 42)
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
$4,100 = $70T + $50C
20

| | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Isoprofit Line Solution Method
C Optimal solution to the Kirti
Furniture problem
100

80
Number of Chairs

Maximum Profit Line

60 Optimal Solution Point
(T = 30, C = 40)
40
$4,100 = $70T + $50C
20

| | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
Four Special Cases in LP
Infeasibility
Unboundedness
Redundancy
Alternate Optimal Solutions
Four Special Cases in LP
No feasible solution
Exists when there is no solution to the problem that
satisfies all the constraint equations
No feasible solution region exists
This is a common occurrence in the real world
Generally one or more constraints are relaxed until
a solution is found
Four Special Cases in LP
A problem with no feasible solution
X2

8

6

Region Satisfying
4 Third Constraint

2

0 | | | | | | | | | |
2 4 6 8 X1

Region Satisfying First Two Constraints

Four Special Cases in LP
Unboundedness
Sometimes a linear program will not have a finite
solution
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
Four Special Cases in LP
A solution region unbounded to the right
X2

X1 5
15

X2 10
10

Feasible Region
5
X1 + 2X2 15

0 | | | | |
5 10 15 X1
Four Special Cases in LP
Redundancy
A redundant constraint is one that does not affect
the feasible solution region
One or more constraints may be more binding
This is a very common occurrence in the real world
It causes no particular problems, but eliminating
redundant constraints simplifies the model
Four Special Cases in LP
A problem with a X2

redundant 30

constraint
25
2X1 + X2 30
20
Redundant
Constraint
15
X1 25

10
X1 + X2 20
Feasible
5
Region

0 | | | | | |
5 10 15 20 25 30 X1
Four Special Cases in LP
Alternate Optimal Solutions
Occasionally two or more optimal solutions may
exist
Graphically this occurs when the objective
functions isoprofit or isocost line runs perfectly
parallel to one of the constraints
This actually allows management great flexibility in
deciding which combination to select as the profit
is the same at each alternate solution
Four Special Cases in LP
Example of X2
alternate optimal 8
solutions
7

6 A
Optimal Solution Consists of All
5 Combinations of X1 and X2 Along the
AB Segment
4

3 Isoprofit Line for $8

2
B Isoprofit Line for $12
1 Feasible Overlays Line Segment AB
Region
0 | | | | | | | |
1 2 3 4 5 6 7 8 X1
Sensitivity Analysis
Optimal solutions to LP problems thus far have been
found under deterministic assumptions
This means that we assume complete certainty in the
data and relationships of a problem
But in the real world, conditions are dynamic and
changing
We can analyze how sensitive a deterministic solution is
to changes in the assumptions of the model
This is called sensitivity analysis or optimality analysis
Sensitivity Analysis
Sensitivity analysis often involves a series of what-if?
questions concerning constraints, variable coefficients,
and the objective function
One way to do this is the trial-and-error method where
values are changed and the entire model is resolved
The preferred way is to use an analytic postoptimality
analysis
After a problem has been solved, we determine a range
of changes in problem parameters that will not affect
the optimal solution or change the variables in the
solution