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LP Maximization Graphical Method 2021

Linear programming is a mathematical technique that determines the optimal allocation of limited resources to maximize profit or minimize costs. It was developed in 1939 and extended in 1947. Some common applications include determining transportation routes, product mixes, investment portfolios, and job/machine assignments. The graphical method involves graphing the constraints and objective function to identify the optimal solution at a corner point of the feasible region. Two examples are provided to illustrate determining the optimal product mix that maximizes total contribution margin given resource constraints.

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146 views28 pages

LP Maximization Graphical Method 2021

Linear programming is a mathematical technique that determines the optimal allocation of limited resources to maximize profit or minimize costs. It was developed in 1939 and extended in 1947. Some common applications include determining transportation routes, product mixes, investment portfolios, and job/machine assignments. The graphical method involves graphing the constraints and objective function to identify the optimal solution at a corner point of the feasible region. Two examples are provided to illustrate determining the optimal product mix that maximizes total contribution margin given resource constraints.

Uploaded by

liesly butic
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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LINEAR PROGRAMMING

PROFIT MAXIMIZATION: GRAPHICAL METHOD


NATURE AND APPLICATIONS

 Linear Programming is a mathematical


technique that permits the determination of
the best or optimum use of the available
resources; namely, money, personnel,
materials, facilities and time.
 This was developed by the Russian
mathematician L.V.Kantrovich in 1939 and
extended by the American mathematician G.
B. Dantzig in 1947.
Specific applications of linear programming:

 Determination of transportation routes.


 Determination of the product mix to
maximize contribution margin.
 Selection of an investment mix.
 Determination of material mix to minimize
cost.
 Assignment of jobs to machines.
Computational Methods of Linear Programming

A. Graphical method –This method can be used if the problem


involves only two variables, a two-dimension graph can be used
to determine the optimal solution
Steps in in graphic method:
 Determine the objective function
 Determine basic relationships
 Compute the optimum solution, especially the constraints as
follows:
a. Change inequalities to equalities
b. Graph the equalities
c. Identify the correct side for the original inequalities
d. Identify the feasible solution
e. Determine the contribution margin at all corners in the feasible
solution
Example 1

Decision variables:
Let x1= no. of units of cabinets to be produced and to maximize
profit
x2=no. of units of dressers to be produced and to maximize
profit
Objective Function:
Maximize P=100x1 +80x2
Constraints:
Subject to: 4x1 +2x2 ≤ 60 assembly
2x1 +4x2 ≤ 48 finishing
x1 , x 2 ≥ 0
Example 2

 A firm produces two products x and y. Product x


requires 2 hours of grinding and 4 hours of
polishing. Product y requires 5 hours of grinding
and 2 hours of polishing. The manufacturer has 3
grinders and 2 polishers, in a 40-hour week there
are 120 hours of grinding capacity and 80 hours of
polishing capacity. The contribution margin of
product x and y are ₱3 and ₱4 respectively.
Example 2

 To maximize the total contribution margin, the


management must decide on:
1. The allocation of the production capacity to products x
and y; and
2. The number of units of each product to produce.
Solution:
Decision Variables:
Let x= number of units of product x to be produced to
maximize profit
y= number of units of product y to be produced to
maximize profit
Example 2

Objective Function:
Maximize P= 3x + 4y

Constraints:
Subject to:
2x + 5y ≤ 120 explicit constraints
4x + 2y ≤ 80
x,y ≥ 0 implicit constraint
Example 2

 Prepare a graph with x-axis representing the number


of units of product x to be produced and y-axis representing
the number of units of product y to be produced.
 Plot all the constraints on the graph by connecting the
points that represent the extreme of each product.
These points are
Grinding
If x=0 y=24
y=0 x=60
Polishing
If x= 0 y=40
y=0 Y=20
Example 2
 The company should produce 10 units of x
and 20 units of y. The total contribution
margin associated with the combination of
products x and y is 110 which is the highest
among the four vertices (combinations).
Example 3
Hazel’s Garment Inc. produces 2 styles of Jeans,
style A & B. Raw materials available for these styles
of Jeans are 90 meters and manufacturing time is 78
hours weekly. Style A requires 2 meters and 2 hours
to finish while style B requires 3 meters and 2 hours
to finish. The market has been surveyed and the
marketing manager feels that no more than 45 units
of style A can be sold weekly. If the contribution
margin of each style A & B are ₱60 and ₱50
respectively, how many units of style A & B should be
produced and sold to maximize the weekly profit?
Example 3
Example 3: Vertices

Determine the optimal solution by testing the four


corners of the shaded area (feasible region) by
substituting their coordinates into the objective
function.
P1 (0,0) = 60 (0) + 50 (0) = ₱0
P2 (0,30) = 60 (0) + 50 (30) = ₱1,500
P3 (27,12)= 60 (27) + 50 (12) = ₱2,220
P4 (39, 0) = 60 (39) + 50 (0) = ₱2,340
Example 3

Point 4 (39,0) yields the highest profit of P2,340 .

2x + 3y = 90 2x + 2y = 78
2(39) + 3(0)=90 2(39) + 2(0)=78
78 ≥ 90 78=78 fully utilized
under utilized
x≤ 45
39 ≤ 45 under utilized
Example 3

Decision: The factory should produced 39


units of Style A and 0 unit of Style B Jeans to
maximize profit to ₱2,340 per week.

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