Linear Programming

Name Mohamed ………………

Set number 12345

Grade First year

Course title Accounting principles -1

Research topic Linear Programming

Research number 18

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(1) Introduction: (Maxium (at most) one page)
Many management decisions involve trying to make the most
effective use of an organization’s resources. Resources typically include
machinery, labor, money, time, warehouse space, or raw materials.
Resources may be used to produce products (such as machinery, furniture,
food, or clothing) or services (such as schedules for shipping and
production, advertising policies, or investment decisions).

Mathematical programming is used to find the best or optimal solution

to a problem that requires a decision or set of decisions about how best to
use a set of limited resources to achieve a state goal of objectives.
Problems of this kind are called “linear programming problems” or “LP
problems” for short; linear programming is the branch of applied
mathematics concerned with these problems.

Linear programming (LP) is a widely used mathematical technique

designed to help managers in planning and decision making relative to
resource allocation. Linear programming requires that all the
mathematical functions in the model be linear functions. A linear
programming problem is the problem of maximizing (or minimizing) a
linear function subject to a finite number of linear constraints.

Steps involved in mathematical programming

➢ Conversion of stated problem into a mathematical model that
abstracts all the essential elements of the problem.
➢ Exploration of different solutions of the problem.
➢ Finding out the most suitable or optimum solution.

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(2) Research elements: (Minimum (at least) 4 elements)
This research will discuss the following elements:
a. Meaning of linear programming:
b. The Importance of Linear Programming
c. History of Linear Programming
d. General stages of linear programming
e. Main items in linear programming:
f. Typical Applications of Linear Programming
g. Numerical Explanation Example on LP

(3) Research topics

A. Meaning of linear programming:

Linear programming is a mathematical technique that enables a decision
maker to arrive at the optimal solution to problems involving the allocation
of scarce resources.
- Linear: the relation between two variables is linear
- Programming: steps after steps (systematic steps to reach the final
solution

Programming problems, in general, are concerned with the use or allocation

of scarce resources - labor, materials, machines, and capital - in the ”best”
possible manner so that costs are minimized or profits maximized.

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 B. The Importance of Linear Programming
A Linear Programming model seeks to maximize or minimize a linear
function, subject to a set of linear constraints.
–Many real world problems lend themselves to linear programming

modeling.
–Many real world problems can be approximated by linear models.

–There are well-known successful applications in:

•Manufacturing * Marketing
•Finance (investment) * Advertising *Agriculture
–There are efficient solution techniques that solve linear programming
models.
–The output generated from linear programming packages provides useful
“what if” analysis.

C. History of Linear Programming

◼ It started in 1947 when G.B.Dantzig design the “simplex method”

for solving linear programming formulations of U.S. Air Force
planning problems.
◼ It soon became clear that a surprisingly wide range of apparently
unrelated problems in production management could be stated in
linear programming terms and solved by the simplex method.
◼ Later, it was used to solve problems of management. It’s algorithm
can also used to network flow problems.
◼ On Oct.14th,1975, the Royal Sweden Academy of Science
awarded the Nobel Prize in economic science to L.V.Kantorovich
and T.C.Koopmans ”for their contributions to the theory of
optimum allocation of resources”
◼ The breakthrough in looking for a theoretically satisfactory
algorithm to solve LP problems came in 1979 when L.G.Khachian
published a description of such an algorithm.

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D. General stages and steps of linear programming formation:

LP is an optimization problem for which we do the following:

1. We attempt to maximize (or minimize) a linear function of the decision
variables. The function that is to be maximized or minimized is called
objective function.
2. The values of decision variables must satisfy a set of constraints. Each
constraint must be a linear equation or linear inequality.
3. A sign restriction is associated with each variable. for any variable Xi,
the sign restriction specifies either that Xi must be nonnegative (Xi > 0)
or that Xi may be unrestricted in sign.

There are four stages of linear programming which are:

1- Problem formation: transfer verbal sentences to mathematical sign

2- Problem solving: whether by graphical solution or by simplex method

3- Solution interpretation: to know the meaning of every item in the

solution

4- Sensitivity analysis: to know what will happen to the optimal solution

if we make certain changes

Main steps of linear programming model

1. Define the objective. (Min or Max)

2. Define the decision variables. (Positive, binary)
3. Write the mathematical function for the objective.
4. Write a 1- or 2-word description of each constraint.
5. Write the right-hand side (RHS) of each constraint.
6. Write <, =, or > for each constraint.
7. Write the decision variables on LHS of each constraint.
8. Write the coefficient for each decision variable in each constraint.

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E. Main items in linear programming:

1- Objective function:
* Represent the goal from the problem which could be either:
- To maximize the revenue, profits (revenue-expenses).
- or to minimize the cost
* There must be an objective (or goal or target) the firm or
organization wants to achieve. For example, maximize dollar profits,
minimize dollar cost, maximize total number of expected potential
customers, minimize total time used, and so forth.
* Identify the objective or criterion and represent it as a linear function
of the decision variables, which is to be maximized or minimized.

Maximize / Minimize z = f (x1, x2 ,…, xn)

2- Decision Variables
Represent the unknown in the problem such as:
- How many units we should produce from each product to max. our profit?
- Which investment project we should invest in it?
Identify the unknown variables to be determined (decision variables), and
represent them in terms of algebraic symbols.
xj are called decision variables. These are things that you control and you
want to determine its values

3- Constraints
Any thing prevents you to get more from what you want such as:
- Availability of resources
- Availability of labor hours.
- Machine capacity available in each month
- Maximum inventory space available in each month
- Non negativity option

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 Identify all the restrictions or constraints in the problem and express them
as linear equations or inequalities which are linear functions of the
unknown variables.
Subject to
* gi (x1, x2 , …, xn) { < , > , =} bi are called constrains
* xj ≥ 0 are non negativity constraints

F. Typical Applications of Linear Programming

1. Product mix problem

2. Blending problem
3. Media selection problem
4. Assignment problem
5. Transportation problem
6. Portfolio selection problem
7. Make or buy problem

1- Product mix problem

A manufacturer wants to develop a production schedule and inventory policy that
will satisfy sales demand in future periods and same time minimize the total
production and inventory cost.
❖ A manufacturer has fixed amounts of different resources such as raw
material, labor, and equipment.
❖ These resources can be combined to produce any one of several different
products.
❖ The quantity of the resource required to produce one unit of the product is
known.
❖ The decision maker wishes to produce the combination of products that
will maximize total income.

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2-Blending problem

❖ Blending problems refer to situations in which a number of

components (or commodities) are mixed together to yield one or
more products.
❖ Typically, different commodities are to be purchased. Each
commodity has known characteristics and costs.
❖ The problem is to determine how much of each commodity should
be purchased and blended with the rest so that the characteristics of
the mixture lie within specified bounds and the total cost is
minimized.

3. Media selection problem

A marketing manager wants to determine how best to allocate a fixed
advertising budget among alternative advertising media such as radio, TV,
newspaper, and magazines. The goal is to maximize advertising effectiveness.
4. Assignment problem
Determine a assignment system which
❑ meets customer demand
❑ minimizes costs
5. Transportation problem
A company has warehouses in a number of locations throughout the country.
For a set of customer demands for its products, the company would like to
determine how much each warehouse should ship to each customer so that the
total transportation costs are minimized.
❖ A product is to be shipped in the amounts al, a2, ..., am from m
shipping origins and received in amounts bl, b2, ..., bn at each of n
shipping destinations.

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 ❖ The cost of shipping a unit from the ith origin to the jth destination is
known for all combinations of origins and destinations.
❖ The problem is to determine the amount to be shipped from each
origin to each destination such that the total cost of transportation is a
minimum.

6. Portfolio selection problem

A financial analyst must select an investment portfolio from a variety of stock
and bond investment alternatives. He would like to establish the portfolio that
maximizes the return on investment.

7. Make or buy problem

To determine which components can be manufactured by the company and
which one should be purchased from outside suppliers. In order to reduce
overall manufacturing costs and purchase prices

G. Explanation Example on LP: (Maximum (at most) one page)

A candidate for mayor in a small town has allocated $40,000 for last-
minute advertising in the days preceding the election. Two types of ads
will be used: radio and television. Each radio ad costs $200 and reaches
an estimated 3,000 people. Each television ad costs $500 and reaches an
estimated 7,000 people. In planning the advertising campaign, the
campaign manager would like to reach as many people as possible, but
she has stipulated that at least 10 ads of each type must be used. Also, the
number of radio ads must be at least as great as the number of television
ads. How many ads of each type should be used? How many people will
this reach?

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 Let X1 = the number of radio ads purchased
X2 = the number of television ads purchased

Maximize 3,000X1 + 7,000X2 (maximize exposure)

Subject (budget constraint)
200X1 + 500X2 ≤ 40,000
to:
(at least 10 radio ads
X1 ≥ 10
purchased)
(at least 10 television ads
X2 ≥ 10
purchased)
(# of radio ads ≥ # of
X1 ≥ X2
television ads)
≥ (non-negativity
X1, X2 0
constraints)

For solution purposes, the fourth constraint would be rewritten as:

X1 − X2 ≥ 0

(4) Conclusion: (Minimum (at least) 7 lines)

- LP programming is used to find the best or optimal solution to a problem that

requires a decision or set of decisions about how best to use a set of limited
resources to achieve a state goal of objectives.
- Linear programming is a mathematical technique that enables a decision maker to

arrive at the optimal solution to problems involving the allocation of scarce

resources
–Many real world problems lend themselves to linear programming modeling.

- LP problems came in 1979 when L.G.Khachian published a description of such an

algorithm.
- There are four stages of linear programming which are Problem formation,
Problem solving, Solution interpretation and Sensitivity analysis
- Main items in linear programming are Objective function, Decision Variables and
Constraints

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 (5) References (Minimum (at least) 6 sources)
1- Lectures notes, operation research, 2020. Dr. Mohamed Habiba

2- Habiba. M. 2020 . Operation research in accounting.

3-Vasek Chvatal. Linear Programming. ISBN 0-7167-1195-8, 1983

4- Richard B.Darst. Colorado State University. Introduction to Linear

Programming—Applications and Extensions. ISBN 0-8247-8383-2,1991

5- http://people.brunel.ac.uk/~mastjjb/jeb/or/ip.html

6-Management since and decision, John Wiley & Sons, Inc. 2002

Note that:

* Number of research pages are from 5-10 pages

* First and last pages not counted in research pages

* Font size 14

* Number of lines per page is 20 lines at least

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