Module Name: Business Mathematics

Module Code: BMS101

Assignment Type: Group Assignment
Project Work on the Application of
Linear Programming Problem
 Declaration Form
Module Name: Business Mathematics Date of Submission: 28/05/2021

Module Code: BMS101 Module Tutor: Miss.Priya Sharma

Type of Course Work: Group Assignment

We hereby declare that this academic work is our own and those derived from other sources have
been appropriately acknowledged. We understand that if found otherwise, our academic work
will be canceled and no mark will be awarded besides the legal consequences.

1. Yangchen choden( 03200453) 2.Yangchen Pelden (03200454) 3. Yangden(03200455)

4. Yangka Pem (03200456) 5. Yeshey choden (03200457)

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Question

Phuntsho Timber and Wood Industry were founded in Phuentsholing in 2002. It is a

manufacturer of wood furniture for the Bhutanese market. Teak Center Table, Mc Shoe Rack,
and Cloth Hanger are the major goods manufactured in Phuntsho Timber & Wood Industry. The
techniques for making these products necessitate a particular number of hours in design, a
specific number of hours in painting, and a specific number of hours in assembling. To produce
each Teak Center Table, it requires 8 hours of designing, 4 hours of painting and 1 hour of
assembling. To produce each Mc shoe rack, it requires 4 hours of designing, 6 hours of painting
and 1 hour of assembling. To produce each cloth Hanger, it requires 3 hours of designing, 2
hours of painting and 1 hour of assembling. In the current production, there are 640 hours of time
available for designing, 540 hours of time available for painting and 100 hours of time available
for assembling. The revenue from the sale of each Teak center Table generates a profit of Nu 30,
sale of each Mc Shoe rack generates Nu 20 and sale of each Cloth Hanger generates Nu 12.
Formulate a linear programming problem to determine the number of Teak center cloth, Mc
Shoe rack, and Cloth Hanger units that must be manufactured to achieve maximum profit..

Solution:-Let us convert the situation into a Linear Programming Program. The components of
LPP are:-

i. Objective functions
ii. Linear constraints
iii. Non-negative restrictions

Step 1:- Define the decision variable

-The decision variables are the number of Teak center table, Mc shoe rack and cloth Hanger.

Let x1 be the number of Teak center table produced.

Let x2 be the number of Mc shoe rack produced.

Let x3 be the number cloth Hanger produced.

Step 2: - Find the objective function for the production.

-It is stated that the profit generated from each sale of Teak center table is Nu 30, profit from
each sale of Mc shoe rack is Nu 20 and profit from each sale of cloth hanger is Nu 12.The profit
from the sale of teak center table from x 1 number is 30x2, from the sale of Mc shoe rack from x 2
number is 20x2 and from the sale of cloth Hanger from x3 number is 12x2.

As our objective is to maximize the profit, the objective function is:-

Maximize Z = 30x1 + 20x2 + 12x3

Step 3: - Linear constraints given in the problem

Numbers of hours required to produce 1 units

Department/items Availability
Teak center Mc shoe rack Cloth hanger (in hours)
table

Designing 8 4 3 640

Painting 4 6 2 540

Assembling 1 1 1 100

The Teak center table can be utilized a maximum of 640 hours, and we are going to produce x1
numbers of teak center table, x2 number of shoe rack and x3 numbers of cloth Hager, 8x1 + 4x2 +
3x3 should not exceed 640 hours.

Hence the first constraint is 8x1 + 4x2 + 3x3 <= 640. Similarly, the second constrains is written as
4x1 + 6x2 + 2x3 <= 540 and the third constraints is written as x1 + x2 + x3 <= 100

Hence the constraints are: 8x1 + 4x2 + 3x3 <= 640, 4x1 + 6x2 + 2x3 <= 540 and x1 + x2 + x3
<=100

Step 4:- The non-negative restrictions of the decision variables

As the number of teak center table, Mc shoe rack and Cloth hanger cannot be negative, the non-
negative restrictions for the problem are

x1>= 0, x2>=0 and x3>= 0

(0:) we can write x1,x2,x3>=0 together.

Hence the LPP for the given problem is given as follows

Maximize Z = 30x1 + 20x2 + 12x3

Subject to the constraints:-
8x1 + 4x2 + 3x3 <= 640 (Designing Department)
4x1 + 6x2 + 2x3 <= 540 (Painting Department)
x1 + x2 + x3 <= 100 (Assembling Department)
X1, x2, x3 >= 0
To proceed with the next table, we need to find the ratio and the entering and departing variable
using the given formula.

Solution entry
 Ratio= Key column entry

Entry variable is X1 (Largest positive Cj – Zj)

Departing variable is S1 (Smallest non-negative ratio)

Simplex Table II

30 20 12 0 0 0
Cj Basic Variable Solution X1 X2 X3 S1 S2 S3 Ratio
30 X1 80 1 ½ 3/8 1/8 0 0 80/1/2=160
0 S1 220 0 4 ½ -1/2 1 0 220/4=55
0 S3 20 0 ½ 5/8 -1/8 0 1 20/1/2=40
Zj 2400 30 15 11.25 3.75 0 0
Cj-Zj 0 5 0.75 -3.75 0 0

Working Note:

Old key row

New key row=
Key number

NKR1 = 640/8 = 80

NKR2 = 8/8 = 1

NKR3 = 4/8 = ½

NKR4 = 3/8

NKR5 = 1/8

NKR6 = 0/8 = 0

NKR7 = 0/8 = 0
 New non-key row = Old non-key row – key column entry × New key row

NNKR of S2 row

NNKR1 = 540 – 4 × 80 = 220 NNKR of S3 row

NNKR2 = 4 – 4 × 1 = 0 NNKR1 = 100 – 1 × 80 = 20

NNKR3 = 6 – 4 × ½ = 4 NNKR2 = 1 – 1 × 1 = 0

NNKR4 = 2 – 4 × 3/8 = ½ NNKR3 = 1 – 1 × ½ = 1/2

NNKR5 = 0 – 4 × 1/8 = -1/2 NNKR4 = 1 – 1 × 3/8 = 5/8

NNKR6 = 1 – 4 × 0 = 1 NNKR5 = 0 – 1 × 1/8 = -1/8

NNKR7 = 0 – 4 × 0 = 0 NNKR6 = 0 – 1 × 0 = 0

NNKR7 = 1 – 1 × 0 = 1

Zj

Zj = 30 × 80 + 0 × 20 = 2400 Cj – Zj

Zj (X1) = 30 × 1 + 0 × 0 + 0 × 0 = 30 Cj – Zj (X1) = 30 – 30 = 0

Zj (X2) = 30 × ½ + 0 × 4 + 0 × 1/2 = 15 Cj – Zj (X2) = 20 – 15 = 5

Zj (X3) = 30 × 3/8 + 0 × ½ + 0 × 5/8 = 11.25 Cj – Zj (X3) = 12 – 11.25 = 0.75

Zj (S1) = 30 × 1/8 + 0 × -1/2 + 0 ×-1/8 = Cj – Zj (S1) = 0 – 3.75 = -3.75

3.75
Cj – Zj (S2) = 0 – 0 = 0
Zj (S2) = 30 × 0 + 0 × 1 + 0 × 0 = 0
Cj – Zj (S3) = 0 – 0 = 0
Zj (S3) = 30 × 0 + 0 × 0 + 0 × 1 = 0

 Since there is a positive entry in the Cj – Zj row, so optimum solution is not obtained. Thus, we
need to proceed with the next simplex table.
Entering variable is X2

Departing variable S3
 Simplex Table 111

Cj Basic solution 30 20 12 0 0 0 ratio

variable X1 X2 X3 S1 S2 S3
30 X1 60 1 0 -1/4 1/4 0 -1
0 S1 60 1 0 -9/2 1/2 1 -8
20 X2 40 0 1 5/4 -1/4 0 2
Zj 260 30 20 17.5 2.5 0 2
Cj-Zj 0 0 -5.5 -2.5 0 -40
Working Note:-
NKR
20
NKR1= =40
1/2
0
NKR2= =0
1/2
1/2
NKR3= =1
1/2
5/8
NKR4= =5/ 4
1/2
−1/8
=−1/4
NKR5= 1
2
0
NKR6= =0
1/2
1
NKR7= 1 =2
2

NNKR of x1 row < NNKR of S2 row

NNKR1=80-1/2*40=60 NNKR1=220-4*40=60
NNKR2=1/2-1/2*1=0 NNKR2=0-4*0=0
NNKR3=1/2-1/2*1=0 NNKR3=4-4*1=0
NNKR4=3/2-1/2*5/4=-1/4 NNKR4=1/4-4*5/4=-9/2
NNKR5=1/8-1/2*-1/4=1/4 NNKR5=-1/2-4*-1/4=1/2
NNKR6=0-1/2*0=0 NNKR6=1-4*0=1
NNKR7=0-1/2*2= -1 NNKR7=0-4*2=-8
Zj Cj-Zj

Zj=30∗60+0∗60+20∗40=2600 Cj-Zj(x1)=30-30=0

Zj(x1)=30∗1+ 0∗0+20∗0=30 Cj-Zj(x2)=20−20=0

Zj(x2)¿ 30∗0+0+20∗1=20 Cj-Zj(S1)=12−17.5=5.5

Zj(x3)=30∗ ( −14 )+0∗( −92 )+ 20∗5

4
=17.5 Cj-Zj(S2)=0−2.5=−2.5

Zj(S1)=
30∗1 0∗1
4
+
2
+20∗
−1
4 ( )
=2.5 Cj-Zj(S2)=0-0=0

Zj(S2)=30∗0+0∗1+20∗0=0 Cj-Zj(S3)=0−40=−40

Zj(SJ)=30*(-1)+0*(-8)+20*2=40

 The shadow price of the resources is -5/5. Since it is negative. any additional
resources will not affect to its production.

 Since all the valuse of Cj-Zj row are zero or negative, the obtimum solution is
abtained. The maximum value of Z is 2600 wich occures at X1=60 and x2=40

 Therefore, in order to maximize the company’s profit, needs to produce 60 units of

Teak center table, 40 unts of shoe rack and 0 units of cloth hanger. The company
maximum profit is Nu2600.
Soving LPP using MS Excel Method
Steps 1:-
Steps 2:- Next, we have to use the solverfor this we have to use cell referencin

I. To set objective, we have to click on the objective cell which is F17 in excle and click
on Max option.
 II. By changing variable cells, we have to drag the optimum solution cell that is from
C17 to E17(C17:E17)

III. Now we have to add the subject to the constrians. After solving method to Simplex
linear program and click on solve
Steps 3:-

Finally, we may obtain the maximum value of Z, as well as the values of variables X, Y, and
Z, by following the processes outlined above.

 Therefore, in order to maximize the company’s profit, needs to produce 60 units of

Teak center table, 40 unts of shoe rack and 0 units of cloth Hanger. The company
maximum profit is Nu2600.
Other formulas to calculate maximum value :-

Other formula to calculate constraint :-

Reference

Phuntsho Timber and Wood Industry. Retrieved from

https://g.co/Kgs/TPTxmc

Introductory guide on Linear Programming for (aspiring) data scientists. (2017, February 28).
Retrieved from AnalyticsVidhya: https://www.analyticsvidhya.com

Thukral, J. K. (n.d.). Mathematics for Business Studies.