CHAPTER 2: An Introduction to Linear Programming

Linear programming is a problem-solving approach developed to help managers

make decisions.

It is a mathematical technique that determines the best way to use available resources.
Managers use the process to help make decisions about the most efficient use of
limited resources – like money, time, materials, and machinery.

An example would be when:

- IBM - to perform capacity planning and to make capacity investment decisions for
its semiconductor manufacturing operations.
- GE Capital - to help determine optimal lease structuring.
- Marathon Oil Company - for gasoline blending and to evaluate the economics of
a new terminal or pipeline.

In all linear programming problems, the maximization or minimization of some

quantity is the objective. Constraints are another general feature of every linear
programming problem.

All linear programming problems also have a second property: restrictions, or

constraints, that limit the degree to which the objective can be pursued. The main
objective of linear programming is to maximize or minimize the numerical value. It
consists of linear functions which are subjected to the constraints in the form of linear
equations or in the form of inequalities.

A SIMPLE PROBLEM MAXIMIZATION

 1. Cutting and dyeing the material — 630hours
2. Sewing — 600hours
3. Finishing — 708hours
4. Inspection and Packaging — 135hours

In the book, we have an example of a problem of Par, Inc., which is a small

manufacturer of golf equipment and supplies who has a new and upgraded product line.
Its director in the manufacturing industry analyzed its operations in producing a
medium-priced standard model. They also determined the requirements of their
operation with the production time and its constraints.

Its production is constrained by a limited number of hours available in each

department. The accounting department analyzed the production data, assigned
all relevant variable costs, and arrived at prices for both tags that will result in a
profit contribution (contribution margin per bag) of $10 for every standard bag
and $9 for every deluxe bag produced.

Problem formulation — or modeling, is the process of translating the verbal

statement of a problem into a mathematical statement.

In other words, you need to have a deep understanding of the problem since it is an art
that can only be mastered with practice and experience. Even though every problem
has some unique features, most problems also have common features. For this, you
need to translate the objective and constraints of the problem.

General Guidelines
1. Understand the problem thoroughly.
Read the problem description and get a feel of what is involved.
You can also take down notes to focus on key issues and facts.
2. Describe the objective.
Objective is to maximize the total contribution to profit.
3. Describe each constraint.
From constraint 1 to 4, it must be less or equal to the number of hours
available.
4. Define the decision variables.
For this example, we can have S and D as decision variables. It stands for s =
number of standard bags and d = number of deluxe bags.
5. Write the objective in terms of the decision variables.
In the example, the profit contribution came from the source of profit made by
producing both the standard and deluxe bags.
 Total Profit Contribution = 10S + 9D (Objective Function)

Par Inc.'s objective = Max 10S + 9D

6. Write the constraints in terms of the decision variables.

Constraint 1: 7/10S + 1D ≤ 630
Constraint 2: 1/2S + 5/6D ≤ 600
Constraint 3: 1S + 2/3D ≤ 708
Constraint 4: 1/10S + 1/4D ≤ 135

Nonnegativity Constraints — constraints that ensure that the solution to

the problem will contain nonnegative values for the decision variables.

S, D ≥ 0

Mathematical Programming Model — a set of mathematical relationships.

This contains an objective function and a set of constraints.

Linear programming — involves choosing a course of action when the

mathematical model of the problem contains only linear functions.

Linear programming model — mathematical modeling technique in which a linear

function is maximized or minimized when subjected to various constraints.
This technique has been useful for guiding quantitative decisions in business planning,
in industrial engineering, and—to a lesser extent—in the social and physical sciences.
This is a special type of mathematical programming model in that the objective function
and all constraint functions are linear.

Remember the objective function as well as the functions on the left side? It is a linear
function because each decision variable appears in a separate term and has an
exponent of 1.

Mathematical functions in which each variable appears in a separate term and is

raised to the first power are called linear functions.

Three Assumptions For A Linear Programming Model

1. Proportionality — contribution to the objective function and the amount of
resources used in each constraint are proportional to the value of each decision
variable.
2. Addivity — the value of the objective function and the total resources used can
be found by summing the objective function contribution and the resources used
for all decision variables.
3. Divisibility — the decision variable are continuous. The divisibility assumption
plus the nonnegativity constraints mean that decision variables can take on any
value greater than or equal to zero.

Summary of the Graphical Solution Procedure for Maximization Problems

As we have seen, the graphical solution procedure is a method for solving two-variable
linear programming problems such as the Par, Inc., problem. The steps of the graphical
solution procedure for a maximization problem are summarized here:

1. Prepare a graph of the feasible solutions for each of the constraints.

2. Determine the feasible region by identifying the solutions that satisfy all the
constraints simultaneously.
3. Draw an objective function line showing the values of the decision variables that yield
a specified value of the objective function.

4. Move parallel objective function lines toward larger objective function values until
further movement would take the line completely outside the feasible region.
5. Any feasible solution on the objective function line with the largest value is an optimal
solution.
Slack — any unused capacity for a ≤ constraint
These unused capacity makes no contribution to the profit so their variables have
coefficients of zero in the objective function.

Slack variables — are added to the formulation of a linear programming problem

to represent the slack, or idle capacity.

Unused capacity makes no contribution to profit; thus, slack variables have coefficients
of zero in the objective function.

Whenever a linear program is written in a form with all constraints expressed as

equalities, it is said to be written in standard form.

Redundant constraint — the constraint does not affect the feasible region and
thus cannot affect the optimal solution.

Zero means that the constraints restrict the feasible region or the use of all available
time in both operations. While the others mean we can expect some unused time or
slack for its operations.