NAME – ALI AHMAD

CLASS – M.B.A
SEMESTER- IST(FIRST)
SUBJECT –QUANTITATIVE TECHNIQUES
SESSION – 2022-2023
PID NO – 22MBA059
 Acknowledgement
I would like to express my deep appreciation to Dr. Pradhuman Singh for his valuable coordination
and support for the substantial outcome of my assignment. At most credit goes to him/her behind the
outcome of the assignment.

Finally, I would like to thank my friends and supporters, without them the assignment would not have
been completed effectively in a short time.

Assignment Of Quantitative Techniques

Topic - explain the importance of linear programming in managerial decision
making process and support it with one numerical solution

Linear programming 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.

Introduction:
Linear programming can be defined as the technique that can be applied to
optimize various functions like cost and performance. The technique is
applicable to variables that are related to linearly with each other. It can
help to tackle very complicated issues and can improve the cost-
effectiveness and performance of linear functions. There are few constraints
or boundaries for each optimization. These limits are considered while
optimizing the function using the approach of linear programming. There
are some factors that are considered as standard and can be assumed in
order to reduce the complexity of computation of optimization of various
functions. The approach of Linear programming can be used for the
optimization of various operations under some constraints. There are
diverse applications of Linear programming in various fields like it has
increasing applications in the field of engineering, transportation, and
manufacturing, etc. It could be successfully used in order to maximize profit
and sales of a business problem.

Management decisions are those key decisions that are taken by the
organization in order to maximize the profit of their business. Management
decisions are performed by some managers that decide the goals of
business and ways in which goals could be achieved. They decide the key
points of any business, or they draft the policies that could play a part in
achieving the specified objective of cost optimization in any business
decision. There are many strategies that could be applied in order to
achieve the objective of maximizing the profit of the business.

Importance of Linear programming

for Management:
The role of linear programming in improving managerial decisions is
important. The technique can play a significant role in determining the
factors that have a significant impact on the decision-making process of
any business.

It can play a vital role in reducing the function of the cost of the product
and optimizing the profitability of any business. The strategy of linear
programming can be used to compute the sales and prices of products. The
profit of the company could be optimized by applying the technique of
linear programming to it. The approach of linear programming can be very
helpful for the managers for the decision making the process. The approach
of linear programming could be very significant in determining the number
of resources that are required for the production of any product. Such
approximations could play an important role in analyzing the requirement
of raw materials or resources required for different products to maximize
the profit of the company. Effective managerial skills could play a significant
role in maximizing the profit of the firm. The production level, as well as the
profit of any business, could be maximized by applying the strategy of
linear programming for effective management.

The practical example of linear programming is the graph that is formed by

modeling the business problem in mathematical form and then by plotting
it in the graphical form to determine the region of feasibility that can be
used to get an optimized solution. Below is the graphical representation of
this principle.

Figure 1 The linear programming and its graph

There are different assumptions that are considered in order to implement

the linear programming approach successfully. The pictorial representation
of this assumption can be shown in the figure below.

Figure 2 Assumptions of linear programming

There is a general algorithm that could be applied in order to determine

the optimal solution of linear equations. The block diagram of the steps
that are to be followed to perform linear programming is shown below.

Figure 3 optimization of operation using linear programming

Advantages of Linear Programming on Decision making:

1. The technique of Linear programming can improve the quality of the

decision that is taken by any manager. The decision-making approach
becomes more technical and objective and produces better results.
2. It can help to use programming techniques to provide the solution of
the approach that is more realistic, and the constraints are considered
to obtain the exact solution.
 3. The realistic solutions are obtained by this approach.
4. It allows modification of the quantities and provides realistic results.
5. The process can help to tackle the bottlenecks of research and could
be used to re-evaluate the techniques that are being applied to
determine the optimal solution.

Example of Application of Linear Programming on Management

Decisions

There are different examples that could be considered while determining

the practical application of linear programming in business. There can be
different cases in which the function of cost or some other function relevant
to the business. The examples in each case can be solved by mathematical
modeling of the equations of the case. Consider an example of a company
manager who is assigned with the task to optimize the profit of the
production of the company either by minimizing the cost of maximizing the
profit of the company. He can use the approach of linear programming to
determine the maximum profit value. Let us consider a case in which there
is a particular case in which the manager has to decide between different
possibilities that are available to him for the sake of evaluating the best
solution to tackle the situation. Consider the case that a manager is dealing
with the situation in which a manufacturing company has two options of
producing two chocolates that require raw material of chocolate powder
and dried Milk. In order to manufacture the chocolate of type A or B the
following things are required.

Type of Chocolate Dried Milk Chocolate Powder

Type A 1 unit 3 unit
Type B 1 unit 2 unit
If the company has a total of 5 units of dried Milk and twelve units of
chocolate powder, then the company needs to maximize profit. The
amount of profit generated by selling chocolate of type A is the amount of
6 Rs per unit. The amount of profit generated by selling chocolate of type B
is the amount of 5 Rs per unit. The manager is to decide the number of
units that are to be produced by the company in order to get maximum
profit.

Constraints:

Maximum units of Milk Maximum units of chocolate powder

7 15
Assumptions:

Assume the profit of the generation of the production of unit "A" is "X."
Assume the profit of the generation of the production of unit "B" is "Y."
Assume the total profited that is generated is “P."

Objective Function:

The objective function that should be maximized is represented by the

following equation:

Profit: Max P = 6X+5Y

The profit generated by this equation is represented by the equation above.

The number of units that is multiplied by the type of product. The function
that is to maximized is "P." The amount of dried Milk and chocolate powder
availability are the factors that are limited. These things that restrict the
result are called "Constraints."

The other equations that can be formed by considering the constraints are
represented by the following equations:
The amount of Milk that is available limits the production and is
represented as:

.X+Y ≤ 7

The amount of chocolate powder that is available limits the production and
is represented as:

3X+2Y ≤ 15

The only possible results are the integral values of X and Y

X≥0 & Y≥0

The results of the mathematical modeling should fulfill all the constraints,
and these all inequalities should be satisfied in order to make the best
decision. The manager should ensure that all the conditions are fully
satisfied in order to provide the best decision. In this way, the approach of
linear programming could be used to maximize profit. The managerial
decisions could be enhanced by the application of the above-mentioned
constraints.

Conclusion:

Linear programming can play an important role in maximizing the profit or

amount of sales or any other objective function under consideration. The
management decisions could be significantly improved by applying these
results in real-world problems. Mathematical modeling can be used to
model real-world scenarios.