02 1 Linear Programming Introduction 2018

Farm System Modeling
(Module 4904-460)
Overview of Optimization
Special thanks to Cliff T. Ragsdale for the use of his

slides
Institut für Tropische Agrarwissenschaften (490d): Farm System Modeling (4904-460)_Optimization
Outline
Objectives:
Optimization and Linear Programming is introduced with the help of a
simple example. A graphical approach is applied to solving the LP
problems.
Contents:
• Formulating LP problems
 Characteristics
 General mathematical form
• Examples
 Graphical Solution
 Anomalies
Main reference:
Ragsdale, CT (2008): Managerial decision modeling, chapter 2
3
Farm management
• Management Science
What should we do?
 Operations research, Decision
science, Decision support
 Uses scientific methods to solve
business decision problems with
the help of computers, statistics,
and mathematics
Farm management as a sub
Farmers field, with specific methods and
applications, for example Whole
Farm Linear Programming
4
Types of model uses

• Descriptive
How does the system work?
• Predictive
How will the system react to …?
• Prescriptive/Normative
What should we do to obtain the best solution…?
5
Computer Modeling
Problem & Data Analysis
Conceptual model
Mathematical model
Computer model
Result interpretation 6
Today:
Problem & Data Analysis
Conceptual model Decision problem
Mathematical model Linear programming
Spreadsheet
Computer model
(Excel, LibreOffice)
Result interpretation 7
Mathematical Programming
• MP is a field of management science that finds
the optimal - or most efficient - way of using
limited resources to achieve the objectives of an
individual or of a business
• a.k.a. Optimization
Based on Ragsdale, Ch2

8
Applications of Optimization
• Determining Product Mix

• Manufacturing
• Routing and Logistics
• Financial Planning
• …

9
Conceptual model:
Characteristics of Optimization Problems

Decisions
must be made so as to optimize the use of available
resources
Objectives
that the decision maker considers when deciding which
course of action is best
Constraints
are placed on the alternatives available to the decision
maker
10
Conceptual model  Mathematical model:

Optimization problems
• Decisions
expressed as variables X1, X2, …
• Objectives
expressed as function involving X1, X2, …
to be maximized or minimized
• Constraints
expressed as equations or inequations involving X1,
X2, …
11
Mathematical Model:
General Form of an Optimization Problem
Objective function:
MAX (or MIN): 0(X1, X2, …, Xn)
Constraints:
subject to: f1(X1, X2, …, Xn) <= b1
:
fk(X1, X2, …, Xn) >= bk
:
fm(X1, X2, …, Xn) = bm
Note: If all the functions in an optimization are linear, the problem is a

Linear Programming (LP) problem
12
Mathematical model:
Linear Programming (LP) Problems
MAX (or IN): c1X1 + c2X2 + … + cnXn
Subject to: a11X1 + a12X2 + … + a1nXn <= b1
:
ak1X1 + ak2X2 + … + aknXn >= bk
:
am1X1 + am2X2 + … + amnXn = bm

13
Linear Programming (LP) Some Terminology

Objective coefficients Activities
MAX (or IN): c1X1 + c2X2 + … + cnXn Capacities

Subject to: a11X1 + a12X2 + … + a1nXn <= b1
:
ak1X1 + ak2X2 + … + aknXn >= bk
Coefficients :
am1X1 + am2X2 + … + amnXn = bm
Left hand side Right hand side
14
Conceptual Model:
An Example Problem
Blue Ridge Hot Tubs produces two types of hot tubs:
Aqua-Spas & Hydro-Luxes
Aqua-Spa Hydro-Lux
Pumps 1 1
Labor 9 hours 6 hours
Tubing 12 feet 16 feet
Unit Profit $350 $300
There are 200 pumps, 1566 hours of labor, and 2880
feet of tubing available
Based on Ragsdale, Ch2 15
Conceptual problem  Mathematical model

5 Steps In Formulating LP Models
1. Understand the problem

2. Identify the decision variables
3. State the objective function as a linear combination of
the decision variables
4. State the constraints as linear combinations of the
decision variables
5. Identify any upper or lower bounds on the decision
variables


5 Steps In Formulating LP Models
1. Understand the problem

2. Identify the decision variables
X1=number of Aqua-Spas to produce
X2=number of Hydro-Luxes to produce
3. State the objective function as a linear combination of

the decision variables
• MAX: 350X1 + 300X2

..continued
4. State the constraints as linear combinations of the
decision variables
1X1 + 1X2 <= 20 } pumps
9X1 + 6X2 <= 1566 } labor
12X1 + 16X2 <= 2880 } tubing
5. Identify any upper or lower bounds on the decision

variables
X1 >= 0
X2 >= 0
Blue Ridge Hot Tubs
MAX: 350X1 + 300X2
s.t.: 1X1 + 1X2 <= 200

9X1 + 6X2 <= 1566
12X1 + 16X2 <= 2880
X1 >= 0
X2 >= 0

Solving LP Problems:
An Intuitive Approach
 Idea: Each Aqua-Spa (X1) generates the highest unit profit
($350), so let’s make as many of them as possible!
 How many would that be?
 Let X2 = 0
 1st constraint: 1X1 <= 200
 2nd constraint: 9X1 <= 1566 or X1 <=174
3rd constraint:
 12X1 <= 2880 or X1 <= 240
 If X2=0, the maximum value of X1 is 174 and the total profit is
$350*174 + $300*0 = $60,900
 This solution is feasible, but is it optimal?
 No!
Solving LP Problems: A Graphical Approach
• The constraints of an LP problem defines its

feasible region
• The best point in the feasible region is the

optimal solution to the problem
• For LP problems with 2 variables, it is easy to

plot the feasible region and find the optimal
solution

Plotting the First Constraint

X2
250 (0,200)
200
Boundary line of pump constraint
150 X1 + X2 = 200
100
50 (0,200)
0
0 50 100 150 200 250 X1 22
Plotting the Second Constraint

X2
250 (0,261)
200
Boundary line of labor constraint
150
9X1 + 6X2 = 1566
100
50 (174,0)
0
0 50 100 150 200 250 X1 23
Plotting the Third Constraint

X2
250 (0,180)
200
Boundary line of tubing constraint
150
12X1 + 16X2 = 2880
100
50 (240,0)
0
0 50 100 150 200 250 X1 24
Plotting A Level Curve of the Objective Function

X2
250 (0,116,67)
200
Objective function
150 350X1 + 300X2= 35000
100
50 (100,0)
0
0 50 100 150 200 250 X1 25
A Second Level Curve of the Objective Function

X2
250 (0,175)
200 Objective function

350X1 + 300X2= 35000
150
Objective function
100 350X1 + 300X2= 52500
50 (150,0)
0
0 50 100 150 200 250 X1 26
Using A Level Curve to Locate the Optimal Solution

X2
250
Objective function
200
350X1 + 300X2= 35000
Optimal solution
150
100 Objective function

350X1 + 300X2= 52500
50
0
0 50 100 150 200 250 X1 27
Calculating the Optimal Solution

 The optimal solution occurs where the “pumps” and “labor”
constraints intersect.
 This occurs where: X1 + X2 = 200 (1)
and 9X1 + 6X2 = 1566 (2)
 From (1) we have, X2 = 200 -X1 (3)
 Substituting (3) for X2 in (2) we have,
9X1 + 6 (20 -X1) = 1566
which reduces to X1 = 122
 So the optimal solution is,
X1=122, X2=200-X1=78
Total Profit = $350*122 + $300*78 = $66,100
Enumerating all corner points

• Instead of shifting the isoprofit line to identify the corner point with
the highest OV, we could also just calculate the OV for all corner
points and then see which is the highest.
• There are three kinds of corner points:
 The origin of the graph (0,0) if part of the feasible region
 The 2 points where the boundaries of the feasible region hit
the axes
 Corner points where two constraints intersect:
We find these by looking at the graph and solving the 2
variables/2 equations system posed by the two constraints.

Enumerating all corner points

X2 Note: This technique will not work if
the solution is unbounded.
250
obj. value: $54,000
200 (0,180) obj. value: $64,000
(80,120)
150
obj. value: $66,100
100 (122,78)
50 obj. value: $0 obj. value: $60,900

(0,0) (174,0)
0
0 50 100 150 200 250 X1 30
Summary of Graphical Solution to LP

Problems
1. Plot boundary line of each constraint

2. Identify the feasible region
3. Locate he optimal solution by either:
• Plotting level curves
• Enumerating the extreme points

Understanding How Things Change
See file RagsdaleFig2-8.xls

(Answer question of Case 2-1 as exercise)

Special Conditions in LP Models
• A number of anomalies can occur in LP problems:

 Alternate Optimal Solutions
 Redundant Constraints
 Unbounded Solutions
 Infeasibility

Example of Alternate Optimal Solutions

X2
250
Objective function level curve
450X1 + 300X2 = 78300
200
150
100
Alternate optimal solutions
50
0
0 50 100 150 200 250 X1 34
Example of a Redundant Constraint

X2
250
200
150 225 pumps available instead of 200
pumps
100
Boundary line of labour constraint
Feasible
50
Region
0
0 50 100 150 200 250 X1 35
Example of an Unbounded Solution

X2
objective function
1000
X1 + X2 = 600
X1 + 2X2 = 400
objective function
800
X1 + X2 = 800
600
400
200
X1 + X2 =
400
0
0 200 400 600 80 1000 X1 36
Example of Infeasibility
X2
250
X1 + X2 = 200
200 Feasible region
for second
150 constraint
100
50 Feasible region
for first
constraint
X1 + X2 = 150
0
0 50 100 150 200 250 X1 37
Assignment #1
• Reading:
Review Ragsdale chapter 2
http://www.wadsworthmedia.com/marketing/sample_chapters/
0324312504_ch02.pdf
Prepare Ragsdale chapter 3

Assignment #2
• Exercises (all on ILIAS):
 Formulate the LP problems for
1. Farm problem 1 (Zeddies)
2. Farm problem 2 (Ragsdale)
3. Investment problem 1 (Ragsdale, Ch.)
 Find a graphical solution

• for Farm problems 1 & 2

Thank you very much
and have a nice day!
40

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Farm System Modeling

Special thanks to Cliff T. Ragsdale for the use of his

Types of model uses

Conceptual model Decision problem

Mathematical model Linear programming

Based on Ragsdale, Ch2

• Determining Product Mix

Based on Ragsdale, Ch2

Characteristics of Optimization Problems

Conceptual model  Mathematical model:

Note: If all the functions in an optimization are linear, the problem is a

Based on Ragsdale, Ch2

Linear Programming (LP) Some Terminology

MAX (or IN): c1X1 + c2X2 + … + cnXn Capacities

Left hand side Right hand side

Conceptual problem  Mathematical model

1. Understand the problem

Based on Ragsdale, Ch2 16

Conceptual problem  Mathematical model

1. Understand the problem

3. State the objective function as a linear combination of

Conceptual problem  Mathematical model

5. Identify any upper or lower bounds on the decision

Blue Ridge Hot Tubs

MAX: 350X1 + 300X2

s.t.: 1X1 + 1X2 <= 200

Based on Ragsdale, Ch2 19

Solving LP Problems: A Graphical Approach

• The constraints of an LP problem defines its

• The best point in the feasible region is the

• For LP problems with 2 variables, it is easy to

Based on Ragsdale, Ch2 21

Plotting the First Constraint

Plotting the Second Constraint

Plotting the Third Constraint

Plotting A Level Curve of the Objective Function

A Second Level Curve of the Objective Function

200 Objective function

Using A Level Curve to Locate the Optimal Solution

100 Objective function

Calculating the Optimal Solution

Enumerating all corner points

Based on Ragsdale, Ch2 29

Enumerating all corner points

50 obj. value: $0 obj. value: $60,900

Summary of Graphical Solution to LP

1. Plot boundary line of each constraint

Based on Ragsdale, Ch2 31

Understanding How Things Change

See file RagsdaleFig2-8.xls

Based on Ragsdale, Ch2 32

Special Conditions in LP Models

• A number of anomalies can occur in LP problems:

Based on Ragsdale, Ch2 33

Example of Alternate Optimal Solutions

Example of a Redundant Constraint

Example of an Unbounded Solution

Based on Ragsdale, Ch2 38

 Find a graphical solution

Based on Ragsdale, Ch2 39

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