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A Practical Introduction to

Management Science

5th edition

Cliff T. Ragsdale

Chapter 2

Introduction to Optimization

and Linear Programming

Introduction

We all face decision about how to use

limited resources such as:

Oil in the earth

Land for dumps

Time

Money

Workers

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 of a business.

a.k.a. Optimization

Applications of Optimization

Manufacturing

Routing and Logistics

Financial Planning

Characteristics of

Optimization Problems

Decisions

Constraints

Objectives

MAX (or MIN): f0(X1, X2, , Xn)

Subject to:

:

fk(X1, X2, , Xn)>=bk

:

fm(X1, X2, , Xn)=bm

the problem is a Linear Programming (LP) problem

MAX (or MIN): c1X1 + c2X2 + + cnXn

Subject to:

:

ak1X1 + ak2X2 + + aknXn >=bk

:

am1X1 + am2X2 + + amnXn = bm

An Example LP Problem

Blue Ridge Hot Tubs produces two types of hot

tubs: Aqua-Spas & Hydro-Luxes.

Pumps

Labor

Tubing

Unit Profit

Aqua-Spa

1

9 hours

12 feet

$350

Hydro-Lux

1

6 hours

16 feet

$300

and 2880 feet of tubing available.

1. Understand the problem.

2. Identify the decision variables.

X1=number of Aqua-Spas to produce

X2=number of Hydro-Luxes to produce

combination of the decision variables.

MAX: 350X1 + 300X2

(continued)

the decision variables.

1X1 + 1X2 <= 200

} pumps

9X1 + 6X2 <= 1566

} labor

5. Identify any upper or lower bounds on the

decision variables.

X1 >= 0

X2 >= 0

LP Model for

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 lets make as many of them as possible!

How many would that be?

Let X2 = 0

1st constraint:

1X1 <= 200

2nd constraint:

3rd constraint:

9X1 <=1566

or X1 <=174

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.

X2

250

(0, 200)

200

X1 + X2 = 200

150

100

50

(200, 0)

0

0

50

100

150

200

250

X1

Constraint

(0, 261)

X2

250

9X1 + 6X2 = 1566

200

150

100

50

(174, 0)

0

0

50

100

150

200

250

X1

X2

250

(0, 180)

200

150

12X1 + 16X2 = 2880

100

Feasible Region

50

(240, 0)

0

0

50

100

150

200

250

X1

Objective Function

X2

250

200

(0, 116.67)

150

objective function

350X1 + 300X2 = 35000

100

(100, 0)

50

0

0

50

100

150

200

250

X1

Objective Function

X2

250

(0, 175)

200

objective function

350X1 + 300X2 = 35000

objective function

350X1 + 300X2 = 52500

150

100

(150, 0)

50

0

0

50

100

150

200

250

X1

X2

the Optimal Solution

250

objective function

350X1 + 300X2 = 35000

200

150

optimal solution

100

objective function

350X1 + 300X2 = 52500

50

0

0

50

100

150

200

250

X1

The optimal solution occurs where the pumps and labor

constraints intersect.

This occurs where:

X1 + X2 = 200 (1)

and

(2)

Substituting (3) for X2 in (2) we have,

9X1 + 6 (200 -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

X2

250

obj. value = $54,000

(0, 180)

200

the solution is unbounded.

150

(80, 120)

obj. value = $66,100

(122, 78)

100

50

(174, 0)

obj. value = $0

(0, 0)

0

0

50

100

150

200

250

X1

to LP Problems

1. Plot the boundary line of each constraint

2. Identify the feasible region

3. Locate the optimal solution by either:

a. Plotting level curves

b. Enumerating the extreme points

See file Fig2-8.xls

A number of anomalies can occur in LP

problems:

Alternate Optimal Solutions

Redundant Constraints

Unbounded Solutions

Infeasibility

Solutions

X2

250

450X1 + 300X2 = 78300

200

150

100

50

0

0

50

100

150

200

250

X1

Example of a Redundant

Constraint

X2

250

200

boundary line of pump constraint

150

boundary line of labor constraint

100

Feasible Region

50

0

0

50

100

150

200

250

X1

Example of an Unbounded

Solution

X2

1000

objective function

X1 + X2 = 600

800

objective function

X1 + X2 = 800

600

400

200

X1 + X2 = 400

0

0

200

400

600

800

1000

X1

Example of Infeasibility

X2

250

200

X1 + X2 = 200

second constraint

150

100

feasible region

for first constraint

50

X1 + X2 = 150

0

0

50

100

150

200

250

X1

End of Chapter 2

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