Chapter 2

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QUANTITATIVE ANALYSIS
FOR MANAGERIAL
DECISION MAKING
(NAME OF THE INSTRUCTOR)
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CHAPTER TWO
LINEAR PROGRAMMING
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INTRODUCTION
 Linear Programming is a mathematical process that has been
developed to help management in decision making involving the
efficient allocation of scares resources to achieve a certain
objective.
 Linear programming technique may be used for solving broad
range of problems arising in business, government, industry,
hospitals, libraries, etc.
 Whenever we want to allocate the available limited resources for
various competing activities for achieving our desired objective,
the technique that helps us is LINEAR PROGRAMMING.
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COMPONENTS OF LP MODELS
 There are four major components of LP models including: Objective
function, decision variables, constraints and parameters.
1. Objective and Objective Function
 The objective in problem solving is the criterion by which all
decisions are evaluated. It provides the focus for problem solving.
In linear programming models a single, quantifiable objective must
be specified by the decision maker.
 Once the objective is specified, it becomes the measure of
effectiveness against which alternate solutions are judged. An LP
model consists of a mathematical statement of the objective called
the objective function.
2. Decision variables
 They represent unknown quantities to be solved for. The decision maker can control
the value of the objective, which is achieved through choices in the levels of decision
variables.
 For example, how much of each product should be produced in order to obtain the
greatest profit?
3. Constraints
 However, the ability of a decision maker to select values of the decision variables in an
LP problem is subject to certain restrictions or limits coming from a variety of sources.
 The restrictions may reflect availabilities of resources (e.g., raw materials, labor time,
etc.), legal or contractual requirements (e.g., product standards, work standards, etc.),
technological requirements (e.g., necessary compressive strength or tensile strength) or
they may reflect other limits based on forecasts, customer orders, company policies,
and so on.
 In LP model, the restrictions are referred to as constraints. Only solutions that
satisfy all constraints in a model are acceptable and are referred to as feasible
solutions.
 The optimal solution will be the one that provides the best value for the objective
function.
 A constraint has four elements:
1. A right hand side (RHS) quantity that specifies the limit for that constraint. It
must be a constant, not a variable.
2. An algebraic sign that indicates whether the limit is an upper bound that cannot
be exceeded, a lower bound that is the lowest acceptable amount, or an equality
that must be met exactly.
3. The decision variables to which the constraint applies.
4. The impact that one unit of each decision variable will have on the right-hand
side quantity of the constraint.
 Constraints can be arranged into three groups:
System constraints – involve more than one decision variable,
Individual constraints – involve only one variable, and
Non-negativity constraints – specify that no variable will be allowed to
take on a negative value. The non-negativity constraints typically apply in
an LP model, whether they are explicitly stated or not.
4. Parameters
 The objective function and the constraints consist of symbols that
represent the decision variables (e.g., X1, X2, etc.) and numerical values
called parameters.
 The parameters are fixed values that specify the impact that one unit of
each decision variable will have on the objective and on any constraint it
pertains to as well as the numerical value of each constraint.
The following simple example illustrates the components of LP models:

ASSUMPTIONS OF LP MODELS
Linearity (proportionality)
 The linearity requirement is that each decision variable has a linear
impact on the objective function and in each constraint in which it
appears. In terms of a mathematical model, a function or equation is
linear when the variables included are all to the power 1 (not squared,
cubed, square root, etc.) and no products (e.g., x1x2) appear.
 On the other hand, the amount of each resource used (supplied) and its
contribution to the profit (or cost) in the objective function must be
proportional to the value of each decision variable. For example, if
production of one unit requires 5 hours of a particular resource, then
making 3 units of that product requires 15 hours (3x5) of that resource.

Divisibility (Continuity)
 The divisibility requirement pertains to potential values of decision
variables. It is assumed that non-integer values are acceptable.
However, if the problem concerns, for example, the optimal number of
houses to construct, 3.5 do not appear to be acceptable. Instead, that
type of problem would seem to require strictly integer solutions. In
such cases, integer-programming methods should be used.
 It should be noted, however, that some obvious integer type situations
could be handled under the assumption of divisibility.
 For instance, suppose 3.5 to be the optimal number of television sets
to produce per hour, which is unacceptable, but it would result in 7
sets per two hours, which would then be acceptable.
Certainty
 This requirement involves two aspects of LP models. One aspect
relates to the model parameters, i.e., the numerical values.
 It is assumed that these values are known and constant. In
practice, production times and other parameters may not be truly
constant.
 Therefore, the model builder must make an assessment as to the
degree to which the certainty requirement is met.
 The other aspect is the assumption that all relevant constraints
have been identified and represented in the model.

Additivity
 The value of the objective function and the total amount of each resource
used (or supplied), must be equal to the sum of the respective individual
contributions (profit or cost) by decision variables.
 For example, the total profit earned from the sale of two products A and B
must be equal to the sum of the profits earned separately from A and B.
 Similarly, the amount of a resource consumed for producing A and B must
be equal to the sum of resources used for A and B respectively.
 Non-negativity
 It assumes that negative values of variables are unrealistic and, therefore,
will not be considered in any potential solutions.
 Only positive values and zero will be allowed and the non-negativity
assumption is inherent in LP models.
ADVANTAGES OF LINEAR PROGRAMMING
Linear programming helps in attaining the optimum use of scarce
productive resources. It also indicates how a decision maker can employ
productive resources effectively by selecting and allocating these resources.
LP techniques improve quality of decisions. The decision making approach
of the user of this technique becomes more objective and less subjective.
Highlighting of bottlenecks in the production process is one of the most
advantages of this technique. For example, when a bottleneck occurs, some
machines can not meet demand while others remain idle for some of the
time.
LP also helps in re-evaluation of a basic plan for changing conditions. If
conditions change when the plan is carried out, they can be determined so
as to adjust the remainder of the plan for best results.
LIMITATIONS OF LINEAR PROGRAMMING
LP treats all relation ships among decision variables as linear. However, generally
neither the objective functions nor the constraints in real-life situations concerning
business and industrial problems are linearly related to variables.
While solving an LP model, there is no guarantee that we will get integer valued
solutions. For example, in finding out how many men and machines would be required to
perform a particular job, a non integer valued solution will be meaningless. Rounding off
the solution to the nearest integer will not yield an optimal solution.
An LP model does not take in to consideration the effect of time and uncertainty. Thus,
the LP model should be defined in such a way that any change due to internal as well as
external factors can be incorporated.
It deals with only with a single objective, whereas in real-life situations we may come
across conflicting multi-objective problems.
Parameters appearing in the model are assumed to be constant but, in real life situation
they are frequently neither known nor constant.
FORMULATING A LINEAR PROGRAMMING MODEL
 One of the most important phases in the solution of linear programming (LP) problem is
the formulation, which translates the verbiage in to an objective function together with a
set of constraints. Therefore, word expressions should be converted in to numerical
models so as to be solved by the help of Lp.
 Furthermore, any constraint is made up of the decision variables that represent the actual
problem at hand. The non-negativity constraint should be always included. The
following are steps;
 STEP 1 – find the key decision to be made from the study of the problems, i.e. problem
definition.
 STEP 2 – identify the variables and assign symbols X 1, X2 and X3 ….
 STEP 3 – identify the objective which is to be optimized and represent it as a linear
function in terms of unknown variables.
 STEP 4 – identify the constraints or restrictions in the problem and express them as a
linear equations or inequalities which are linear functions of unknown variables.
Example - 1- A company makes tables in two models;
standard model and secretarial model. Each standard model
requires 2 hr’s in wood working and 3 hr’s in finishing
department. Each secretarial model requires 3 hr’s in wood
working and 5 hr’s in finishing department. The company
has a total of 240 working hr’s available in the wood
working department and a total of 390 working hr’s
available in the finishing department in each week. A profit
of birr 20 is made on each standard model and birr 50 on
each secretarial model. Assuming that all models are sold,
formulate the LP model?

SOLUTION
STEP- 1- Problem definition

 To determine the number of two types of tables that can be produced and sold
per week so as to maximize the weekly profit given the restriction
(constraints).
STEP -2- Variable representation
 Let X1 be the number of standard models to be produced and sold
 Let X2 be the number of secretarial models to be produced and sold
STEP -3- Developing the objective function
 The objective is to maximize profit
 X1 contributes birr 20 to profit and X2 contributes birr 50 to profit. Thus,
Maximize: 20X1+ 50X2 is the objective function.

 STEP-4- Constraint identification (system constraints)
2X1 + 3X2 ≤ 240 (wood working)
3X1 + 5X2 ≤ 390 (finishing)
X1, X2 ≥ 0 (non negativity constraints)

The given data can be organized as follows;
 So, the mathematical model for the table problem is;

Subject to: 2X1 + 3X2 ≤ 240
3X1 + 5X2 ≤ 390
X1 X2 ≥ 0, thus LP model is formulated.

 Example -2. An electronic firm produces three types of
switching devices. Each type involves a two step assembly
operation. The assembly times per minutes are shown below in
the following tables;

 Each station has a daily working time of 7.5 hr’s. The manager
wants to obtain the greatest possible profit during the next five
working days.
 Model A yields a profit of birr 8.25 per unit, model B a profit of
birr 7.5 per unit and model C a profit of birr 7.8 per unit. Assume
that the firm can sell all its products.
 During this time, but, it must fill outstanding order for 20 units of
each model type. Formulate the LP model of this problem;

 Brothers Biscuit and Flour Company makes a cereal from
several ingredients. Two of the ingredients, oats and rice, provide
vitamins A and B. The company wants to know how many ounces
of oats and rice it should include in each box of cereal to meet the
minimum requirements of 48 milligrams of vitamin A and 12
milligrams of vitamin B while minimizing cost. An ounce of oats
contributes 8 milligrams of vitamin A and 1 milligram of vitamin
B, whereas an ounce of rice contributes 6 milligrams of A and 2
milligrams of B. An ounce of oats costs $0.05, and an ounce of
rice costs $0.03.
 Formulate a linear programming model for this problem.

 Solution
1. Problem definition
 To determine the number of three types of switching devices to be
produced and sold for the next 5 days to maximize profit.
2. Variable representation
 Let X1 be the number of model A
 Let X2 be the number of model B
 Let X3 be the number of model C to be produced and sold,
3. Developing objective function
 The objective is to maximize profit
 X1 Contributes Birr 8.25 to profit.
 X2 Contributes Birr 7.5 to profit.
 X3 Contributes Birr 7.8 to profit, thus,
 Maximizes Z: 8.25X1 + 7.5x2+ 7.8X3
4. Constraint identification
 System constraint
 2.5 X1 + 1.8X2 +2X3 ≤ 7.5(60) ---------- minutes in station 1
 3X1 + 1.6 X2 + 2.2X3 ≤ 7.5(60) -- --------minutes in station 2

X1 ≥ 20
X2 ≥ 20 Individual constraint
X3 ≥ 20
 X1, X2, and X3 ≥ 0 (non – negativity constraint)
 So, Z max = 8.25 X1 + 7.5X2 + 7.8X3

 Subject to: 2.5X1 + 1.8X2 + 2X3 ≤ 450
3X1+ 1.6X2 +2.2X3 ≤ 450
X1 ≤ 20
X2 ≤ 20
X3 ≤ 20
X1, X2, and X3 ≥ 0 (non – negativity constraint)

EXERCISE-1
 A patient consult a doctor to check up his ill health. Doctor examines him and advises
him that he is having deficiency of two vitamins, vitamin A and vitamin D. Doctor
advises him to consume vitamin A and D regularly for a period of time so that he can
regain his health. Doctor prescribes tonic X and tonic Y, which are having vitamin A, and
D in certain proportion. Also advises the patient to consume at least 40 units of vitamin
A and 50 units of vitamin D Daily. The cost of tonics X and Y and the proportion of
vitamin A and D that present in X and Y are given in the table below. Formulate LPP to
minimize the cost of tonics.

ANSWER
The LPP can be expressed as follows;
Minimize Z = 5x + 3y
Subject to: 2x + 4y ≥ 40
3x + 2y ≥ 50
x and y ≥ 0

EXERCISE-2
A company manufactures two products, X1 and X2 by using

three machines A, B, and C. Machine A has 4 hours of capacity
available during the coming week. Similarly, the available
capacity of machines B and C during the coming week is 24
hours and 35 hours respectively. One unit of product X1 requires
one hour of Machine A, 3 hours of machine B and 10 hours of
machine C. Similarly one unit of product X2 requires 1 hour, 8
hour and 7 hours of machine A, B and C respectively. When one
unit of X1 is sold in the market, it yields a profit of Birr 5 per
product and that of X2 is Birr 7 per unit. Formulate LPP?

ANSWER
Maximize Z: 5x1 + 7x2
Sujete to: x1 + x2 ≤ 4
3x1 + 8x2 ≤ 24
10x1 + 7x2 ≤ 35 and
Both x1 and x2 are ≥ 0.

SOLVING LINEAR PROGRAMMING PROBLEMS (LPPS)
There are two approaches to solve LPPs

The graphical approach (geometric method)
The simplex algorism (algebraic method)

THE GRAPHICAL APPROACH (GEOMETRIC METHOD)
 Steps in Graphical method- graphical solution method involves
the following steps;
Plot each of the constraints
Identify the feasible region
Locate the optimal combination (Compute the values of each
constraint at each corner point of the feasible region)
Select the corner point with the maximum profit for maximization
problem, and minimum cost for minimization problem. (the
optimal solution).

EXAMPLE-1
 A furniture company produces inexpensive tables and chairs. The
production process for each is similar in that both require a certain number
of hours of carpentry work and a certain number of labour hours in the
painting department.
 Each table takes 4 hours of carpentry and 2 hours in the painting
department. Each chair requires 3 hours of carpentry and 1 hour in the
painting department. During the current production period, 240 hours of
carpentry time are available and 100 hours in painting is available.
 Each table sold yields a profit of Birr 7; each chair produced is sold for Birr
5 profit. Find the best combination of tables and chairs to manufacture in
order to reach the maximum profit.

Answer
X1 = 30 units
X2 = 40 units
Profit = 410 Birr

EXAMPLE-2
 A patient in a hospital is required to have at least 84 units of drug A
and 120 units of drug B each day. Each gram of substance M
contains 10 units of drug A and 8 units of drug B, and each gram of
substance N contains 2 units of drug A and 4 units of drug B. Now
suppose that both M and N contain an undesirable drug C, 3 units
per gram in M and 1 unit per gram in N. How many grams of
substances M and N should be mixed to meet the minimum daily
requirements at the same time minimize the intake of drug C? How
many units of the undesirable drug C will be in this mixture?

Answer
X1 = 4
X2 = 22
Minimum cost = 34 units

EXAMPLE-3
 A small brewery produces Ale and Beer. Suppose that production is limited
by scarce resources of corn, hops and barley malt.
 To make Ale 5kg of Corn, 4kg of hops and 35kg of malt are required. To
make Beer 15kg of corn, 4 kg of hops and 20kg of malt are required.
 Suppose that only 480 kg of corn, 160kg of hops and 1190 kg of malt are
available.
 If the brewery makes a profit of Birr 13 for each kg of Ale and Birr 23 for
each kg of Beer, how much Ale and Beer should the brewer produce in order
to maximize profit?

Answer
X1 = 12 kg
X2 = 28 kg
Maximum profit = 800 Birr

EXAMPLE-4
A company owns two flour mills (A and B) which have different production
capacities for HIGH, MEDIUM and LOW grade flour.
This company has entered contract supply flour to a firm every week with
12, 8, and 24 quintals of HIGH, MEDIUM and LOW grade respectively. It
costs the Co. $1000 and $800 per day to run mill A and mill B respectively.
On a day, mill A produces 6, 2, and 4 quintals of HIGH, MEDIUM
and LOW grade flour respectively.
Mill B produces 2, 2 and 12 quintals of HIGH, MEDIUM and LOW grade
flour respectively. How many days per week should each mill be operated
in order to meet the contract order most economically standardize? Solve
graphically.

Min.Z  100 X 1800 X 2
St :
6 X 12 X 2 12
2 X 12 X 2 8
4 X 1  12 X 2  24
X1, X 2  0
EXERCISE-1
A chicken farmer can buy a special food mix A at 20c per Kg and
special food mix B at 40c per Kg.
Each Kg of mix A contains 3000 units of nutrient N1 and 1000
units of nutrient N2; each Kg of mix B contains 4000 units of
nutrient N1 and 4000 units of nutrient N2.
If the minimum daily requirements for the chickens collectively
are 36000 units of nutrient N1 and 20000 units of nutrient N2,
how many pounds of each food mix should be used each day to
minimize daily food costs while meeting (or exceeding) the
minimum daily nutrient requirements? What is the minimum daily
cost?
Answer
X1 = 8 kg
X2 = 3 kg
Minimum cost = 2.80 cents

EXERCISE-2
Solve the following LP Model by using the graphic

method?
Max Z: 300x1 + 250x2
St: 2x1 + x2 ≤ 40
x1 + 3x2 ≤ 45
x1 ≤ 12
X1, x2 0
ANSWER
 X1 = 12 units
 X2 = 11 units and
 Maximum profit = $6350

Special cases in graphical method: linear programming
A. No feasible solution: this is the case where there is no feasible
region for the LP model and it happens when there is mix of
constraints.
 Example-1
Minimize C: 200x1 + 300x2
Subject to
 2x1 + 3x2 ≥ 1200
x1 + x2 ≤ 400
2x1 + 1.5x2 ≥ 900
 x1 , x 2 ≥ 0
EXAMPLE:
Max Z: 20X1+30X2
Subject to: 2X1 + X2 < 40
4X1 + X2 < 60
X1 > 30
X1, X2 > 0

B. Unbounded solution:- the case where it is possible to increase
profit/reduce cost without limit. It happens due to incorrectly
maximizing the LP model when the objective is minimization or
vice versa; it can also happen when greater than constraints are
used instead of less than or vice versa.
Maximize Z: 40x1 + 60x2
Subject to
2x1 + x2 ≥ 70
x1 + x2 ≥ 40
x1 + 3x2 ≥ 90
 x1 , x 2 ≥ 0
Max. Z: 3X1+4X2
 St:
X1-X2<-1==> -X1+X2>1 since the quantity solution
is positive
-X1+X2<0
X1, X2 > 0

C. Redundant Constraints:- a constraint does not form a unique
boundary of the feasible solution space. A constraint is redundant if
its removal would not alter the feasible solution space.
Max.Z  40 X 135 X 2
St :
2 X 13 X 2 60
4 X 13 X 2 96
4 X 1  3.5 X 2  105
X1, X 2  0
Max.Z  40 X 135 X 2
St :
2 X 13 X 2 60
4 X 13 X 2 96
4 X 1  3.5 X 2  105
X1, X 2  0

D. Multiple Optimal Solutions: - the condition or situation
where more than combination of activities yield the same
optimal solution.
 Example:
Maximize Z: 20X1 + 80X2
Subject to: X1 + 4X2 ≤ 20

4X1 + X2 ≤ 35
X1, X2 ≥ 0
EXAMPLE-2
Max.Z  8 X 116 X 2
St :
3 X 16 X 2 900
X 1 X 2 200
X 2  125
X1, X 2  0
THE END OF CHAPTER-2
Thank You!

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PREMIUM COLLEGE

Master of Business Administration

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STEP- 1- Problem definition

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 So, the mathematical model for the table problem is;

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 So, Z max = 8.25 X1 + 7.5X2 + 7.8X3

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A company manufactures two products, X1 and X2 by using

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There are two approaches to solve LPPs

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Subject to: X1 + 4X2 ≤ 20

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