RECAP

• What is Management Science?

• Process of Management Science
• Management Science Technique
• Components of break-even Analysis
• What is Fixed Cost?
• What is Variable Cost?
• What is Total Cost?
• What is Contribution Margin per unit?
• What is the formula for Contribution margin ratio?
• What is the Formula for Break-even point analysis?
• What is the Formula for Break-even sales?
• If there is a target profit, what will be the break-even formula?
 Linear
Programming:
Model
Formulation and
Graphical
Solution
MANAGEMENT SCIENCE –AY 2022 Rizaldy R. Raguero, CPA, MBA, CTT
AGENDA
LINEAR PROGRAMMING

BENEFITS OF LINEAR PROGRAMMING

LINEAR PROGRAMMING TECHNIQUE

LINEAR PROGRAMMING PROBLEMS

 IF YOU WILL BE GIVEN A CHANCE TO
CHOOSE, WHICH ONE DO YOU PREFER?

House Trip around Ten Million

& Lot The World Pesos
 IF YOU WILL BE GIVEN A CHANCE TO
CHOOSE, WHICH ONE DO YOU PREFER?
Linear Programming is a model that consists of
linear relationships representing a firm's decision(s),
given an objective and resource constraints .
WHAT IS
LINEAR PROGRAMMING?

A linear relationship means the interdependence of

one variable (independent variable) and another
variable (dependent variable)
BENEFITS of
LINEAR PROGRAMMING It help managers determine solutions for problems to
achieve some objective in which there are restrictions,
such as limited resources.

It will provide an optimum base for

allocation of scarce resources.

It reflects the drawbacks of the process.

It helps in re-evaluation of a basic plan

It assists in making adjustments according to

changing conditions
LINEAR PROGRAMMING TECHNIQUE
Define the decision variable

Define the objective function

Define the model constraints

Define the non-negativity constraints

Solve the model using graphical method, elimination

method or substitution method
 MODEL FORMULATION
1. First step is to define the decision variable.
Decision Variables are mathematical symbols
that represent levels of activity .

If a coffee shop wanted to decide on the products to

sell, decision variables can be:
H = Hot Drinks
C = Cold Drinks

If a manufacturing company wanted to decide

on the transporting their products, decision
variables can be:
A = by Air L = by Land S = by Sea
 Z = (Profit x C)+(Profit x H)

MAXIMIZE PROFITS MODEL FORMULATION

MINIMIZE COST

2. Second step is to define the objective function.

Objective Function is a linear relationship that
reflects the objective of an operation .
C = (Cost x C)+(Cost x H)
3. Third step is to define the model constraints.
Model Constraints are linear relationship that
represents a restriction on decision making
MODEL FORMULATION
In a company, it could be the
following:
• Cost
• Time/Schedule
• Risk
• Resources
• Scope
• Quality
Parameters are numerical values that are included in
MODEL FORMULATION
the objective functions and constraints .

Cost Budget : 150C + 200H ≤ 10,000 pesos

Time/Schedule Labor Hours: 0.5R + 0.25CB ≤ 8 hrs
Risk Acceptable Risk: 0.10 F + 0.20 M ≤ 0.05
Resources Days: 1 P + 3 C ≤ 7 days
Scope Kilometers: 100mV + 300mB ≤ 1,000m
Quality Defects: 10C + 15D ≤ 90

In mathematics, answers can be negative
sometimes but on real life, we are looking
at the positive amounts because that
represent a real thing
MODEL FORMULATION
C ≥ 0, H ≥ 0
4. Fourth step is to define the nonnegativity
constraints. Nonnegativity constraints restrict the
decision variables to zero or positive values.
MODEL SOLUTION
To solve, you can choose on either of the following:

GRAPHICAL ELIMINATION SUBSTITUTION

METHOD METHOD METHOD

Bean Ware Pottery Company is a small crafts operation
run by a Native American tribal council. The company
employs skilled artisans to produce clay bowls
and mugs with authentic Native American designs and
colors. The two primary resources used by the company
are special pottery clay and skilled labor. Given these
limited resources, the company desires to know how
many bowls and mugs to produce each day in order to
maximize profit. This is generally referred to as a
product mix problem type.
The two products have the following resource
requirements for production and profit per item
produced (i.e., the model parameters):
There are 40 hours of labor and 120 pounds of clay available
each day for production. We will formulate this problem as a
linear programming model by defining each component of
the model separately and then combining the components
into a single model. The steps in this formulation process are
summarized as follows:
1. Decision Variables: The decision confronting management
in this problem is how many bowls and mugs to produce.
B = number of bowls to produce
M = number of mugs to produce
2. The Objective Function: The objective of the company is to
maximize total profit.
Z = 40B + 50M
3. Model Constraints: The constraints are limited time and
resources.
1B + 2M ≤ 40 -> constraint for the labor hrs
4B + 3M ≤ 120 -> constraint for the clay
4. Non-negativity Constraints:
B ≥ 0 and M ≥ 0
MODEL SOLUTION
Using Graphical Method, you need to solve each inequalities by changing it to
equations and replacing each variable by zero (0). 1. Plot 1B + 2M ≤ 40 using (B,M) in the graph. First Point
(0,20) and the second point (40,0)
1B + 2M ≤ 40
If B = 0 If M = 0
1B + 2M ≤ 40 1B + 2M ≤ 40 2. Plot 4B + 3M ≤ 120 using (B,M) in the graph. First
1B + 2M = 40 1B + 2M = 40 point (0,40) and the second point (30,0)
1(0) + 2M = 40 1B + 2(0) = 40
2M = 40 1B = 40
2 2 B = 40 3. Shade the feasible solution area and those are all the
M = 20 possible answers but to get the maximization
objective, use the three extreme points and
4B + 3M ≤ 120 substitute the Objective Function
If B = 0 If M = 0
4B + 3M ≤ 120 4B + 3M ≤ 120 1. (30,0) 2. (24,8) 3. (0,20)
4B + 3M = 120 4B + 3M = 120 Z = 40B + 50M Z = 40B + 50M Z = 40B + 50M
4(0) + 3M = 120 4B + 3(0) = 120 = (40x30) + (50x0) = (40x24) + (50x8) = (40x0) + (50x20)
3M = 120 4B = 120 = 1,200 + 0 = 960+400 = 0 + 1,000
3 3 4 4 = 1,200 = 1,360 = 1,000
M = 40 B = 30
4. The answer with the highest answer is the optimum.
Therefore, the best combination of producing 24 bowls
and 8 mugs will give Bean Ware Pottery the highest
profit with the limitations on labor hours and clay
 1. Decision Variables: The decision confronting
management in this problem is how many bowls
and mugs to produce.
C = number of acres for corn
O = number of acres for oats

2. The Objective Function: The objective of the

company is to maximize total profit.
Z = 40C + 30O

3. Model Constraints: The constraints are

A farmer owns a 240 acres of land. If he will plant corn, he limited time and resources.
C + O ≤ 240 -> constraint for the land
could earn a profit of $40 per acre and if oats will be 2C + 1O ≤ 320 -> constraint for the labor
planted, he could earn a profit of $30 per acre. Available hours
number of labor is 320 hours. For corn it requires 2 hours
4. Non-negativity Constraints:
per acre, while for oats it requires 1 hour per acre. How
C ≥ 0 and O ≥ 0
many acres will be planted for each product to maximize
profit
Using Elimination Method
Constraint 1: C + O ≤ 240
MODEL SOLUTION
Constraint 2: 2C + 1O ≤ 320

1. Change the inequalities to equation. Subtract the 3. Substitute the variable with the computed amount to
constraints with one another get the other variable

C + O = 240 C + O = 240
- 2C + 1O = 320 C + 160 = 240
C = 240-160
C = 80

2. In order to subtract, you need to multiply the 4. Substitute the Objective Function with the computed
equation with a number to eliminate one variable value.

2C + 2O = 480 Z = 40C + 30O

C + O ≤ 240 2( C + O ≤ 240)
2C + 1O = 320 = 40(80) + 30(160)
- 2C + 1O ≤ 320
O = 160 = 3,200 + 4,800
= 8,000

5. The maximum profit that the farmer can get is farming

80 acres of land for corn and 160 acres of land for oats
to achieve $8,000.00
1. Decision Variables: The decision confronting
management in this problem is how many bowls and
mugs to produce.
M = kgs of Mix 1
X = kgs of Mix 2

2. The Objective Function: The objective of the

company is to Minimize Total Cost.
C = 0.80M + 0.60X

3. Model Constraints: The constraints are limited time

and resources.
300M + 200X ≥ 1,100 -> constraint for protein
200M + 400X ≥ 1,000 -> constraint for fat

4. Non-negativity Constraints:
M ≥ 0 and X ≥ 0
Using Substitution Method
Constraint 1: 300M + 200X ≥ 1,100
MODEL SOLUTION
Constraint 2: 200M + 400X ≥ 1,000
Objective Function: C = 0.80M + 0.60X 3. Substitute the variable with the computed amount to
get the other variable
1. Use one of the constraint to represent a variable, in
this case I use M. 200M + 400X ≥ 1,000
200M + 400X = 1,000
200M + 400X ≥ 1,000 200M + 400(1) = 1,000
200M + 400X = 1,000 200M+ 400 = 1,000
200M = 1,000 – 400X 200M = 1,000-400
200M = 1,000 – 400X 200M = 600
200 200 200 200
M = 5 – 2X M=3

2. Substitute the first constraint with the variable being 4. Substitute the Objective Function with the computed
represented. value.

300M + 200X ≥ 1,100 C = 0.80M + 0.60X

300M + 200X = 1,100 = 0.80(3) + 0.60(1)
300(5-2X) + 200X = 1,100 = 2.4+0.6
1,500 – 600X + 200X = 1,100 =3
-400X = 1,100-1500
-400X = -400 5. The minimum cost to produce the mixture with the
-400 -400 needed nutritional requirements (1,100g of protein
X=1 and 1,000 g of fats) is $3.00
Do you have any questions?
 TIME
TO SHARE
YOUR
KNOWLEDGE
Instruction: BREAK
Go to Assignment and
answer CS No.2 OUT
ROOM
 WERE YOU ABLE TO
ANSWER IT CORRECTLY ?

BREAK
OUT
ROOM
 Prepare for a short quiz
Go to Assignment and answer
Q No 2
 Asynchronous Activity
When to submit: 11 pm on the day of
your Asynchronous class
Go to: Assignment, Answer: SA2
Introduction to Science Management