CHAPTER 3: LINEAR PROGRAMING

FORMULATION & APPLICATION

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 Linear Programming
Formulation and Applications

What did we learn about Linear Programming on Chapter 2?

1. What is Linear Programming?

2. What are features of LP problem?

3. Algebraic form vs. Spreadsheet model for solving LP

problem?

4. Graphic method for solving two-variable LP problem?

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 Basic concepts

Three types of constraints:

1. Benefit constraint
2. Resource constraint
3. Fixed – requirement constraint

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 Components for Analyzing

Four components for Analyzing:

1. The data  Data cells
2. The decisions  changing cells
3. The constraints  output cells
4. The measure of performance  objective cells

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 Linear Programming
Formulation and Applications

1. Advertising-Mix Problem

2. Resource Allocation Problems

3. Cost-Benefit-Trade-Off Problems

4. Mixed Problems

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 1. Advertising-Mix Problem

• Background

– New product: Crunchy Start

– How to break into an already overly crowded breakfast cereal market?

– Past campaign: Fail

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 1. Advertising-Mix Problem
*Goal: Design the promotional campaign for Crunchy Start

 measured in terms of the expected number of exposures

1.The three most effective advertising media:

–Television commercials

–Advertisements in magazines.

–Advertisements in major newspapers.

2.The limited resources:

–Advertising budget ($4 million).

–Planning budget ($1 million).

–TV commercial spots available (5).

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 Cost and Exposure Data

Costs

Each Each Each

Cost Category TV Commercial Magazine Ad Sunday Ad

Ad Budget $300,000 $150,000 $100,000

Planning budget 90,000 30,000 40,000

Expected number of
1,300,000 600,000 500,000
exposures

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 Algebraic Formulation
Let TV = Number of commercials for separate spots on television
M = Number of advertisements in magazines.
SS = Number of advertisements in Sunday supplements.

Maximize Exposure = 1,300TV + 600M + 500SS

subject to
Ad Spending: 300TV + 150M + 100SS ≤ 4,000 ($thousand)
Planning Cost: 90TV + 30M + 30SS ≤ 1,000 ($thousand)
Number of TV Spots: TV ≤ 5
and
TV ≥ 0, M ≥ 0, SS ≥ 0.

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 Spreadsheet Formulation
A B C D E F G H
1 Super Grain Corp. Advertising-Mix Problem
2
3 TV Spots Magazine Ads SS Ads
4 Exposures per Ad 1,300 600 500
5 (thousands)
6 Budget Budget
7 Cost per Ad ($thousands) Spent Available
8 Ad Budget 300 150 100 4,000 <= 4,000
9 Planning Budget 90 30 40 1,000 <= 1,000
10
11 Total Exposures
12 TV Spots Magazine Ads SS Ads (thousands)
13 Number of Ads 0 20 10 17,000
14 <=
15 Max TV Spots 5

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 2. Resource-allocation problems

1. Resource constraint

Amount of resource used ≤ Amount of resource available

2. Characteristics of Resource-Allocation Problems

• Decisions to be made: levels of activities
• Measure of performance: total profit from the
activities

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 2. Resource-allocation problems

1. Data are needed:

• The amount available of each resource
• The amount of each resource needed by each activity/
amount of resource used per unit of the activity
• The contribution per unit of each activity to the
overall measure of performance

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Case: The TBA Airlines Problem
Background
• TBA Airlines specializes in short flights in small airplanes and
now decides to expand its operations.
• There are two options:
– Purchase more small airplanes, or
– Purchasing some large airplanes, or both.
Question: How many airplanes of each type should be
purchased to maximize their total net annual profit?

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 Data for the TBA Airlines Problem

Small Large Capital

Airplane Airplane Available
Net annual profit per airplane $7 million $22 million

Purchase cost per airplane 25 million 75 million $250 million

Maximum purchase quantity 5 —

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Violates Divisibility Assumption of LP
• Divisibility Assumption of Linear Programming: Decision variables
are allowed to have any values, including fractional values, not
restricted to just integer values.

• Since the number of airplanes purchased by TBA must have an integer

value, the divisibility assumption is violated.

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Integer Programming Formulation
Let S = Number of small airplanes to purchase
L = Number of large airplanes to purchase

Maximize Profit = 7S + 22L ($millions)

subject to
Capital Available: 25S + 75L ≤ 250 ($millions)
Max Small Planes: S ≤ 5
and

S ≥ 0, L ≥ 0
S, L are integers.

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 Spreadsheet Model
A B C D E F G
1 TBA Airlines Airplane Purchasing Problem
2
3 Small Airplane Large Airplane
4 Unit Profit ($millions) 7 22
5
6 Capital Capital
7 Capital Per Unit Purchased Spent Available
8 Capital ($millions) 25 75 250 <= 250
9
10 Total Profit
11 Small Airplane Large Airplane ($millions)
12 Number Purchased 1 3 73
13 <=
14 Maximum Small Airplanes 5

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Summary of Formulation Procedure for
Resource-Allocation Problems
1. Identify the activities for the problem at hand.
2. Identify an appropriate overall measure of performance (commonly profit).
3. For each activity, estimate the contribution per unit of the activity to the
overall measure of performance.
4. Identify the resources that must be allocated.
5. For each resource, identify the amount available and then the amount used
per unit of each activity.
6. Enter the data in steps 3 and 5 into data cells.
7. Designate changing cells for displaying the decisions.
8. In the row for each resource, use SUMPRODUCT to calculate the total
amount used. Enter <= and the amount available in two adjacent cells.
9. Designate an objective cell. Use SUMPRODUCT to calculate this measure
of performance.

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 Template for Resource-Allocation
Problems

Activities

Unit Profit profit per unit of activity

Resources Resources
Used Available
Constraints

SUMPRODUCT
resource used per unit of activity (resource used per unit,
changing cells) <=

Total Profit
Level of Activity changing cells SUMPRODUCT(profit per unit, changing cells)

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 3. Cost-Benefit-Trade-Off Problems
• Benefit constraint

Level achieved ≥ Minimum acceptable level

• Characteristics of Cost-Benefit-Trade-Off Problems
• Prescribing what benefits must be achieved by the
activities under consideration
• Objective: achieve all benefits with minimum cost

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 3. Cost-Benefit-Trade-Off Problems

Data are needed:

1. The minimum acceptable level of each benefit
2. For each benefit, the contribution of each activity to
that benefit
3. The cost per unit of each activity

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 Case: Union Airways Personnel
Scheduling
• Union Airways is adding more flights to and from its hub
airport and so needs to hire additional customer service agents.
• The five authorized eight-hour shifts are
– Shift 1: 6:00 AM to 2:00 PM
– Shift 2: 8:00 AM to 4:00 PM
– Shift 3: Noon to 8:00 PM
– Shift 4: 4:00 PM to midnight
– Shift 5: 10:00 PM to 6:00 AM
Question: How many agents should be assigned to each shift?

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 Schedule Data
Time Periods Covered by Shift
Minimum
Number of
Time Period 1 2 3 4 5 Agents Needed
6 AM to 8 AM √ 48
8 AM to 10 AM √ √ 79
10 AM to noon √ √ 65
Noon to 2 PM √ √ √ 87
2 PM to 4 PM √ √ 64
4 PM to 6 PM √ √ 73
6 PM to 8 PM √ √ 82
8 PM to 10 PM √ 43
10 PM to midnight √ √ 52
Midnight to 6 AM √ 15
Daily cost per agent $170 $160 $175 $180 $195

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 Algebraic Formulation
Let Si = Number working shift i (for i = 1 to 5),

Minimize Cost = $170S1 + $160S2 + $175S3 + $180S4 + $195S5

subject to
Total agents 6AM–8AM: S1 ≥ 48
Total agents 8AM–10AM: S1 + S2 ≥ 79
Total agents 10AM–12PM: S1 + S2 ≥ 65
Total agents 12PM–2PM: S1 + S2 + S3 ≥ 87
Total agents 2PM–4PM: S2 + S3 ≥ 64
Total agents 4PM–6PM: S3 + S4 ≥ 73
Total agents 6PM–8PM: S3 + S4 ≥ 82
Total agents 8PM–10PM: S4 ≥ 43
Total agents 10PM–12AM: S4 + S5 ≥ 52
Total agents 12AM–6AM: S5 ≥ 15
and
Si ≥ 0 (for i = 1 to 5)
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Spreadsheet Formulation

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Summary of Formulation Procedure for
Cost-Benefit-Tradeoff Problems
1. Identify the activities for the problem at hand.
2. Identify an appropriate overall measure of performance (commonly cost).
3. For each activity, estimate the contribution per unit of the activity to the
overall measure of performance.
4. Identify the benefits that must be achieved.
5. For each benefit, identify the minimum acceptable level and then the
contribution of each activity to that benefit.
6. Enter the data in steps 3 and 5 into data cells.
7. Designate changing cells for displaying the decisions.
8. In the row for each benefit, use SUMPRODUCT to calculate the level
achieved. Enter >= and the minimum acceptable level in two adjacent cells.
9. Designate an objective cell. Use SUMPRODUCT to calculate this measure
of performance.

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 Template for Cost-Benefit Trade-off
Problems

Activities

Unit Cost cost per unit of activity

Benefit Benefit
Achieved Needed
Constraints

SUMPRODUCT
benefit achieved per unit of activity (benefit per unit,
changing cells) >=

Total Cost
Level of Activity changing cells SUMPRODUCT(cost per unit, changing cells)

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 Types of Functional Constraints

Type Form* Typical Interpretation Main Usage

For some resource, Resource-allocation
Resource constraint LHS ≤ RHS Amount used ≤ problems and mixed
Amount available problems

For some benefit, Cost-benefit-trade-off

Benefit constraint LHS ≥ RHS Level achieved ≥ problems and mixed
Minimum Acceptable problems

For some quantity, Transportation

Fixed-requirement
LHS = RHS Amount provided = problems and mixed
constraint
Required amount problems

* LHS = Left-hand side (a SUMPRODUCT function).

RHS = Right-hand side (a constant).

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 4. Mixed Problems
Continuing the Super Grain Case Study
• David and Claire conclude that the spreadsheet model needs to be
expanded to incorporate some additional considerations.
• In particular, they feel that two audiences should be targeted — young
children and parents of young children.
• Two new goals
– The advertising should be seen by at least five million young children.
– The advertising should be seen by at least five million parents of young
children.
• Furthermore, exactly $1,490,000 should be allocated for cents-off
coupons.

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 Benefit and Fixed-Requirement Data

Number Reached in Target Category (millions)

Minimum
Each Each Each Acceptable
TV Commercial Magazine Ad Sunday Ad Level

Young children 1.2 0.1 0 5

Parents of young children 0.5 0.2 0.2 5

Contribution Toward Required Amount

Each Each Each Required
TV Commercial Magazine Ad Sunday Ad Amount

Coupon redemption 0 $40,000 $120,000 $1,490,000

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 Algebraic Formulation
Let TV = Number of commercials for separate spots on television
M = Number of advertisements in magazines.
SS = Number of advertisements in Sunday supplements.

Maximize Exposure = 1,300TV + 600M + 500SS

subject to
Ad Spending: 300TV + 150M + 100SS ≤ 4,000 ($thousand)
Planning Cost: 90TV + 30M + 30SS ≤ 1,000 ($thousand)
Number of TV Spots: TV ≤ 5

Young children: 1.2TV + 0.1M ≥ 5 (millions)

Parents: 0.5TV + 0.2M + 0.2SS ≥ 5 (millions)

Coupons: 40M + 120SS = 1,490 ($thousand)

and
TV ≥ 0, M ≥ 0, SS ≥ 0.

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 Spreadsheet Formulation
A B C D E F G H
1 Super Grain Corp. Advertising-Mix Problem
2
3 TV Spots Magazine Ads SS Ads
4 Exposures per Ad 1,300 600 500
5 (thousands)
6 Cost per Ad ($thousands) Budget Spent Budget Available
7 Ad Budget 300 150 100 3,775 <= 4,000
8 Planning Budget 90 30 40 1,000 <= 1,000
9
10 Number Reached per Ad (millions) Total Reached Minimum Acceptable
11 Young Children 1.2 0.1 0 5 >= 5
12 Parents of Young Children 0.5 0.2 0.2 5.85 >= 5
13
14 TV Spots Magazine Ads SS Ads Total Redeemed Required Amount
15 Coupon Redemption per Ad 0 40 120 1,490 = 1,490
16 ($thousands)
17 Total Exposures
18 TV Spots Magazine Ads SS Ads (thousands)
19 Number of Ads 3 14 7.75 16,175
20 <=
21 Maximum TV Spots 5

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 Template for Mixed Problems
Activities

Unit Profit or Cost profit/cost per unit of activity

Resources Resources
Used Available

SUMPRODUCT
resource used per unit of activity (resource used per unit,
changing cells) <=
Constraints

Benefit Benefit
Achieved Needed

benefit achieved per unit of activity

SUMPRODUCT
(benefit per unit,
>=
changing cells)
=
Total Profit or Cost
Level of Activity changing cells SUMPRODUCT(profit/cost per unit, changing cells)

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 5. Transportation problems
& 6. Assignment Problems

• Quantity constraint

Amount provided = Required amount

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Case: The Big M Transportation
Background
Problem
• The Big M Company produces a variety of heavy duty
machinery at two factories. One of its products is a large
turret lathe.
• Orders have been received from three customers for the turret
lathe.
Question: How many lathes should be shipped from each
factory to each customer?

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 Some Data
Shipping Cost for Each Lathe

To Customer 1 Customer 2 Customer 3

From Output

Factory 1 $700 $900 $800 12 lathes

Factory 2 800 900 700 15 lathes

Order Size 10 lathes 8 lathes 9 lathes

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The Distribution Network
C1 10 lathes
needed
$700/lathe

12 lathe F1
produced $900/lathe

$800/lathe
C2 8 lathes
needed
$800/lathe $900/lathe

15 lathes F2
produced

$700/lathe
C3 9 lathes
needed

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 Algebraic Formulation
Let Sij = Number of lathes to ship from i to j (i = F1, F2; j = C1, C2, C3).

Minimize Cost = $700SF1-C1 + $900SF1-C2 + $800SF1-C3

+ $800SF2-C1 + $900SF2-C2 + $700SF2-C3
subject to
Factory 1: SF1-C1 + SF1-C2 + SF1-C3 = 12
Factory 2: SF2-C1 + SF2-C2 + SF2-C3 = 15
Customer 1: SF1-C1 + SF2-C1 = 10
Customer 2: SF1-C2 + SF2-C2 = 8
Customer 3: SF1-C3 + SF2-C3 = 9
and
Sij ≥ 0 (i = F1, F2; j = C1, C2, C3).

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 Spreadsheet Formulation
A B C D E F G H
1 Big M Company Distribution Problem
2
3 Shipping Cost
4 (per Lathe) Customer 1 Customer 2 Customer 3
5 Factory 1 $700 $900 $800
6 Factory 2 $800 $900 $700
7
8 Total
9 Shipped
10 Units Shipped Customer 1 Customer 2 Customer 3 Out Output
11 Factory 1 10 2 0 12 = 12
12 Factory 2 0 6 9 15 = 15
13 Total To Customer 10 8 9
14 = = = Total Cost
15 Order Size 10 8 9 $20,500

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 Case: Sellmore Company
• The marketing manager of the company will celebrate the company’s
Assignment
annual sales conference soon. Problem
• He is hiring four temporary employees:
– Ann
– Ian
– Joan
– Sean
• Each will handle one of the following four tasks:
– Word processing of written presentations
– Computer graphics for both oral and written presentations
– Preparation of conference packets, including copying and organizing
materials
– Handling of advance and on-site registration for the conference
Question: Which person should be assigned to which task?

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 Data for the Sellmore Problem

Required Time per Task (Hours)

Temporary Word Hourly

Employee Processing Graphics Packets Registrations Wage
Ann 35 41 27 40 $14

Ian 47 45 32 51 12

Joan 39 56 36 43 13

Sean 32 51 25 46 15

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Spreadsheet Formulation
1
A B C D
Sellmore Co. Assignment Problem
E F G H I J

2
3 Task
4 Required Time Word Hourly
5 (Hours) Processing Graphics Packets Registrations Wage
6 Ann 35 41 27 40 $14
7 Assignee Ian 47 45 32 51 $12
8 Joan 39 56 36 43 $13
9 Sean 32 51 25 46 $15
10
11
12 Task
13 Word
14 Cost Processing Graphics Packets Registrations
15 Ann $490 $574 $378 $560
16 Assignee Ian $564 $540 $384 $612
17 Joan $507 $728 $468 $559
18 Sean $480 $765 $375 $690
19
20
21 Task
22 Word Total
23 Assignment Processing Graphics Packets Registrations Assignments Supply
24 Ann 0 0 1 0 1 = 1
25 Assignee Ian 0 1 0 0 1 = 1
26 Joan 0 0 0 1 1 = 1
27 Sean 1 0 0 0 1 = 1
28 Total Assigned 1 1 1 1
29 = = = = Total Cost
30 Demand 1 1 1 1 $1,957

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 6. Assignment Problems
The problem is to determine which assignee should be assigned
to each task.
To fit the model for an assignment problem, the following
assumptions need to be satisfied:
1. The number of assignees and the number of tasks are the
same.
2. Each assignee is to be assigned to exactly one task.
3. Each task is to be performed by exactly one assignee.
4. There is a cost associated with each combination of an
assignee performing a task.
5. The objective is to determine how all the assignments
should be made to minimize the total cost.

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 Linear Programming
Formulation and Applications
What have we just learnt about LP problem?

1. Differences among constraints

2. Identify components of LP model

3. 6 different types of LP problem

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