•BU275: Business
Decision Models –
Lecture Wk8-2
• Instructor – Dr Qiang
Li
Winter 2024
Feb. 28/29, 2024
Agenda
• Deterministic Models and Intro to
LP
• Linear Inequality
• LP Example: How to solve the LP
• Graphical Method
Deterministic Models and Algorithms
• The course so far: probabilities played a big role in our
model building
• Last part of the course: everything is deterministic
• With the computational power now available in the
modern world, there are algorithms available for solving
many different business/personal problems
• Linear Programming Problems
• Use an algorithm that helps solve a certain class of
problems
• Excel Solver has an algorithm to solve linear
programming problems
Linear Programming: The Big Picture
Real World Formulate Solution to the Solution to the
Mathematical Modeling
Solution Algorithm
Interpret and Validate
Problem Problem Mathematical Real World
Mathematically Problem Problem
Linear Programming
• Make simultaneous decisions to reach an optimal
output by considering constraining factors (e.g.,
limited/scarce resources)
• Planning of activities represented by linear
mathematical model
• Categories of LP problems include:
• Resource-allocation
• Cost-benefit tradeoff
• Mixed
• Transportation
Difficult to Understand the LP Definition?
Final exam Linear Programing
Objective: Maximize Objective: Maximize
your score profit
Constraints: Constraints:
2 hours
No talks Limited resources
Requirements
How much time to Decisions to allocate
spend on Q1, Q2, resources
…?
History
Developed by Leonid Kantorovich during
World War II (1939-1945) as a way to plan
expenditures and returns, so as to reduce
costs to the army.
Linear Inequality
Which side satisfies y≥2x+4 ?
Linear Inequality
Which side satisfies y≥2x+4 ?
Select one point which is not at the line.
Check the inequality relationship; Draw an arrow to
denote the side.
How to Formulate an LP Example
Flair furniture company produces chairs and tables. Each
chair takes 4 hours of carpentry work and 2 hours of
painting work. Each table takes 5 hours of carpentry work
and 6 hours of painting work.
During the current month, 4000 hours of carpentry time
and 1800 hours of painting time are available.
The chair profit is $20 per unit; the table profit is $100 per
unit.
Chairs are not less than 3 times of tables.
How many chairs and tables are made to maximize the
10
Data
Carpentry Painting Profit
(Hours) (Hours) ($)
Per chair 4 2 20
Per table 5 6 100
Available 4000 1800
Chairs are not less than 3 times of
tables.
Special Cases (1)
Carpentry Painting Profit
(Hours) (Hours) ($)
Per chair 4 2 20
Per table 5 6 100
Available 4000 1800
Chairs are not less than 3 times of
tables.
Make 1 chair and 1 table Profit =(20)(1)+(100)(1)=120
Carpentry work=(4)(1)+(5)(1)=9 ≤ 4000 available
Painting work=(2)(1)+(6)(1)=8 ≤ 1800 available
Against “Chairs are not less than 3 times of tables”
The plan “make 1 chair and 1 table” is not feasible. 12
Special Cases (2)
Carpentry Painting Profit
(Hours) (Hours) ($)
Per chair 4 2 20
Per table 5 6 100
Available 4000 1800
Chairs are not less than 3 times of tables.
Make 3 chairs and 1 table Profit=(20)(3)+(100)(1)=160
Carpentry work=(4)(3)+(5)(1)=17 ≤ 4,000 available
Painting work=(2)(3)+(6)(1)=12 ≤ 1,800 available
“Chairs are not less than 3 times of tables” OK!
The plan “Make 3 chairs and 1 table ” is feasible.
Special Cases (3)
Carpentry Painting Profit
(Hours) (Hours) ($)
Per chair 4 2 20
Per table 5 6 100
Available 4000 1800
Chairs are not less than 3 times of tables.
Make 3000 chairs and 1000 tables
Profit =(20)(3000)+(100)(1000)=160,000
Carpentry work
=(4)(3000)+(5)(1000)
=17,000
> 4,000 available Not a feasible plan
Analysis (Ideas)
Carpentry Painting Profit
(Hours) (Hours) ($) Linear Programing
Objective:
Per chair 4 2 20
Maximize/Minimize
Per table 5 6 100 Constraints:
Available 4000 1800 Limited
Chairs are not less than 3 times of resources
tables.
Start from the Objective “to maximizeRequirements
the
total profit”
Total
Profitprofit = Profit
= (Profit from chairs
per unit)(The + Profit
numberProfit
of from chairs = (20)(The number of chairs
units)tables
from
Let c be the number of chairs Total profit = 20c+100t
Profit from chairs = 20c
Analysis of Carpentry Hours
Carpentry Painting
(Hours) (Hours) Linear Programing
Maximize
Per chair 4 2 profit=20c+100t
Per table 5 6 Constraints:
Available 4000 1800 Limited
resources
What we are going to use ≤ Available
Requirements
resources
Spent carpentry hours ≤ Available carpentry hours
Spent carpentry hours = Hours on chairs + Hours on tables
Hours on chairs = (Hours per chair)(The number of chairs)
= 4c
4c+5t ≤ 4000
Analysis of Painting Hours
Carpentry Painting Linear Programing
(Hours) (Hours)
Maximize
Per chair 4 2 profit=20c+100t
Constraints:
Per table 5 6
4c+5t ≤
Available 4000 1800 4000
Limited
resources
Spent painting hours ≤ Available
painting hours Requirements
2c+6t ≤ 1800
17
Analysis of Other Requirements
Linear Programing
Maximize
profit=20c+100t
Constraints:
4c+5t ≤
4000
2c+6t ≤
1800
Chairs are not less than 3 times of
tables.
Requirements
Chairs ≥ 3 times of
tables
c ≥ 3t
Solution of Formulating a Linear Programming Model
Let c be the number of chairs, and t be the number of tables.
Maximize 20c+100t
Constraints:
4c+5t ≤ 4000
2c+6t ≤ 1800
c ≥ 3t
c, t ≥ 0
Summary
• Formulate: Start from the objective to find out variables
• Remind
Define notations before using them;
Address each constraint separately
Constraints from your common senses: non-negative?
• Play the game
Different Writing Styles
Let c be the number of Let c be the number of chairs,
chairs, and t be the number of tables.
and t be the number of
tables.
Maximize Profit= 20c+100t Maximize 20c+100t
Constrain Subject to:
ts:
4c+5t ≤ 4000 4c+5t ≤ 4000
2c+6t ≤ 1800 2c+6t ≤ 1800
c ≥ 3t c ≥ 3t
c, t ≥ 0 c and t are non-negative.
What Is the Optimal Production Plan?
Let c be the number of
chairs, and t be the
number of tables. Graphical
Maximize 20c+100t method The company can
obtain the maximum
Subject profit $24,000 by
to: making 450 chairs
4c+5t ≤ and 150 tables.
4000
2c+6t ≤
1800
c ≥ 3t 22
Graphical method to solve an LP with Two Variables
Find out the feasible region
A corner point is the intersection of two Feasible
lines.
People have proved that one optimal
solution of an LP is at a corner point of
the feasible region.
Evaluate the objective function value at each
corner point.
Select the best one.
Maximize 20c+100t
Process of Solving LP in Details Constraints:
Step 1. Get a coordinate
system without scale. Need
only the non-negative
region. Does not matter
which axis is c.
Step 2. Change the constraint
“4c+5t≤ 4000” to be the
equation: 4c+5t=4000.
Let c=0. t=800 from (4)
(0)+5t=4000.
Let t=0. c=1000.
Draw the line. Label it by
“4c+5t≤4000.”
How to Solve Two Linear Equations
Solution of Graphical Method to Solve the LP
(Some details in previous slides are not
necessary.)
t=150, and c=450.
(20)(450)+(100)
(150)=24000
Point C is (900,0).
(20)(900)+(100)
Point A is (0,0). (0)=18000
(20)(0)+(100)(0)=0. Hence, the maximum
profit will be $24000 if
Point B is given by the production plan is to
make 450 chairs and 150
tables. 30
Whole Process
Formulate a Use the graphical
Problem
Linear method to Solve
(Slide 10)
Programming the LP
(Slide 19) (Slide 30)
Exercise 1
A wood products firm uses leftover time at the end of each
week to make goods for stock. Currently, there are two
products on the list of items that are produced for stock: a
chopping board and a knife holder. Both items require
three operations: cutting, gluing, and finishing. The
manager of the firm has collected the following data on
these products:
Item Profit per unit
Time per unit (minutes)
Cutting Gluing Finishing
Chopping Board $2 0.7 5 8
Knife Holder $6 0.8 15 3
The manager has also determined that during each week,
56 minutes are available for cutting, 750 minutes are
available for gluing, and 360 minutes are available for
finishing. Formulate the problem as a linear programming
problem and solve it graphically.
Exercise 2
The Munchies serial 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 to
meet the minimum requirements of 48 mg of vitamin A and
12 mg of vitamin B while minimizing cost. An ounce of oats
contributes 8 mg of vitamin A and 1 mg of vitamin B,
whereas an ounce of rice contributes 6 mg of vitamin A and
2 mg of vitamin B. An ounce of oats costs $0.05 and ounce
of rice costs $0.03. Formulate the problem as an LP
problem and solve it graphically.
Next class:
• Linear Programming (Part 2)
Thanks for your attention!
