MATH507

Optimization Techniques

2nd Trimester 2022-2023

• Operations Research / Optimization Methods:
– OR is a scientific methodology – analytical,
experimental and quantitative – which by assessing
the overall implications of various alternative
courses of action in a management system provides
an improved basis for management decisions.
 Application of OR
Finance, Budgeting and Investment Marketing
Cash flow analysis , investment 1. Product selection, timing
portfolios 2. Number of salesman,
Credit polices, account procedures advertising
Purchasing, Procurement and Personnel management
Exploration 3. Selection of suitable personnel
Rules for buying, supplies on minimum salary
4. Mixes of age and skills
Quantities and timing of purchase
Research and development
Replacement policies
5. Project selection
Production management
6. Determination of area of
Physical distribution research and development
Facilities planning 7. Reliability and alternative design
Manufacturing
Maintenance and project scheduling
 Phases of OR
• Defining the problem and gathering data
• Formulating a mathematical model
• Deriving solutions from the model
• Testing the model and its solutions
• Preparing to apply the model
• Implementation
 Formulating a mathematical model
• Decision variables (x1, x2 … xn) – ‘n’ related quantifiable
decisions to be made.
• Objective function – measure of performance (profit)
expressed as mathematical function of decision variables.
For example
Max P =3x1 +5x2 + … + 4xn
• Constraints – any restriction on values that can be assigned
to decision variables in terms of inequalities or equations.
For example x1 +2x2 ≥ 20
• Non negativity constraint x1>=0
• Parameters – the constant in the constraints (right hand
side values)
Linear Programming Problem
 Linear Programming Problem

• The general LPP calls for optimizing

(maximizing / minimizing) a linear function of
variables called the ‘Objective function’
subject to a set of linear equations and /
or inequalities called the ‘Constraints’ or
‘Restrictions’
Linear programming is implemented in the Wolfram
Language as Linear Programming[c, m, b], which finds a
vector x which minimizes the quantity cx subject to the
constraints mx>=b and x_i>=0 for x=(x_1,...,x_n).
 Application of LPP
• Personnel Assignment Problem
• Transportation Problem
• Efficiency on Operation of system of Dams
• Optimum Estimation of Executive Compensation
• Agriculture Applications
• Military Applications
• Production Management
• Marketing Management
• Manpower Management
• Physical distribution
 Advantages of LPP
• It helps us in making the optimum utilization of
productive resources.
• The quality of decisions may also be improved by linear
programming techniques.
• Provides practically solutions.
• In production processes, high lighting of bottlenecks is
the most significant advantage of this technique
 Formulation of LPP
Example 1:
A firm manufactures two types of products A and B and sells
them at a profit of 2$ on type A and 3$ on type B. Each product
is processed on two machines G and H. Type A requires 1
minute of processing time on G and 2 minutes on H; type B
requires 1 minute on G and 1 minute on H. The machine G is
available for not more than 6 hours 40 minutes while machine
H is available for 10 hours during any working day. Formulate
the problem as a linear programming problem.

Types of Product
Available
Machine Type A (x units) Type B (y units) Time(Minutes)

G 1 400
1
H 2 1 600
Profit per unit 2 3
• Let us assume decision variables are:
• x1( number of Product A),
• x2( Number of Product B) as my decision variables.

Objective function :
Maximum Profit, P= 2x1 + 3x2
Constraints :
x1 + x2 <=400
2x1+x2<=600
x1>=0, x2 >=0
 Type of products (minutes)
Available
Machine Type A (x units) Type B (Y units) time (mins)
G 1 1 400
H 2 1 600
Profit per unit 2 3

Objective : Maximize the profit Decision Variables : x numbers of A

y numbers of B
Type A : 1 m on G and 2 m on H
Objective Function:
Max Z = x * 2 + y * 3
Type B : 1 m on G and 1 m on H Max Z = 2X + 3Y
Constraints: (Availability)
Availability of G : 400 minutes
X * 1 + y * 1 <= 400
Availability of H : 600 minutes X * 2 + y * 1 <= 600
Constraints: (Non Negativity)
X >=0 , Y >= 0
LPP

Objective Max Z = 2X + 3Y.

Subject to:
X + y <= 400
2X+ y<= 600
x>=0,y>=0
• A company produces two products A and B which
possess raw materials 400 quintals and 450 labor hours.
It is known that 1 unit of product A requires 5 quintals of
raw materials and 10 man hours and yields a profit of
$45. Product B requires 20 quintals of raw materials, 15
man hours and yields a profit of $80. Formulate the LPP.
• Decision variables x1, x2
• objective function
Max Z = 45x1 + 80x2
• Subject to (constraints)
• 5x1 + 20x2 <= 400
• 10x1 + 15x2 <= 450
• X1>=0
• X2>=0
 Exercise 2

• A company produces two products A and B which possess

raw materials 400 quintals and 450 labor hours. It is
known that 1 unit of product A requires 5 quintals of raw
materials and 10 man hours and yields a profit of $45.
Product B requires 20 quintals of raw materials, 15 man
hours and yields a profit of $80. Formulate the LPP.

Decision variables x1, x2

Product A(x1) Product B (x2) Max Profit
Z = 45x1 + 80x2
Raw Material 5 20 400 quintals Subject to
Labor Hours 10 15 450hrs 5x1 + 20x2 <= 400
10x1 + 15x2 <= 450
Profit 45 80
X1>=0
X2>=0
 Exercise 3
• A company owns 2 oil mills A and B which have different production
capacities for low, high and medium grade oil. The company enters into
a contract to supply oil to a firm every week with 12, 8, 24 barrels of
each grade respectively. It costs the company $1000 and $ 800 per day
to run the mills A and B. On a day A produces 6, 2, 4 barrels of each
grade and B produces 2, 2, 12 barrels of each grade. Formulate an LPP
to determine number of days per week each mill will be operated in
order to meet the contract economically.

A(x) B(y) Minimize Z=1000x + 800y

Low 6 2 12 Subject
6x +2y >= 12
High 2 2 8
2x +2y >= 8
Medium 4 12 24 4x +12y >= 24
Cost 1000 800 x>=0 y>=0