ROAD TO LINEAR PROGRAMMING

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Technological development - necessitated organizations for optimally utilizing resources. Use knowledge and exp for decision making together with quantitative approaches to business. “OPERATIONS RESEARCH”-technique of using quantitative approach to solve business problems. Helps a manager in effective decision making by effectively utilizing the available resources. Complex problems- easily solved by managers knowledge+ quantitative techniques.

RACING TOWARDS LINEAR PROGRAMMING

Method formulated by a Russian mathematician ‘L.V. KANTROVICH’ and later developed by George B. Dantzig in 1947. The word “LINEAR” means that the relationships handled are those represented by straight lines . . The word “PROGRAMMING” means taking decisions systematically. Thus linear programming is a decision making technique under the given constraints on the assumption that the relationships among the variables representing different phenomena happen

The mathematical method of trying to achieve something while taking into account a number of constraints. Typical EXAMPLES include: - maximizing consumer satisfaction or utility subject to a . ……..budget constraint; - maximizing profits subject to cost constraints; - minimizing a firm’s wage bill taking into account a given capital-……..labour ratio; or - maximizing revenues for a sales maximizing firm subject to the own price elasticity of demand.

CONCEPT OF LINEAR PROGRAMMING

Put more formally, linear programming problems are really about finding optimal solutions to problems which are expressed in terms of an entity which needs to be optimized (also known as ‘the objective function’) given certain constraints. Both the objective function and all of the constraints are expressed as linear equations eg. y = 4x+7 etc

GEARING UP LINEAR PROGRAMMING BY “UNDERSTANDING THE
OBJECTIVE FUNCTION”

 GOAL OF THE COMPANY  EITHER TO MAXIMIZE PROFIT OR  TO MINIMIZE THE LOSSES

UNDERSTANDING THE CONSTRAINTS

o RESOURCES IN LIMITED SUPPLY . o LIMITATIONS UNDER WHICH ONE HAS TO PLAN . o FOR EX…

REQUIREMENTS OF A LINEAR PROGRAMMING PROBLEM

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Their should be an objective which is easily identifiable and measurable in quantitative terms. The activities to be included should be distinctly identifiable in quantitative terms. The resources of the system which are to be allocated for the attainment of the goal, should be quantitatively measured. They must be in limited supply. T he relationships representing the objective and constraints shall be linear. There should be a series of feasible alternative courses of action available .

SOLUTION OF THE LPP PROBLEMS
► SOLVED

BY TWO METHODS :

* THE GRAPHICAL METHOD * “THE SIMPLEX METHOD”……

THE SIMPLEX METHOD

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The simplex method was developed by Prof. G.B. DANTZIG in 1947 . He demonstrated how to use an objective function to find a optimal solution from amongst the several feasible solutions to a linear programming problem. Simplex method is a computational routine of repeating the procedure over and over until an optimal solution is achieved. Here each new solution obtains a value of the objective function at least as large as the previous solution., thus leading closer to the optimal solution and thus the iteration can be determined

ESSENTIALS FOR SIMPLEX METHOD

The types of problems for which the simplex method are suitable are ones that can be expressed in the following STANDARD FORM:  * The constraints must include the non-negativity constraints for all . the decision variables * The other constraints must be expressed in the form (linear . . …….expression) ≤ No. where the No. on the right hand side must be …….positive. * The objective must be to MAXIMISE some linear expression

APPLICATION OF SIMPLEX METHOD IN BUSINESS PROBLEMS:M/S Greenply Industries uses 3 machines in the manufacture of three plywood products of different thickness i.e. 6mm, 18mm and 12mm ply. Each unit of product A requires 6 hrs on machine 1,4 hrs on machine 2,and 2 hrs on machine 3. Each unit of product b requires 8 hrs on machine 1,2 hrs on machine 2 and 6 hrs on machine3,while each unit of product c requires 4 hrs on each of the three machines. The contribution margin of the three products is Rs. 60,Rs 80and Rs 70 respectively. The machine hours

FORMATION OF THE EQUATIONS

Max Z= 60x1 + 80x2 + 70x3 (objective) ► 6x1+8x2+4x3 ≤ 180 ► 4x1+2x2+4x3 ≤ 108 ► 2x1+6x2+4x3 ≤ 186 addition of some slack variables/constraints to ramove the inequality sign !

INTIAL TABLE
Cj 0
0 0

60 80 70 0 x₁ 6
4
2 0 60

0 s₂ 0
1 0 0 0

0 s₃ 0
0 1 0 0

x₂ 8 2 6 0 80

x₃ 4
4 4 0 70

s₁ 1
0 0 0 0

s₁ s₂ s₃ zj Dj

s olu 18 tio 0 n 108
186

M. R 2 2.5 54
31

SECOND TABLE
60 80

70 x₃ 1/ 2 3 1 40 30

0

0

0

Cj
80

x₁
6/8

x₂
1

s₁
1/8

s₂
0

s₃
0

x₂ s₂ s₃ Zj Dj

S M. olu R 22.5 45 63 21
51 51

0
0

5/ 0 2 0 -5/2
60 0 80 0

1 1/ 0 -3/4 4
10 -10 0 0

0
1 0 0

THIRD TABLE
60 80

70

0

0

0

Cj
80 70 0

x₁ x₂ x₃ s₁
0.33 1 5/6 -20 /6 0 0 0 1 0 70 0 5/2 -1 /12 -8 /12

s₂
-1/6 1/3 -1/3

s₃
0 0 1 0 0

x₂ x₃ s₃ Z Dj

s M. olu R 12
21 30

84.7 80 -24. 7 -10

10.8 10 -10. 8 -10

Result
►Putting

values of x₁, x₂, x₃, s₁, s₂, s₃ in the objective function. Maximize Z = 60x₁ +80x₂+70x₃ +0s₁ +0s₂ +0s₃ = 60(0)+80(12)+70(21)+0(0)+0(0)+0(0) = 0+960+1470+0+0+0 Maximize Z = 2430

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