27/12/2021

Learning Objective
 After completing this chapter, students should be
able to :
 Explain what is meant by the term constrained optimization
 Explain what linear programming is.
 Identify components and assumptions of linear programming
models.
 Recognize problems that can be solved using linear program
models.
 Formulate linear programming models
 Describe several problem types that lead themselves to solutions
using linear programming models.

2021

12/27/2021 Dr. Wasihun 1 12/27/2021 Dr. Wasihun 2

Linear programming
Linear programming (LP, also called linear optimization) is the development of
Linear programming
modeling and solution procedures which employ mathematical techniques to
optimize the goals and objectives of the decision-maker.
 Restrictions are referred to as constraints
 LP is a widely used mathematical modelling technique to determine the  Restrictions may be imposed internally or externally.
optimum allocation of scarce resources among competing demands.
- Internal restrictions: e.g. Labour time,
 LP is a method to achieve the best outcome (such as maximum profit or lowest
cost) in a mathematical model whose requirements are represented by linear
Machine time, Budget etc.
relationships. - External restrictions: e.g, Labour regulation
 LP is a versatile technique which can be applied to a variety of management
problems in investment, advertising, production, education, hospitals, etc.
 The goal in LP is to find the best solution given
 LP problems determine the optimal allocation of scarce resources in
organizations (both profit and non-profit) to meet certain objectives.
the constraint imposed by the problem: hence
 LP – enables users to find optimal solutions to certain problems in which the
the term constrained optimization.
solutions must satisfy a given set of requirements or constraints/restrictions
12/27/2021 Dr. Wasihun 3 12/27/2021 Dr. Wasihun 4

Linear programming Linear programming models

 In 1947, George Danzig developed the use of  LP models are the mathematical representations
linear algebra for determining solutions to of LP problems.
problems that involved the optimal allocation  LP models have certain characteristics in
of scarce resources. common.
 Characteristics can be grouped into two
 Programming refers to the use of algorithms. categories: components and assumptions
 Algorithm is a well defined sequence of steps  Components
that will lead to an optimal solutions. 1. Objective
2. Decision variable Model structure
 The term linear refers to straight line 3. Constraint
relationships. 4. Parameter
12/27/2021 Dr. Wasihun 5 12/27/2021 Dr. Wasihun 6

1
 27/12/2021

Components of LP Components of LP
 Objective function  Decision variables
…states the goal/objective of the decision-maker (in our case the manager). • LP method is applicable in problems characterized by the presence of
decision variables.
Often times, there are two types of objectives:
• Maximization (e.g. profit, revenue, market share ROI ), or • Decision variables refers to the aim to optimize (maximize the profits or
• Minimization (e.g. costs, time, distance) minimize the costs) or explain the optimization (maximization of profit or
minimization of cost).
Example:
Assume a factory is producing two types of products: bicycle (X1 ) and motorbike • Decision variables – represent unknown quantities to be
(X2). The profit from each bicycle is Birr 250 and from a motorbike is Birr solved for.
1,500.
(e.g., number of quantities to be produced within a given machine/labor hours
The objective function is: to maximize profit or minimize cost).
Maximize Z = 250X1 + 1,500X2; Decision variables are X1 and X2
The solution for these terms are what we would like to optimize.
12/27/2021 Dr. Wasihun 7 12/27/2021 Dr. Wasihun 8

Components of LP Components of LP
 Constraints:  Parameters
 There will be no problem in making decisions if resources are abundant;
but resources are usually scarce to achieve objectives.
 Are fixed values that specify the impact that one
unit of each decision variable will have on the
 Constraints are thus resources or factors (number of labor hours, raw
materials, equipment, etc.) that limit feasible solutions (or that limit to
objective and on any constraint it pertains to as
achieve desired objectives). well as to the numerical value of each constraint.
 The availability of scarce resources may be expressed as equations or  Example,
inequalities which rule out certain combinations of variable values as Maximize Z = 250X1 + 1,500X2
feasible solutions.
Subject to:
Consider the previous example
5X1 + 10X2 = 200
To produce one bicycle needs five labour hours and 2 machine hours, and
to produce a motorbike requires ten labour hours and 4 machine hours. 2X1 + 4X2 = 80
There are only 200 labour hours and 80 machine hours. Find the profit
maximizing number of bicycles and motorbikes. X1,X2 > 0
12/27/2021 Dr. Wasihun 9 12/27/2021 Dr. Wasihun 10

Assumptions of LP model
Essentials of LP model • Four basic assumptions (Model Validity)
 The objective in all linear programming problems is the
maximization or minimization of some quantity.
1. Linearity – each decision variables has linear
impact on objective function and in each
 All LP problems have constraints that limit the degree to which the constraints.
objective can be pursued.
2. Divisibility – nonintegers values are
 A feasible solution satisfies all the problem's constraints. acceptable. E.g. X1= 3.5
 An optimal solution is a feasible solution that results in the largest
possible objective function value when maximizing (or smallest
3. Certainty – (model parameters are known
when minimizing). and constant)
 Linear constraints are linear functions that are restricted to be "less 4. Non-negativity – negative value of variables
than or equal to", "equal to", or "greater than or equal to" a constant. are unrealistic.
 A model must have a non-negativity constraint.
12/27/2021 Dr. Wasihun 11 12/27/2021 Dr. Wasihun 12

2
 27/12/2021

Formulating LP Models
 Problem formulation or modelling is the process
of translating the verbal statement of a problem
into a mathematical statement.
 Model formulation in a mathematical statement:
 Understand the problem thoroughly.
 Define the decision variables.
 Describe each constraint.
 Describe the objective.
 Write the objective in terms of the decision variables.
 Write the constraints in terms of the decision variables.
12/27/2021 Dr. Wasihun 13 12/27/2021 Dr. Wasihun 14

Parameters
Special Terms in LP Parameters
are the constant terms. These are the coefficients to the decision variables
1) Parameters
An Example of LP with Maximization Problem
2) Right-Hand Side (RHS)
Assume that wood Furniture Company wants to produce tables and chairs. A
3) Objective Coefficients unit of table requires 30 units of wood and 5 units of labor. A unit of chair
requires 20 units of wood and 10 units of labor. The company has 300 and
4) Technological Coefficients 110 units of wood and labor, respectively. A unit of table and chair contribute
to the profit of $ 6 and 8 respectively.
5) Canonical Form
6) Standard Form

12/27/2021 Dr. Wasihun 15 Dr. Wasihun 16

12/27/2021

Parameters Right-Hand side (RHS)

Wood Problem Formulation …are the numbers (parameters) located on the right-hand side of
the a LP model.
Let: XT = number of tables produced
XC = number of chairs produced In a production problem these parameters typically indicate the
amount, or quantity, of resources available. In the conventional
Max Z = 6XT + 8XC Parameters literature these are known as the “b”s.
Subject to: Max Z = 6XT + 8XC
RHS
30XT + 20XC < 300 Subject to:
5XT + 10XC < 110 30XT + 20XC < 300
where: XT, XC > 0 5XT + 10XC < 110
where: XT, XC > 0
12/27/2021
Dr. Wasihun 12/27/2021
17 Dr. Wasihun 18

3
 27/12/2021

Objective Coefficients Technological Coefficients

 Also known as “exchange coefficients,” these are the coefficients of
 Are the coefficients of the variables in the objective function.
the variables in the constraints. In a production problem these
In a production problem, these typically represent unit profit or
typically represent the unit resource requirements. In the conventional
unit cost. In the conventional literature these are known as the literature these are known as the “a”s.
“c”s.
Objective
coefficients Max Z = 6XT + 8XC
Subject to:
Max Z = 6 XT + 8 XC 30XT + 20XC < 300
5XT + 10XC < 110
Subject to: where: XT, XC > 0
30 XT + 20 XC < 300
5 XT + 10 XC < 110 In this model, 30, 20, 5, and 10 are technology coefficients.
where: XT, XC > 0 12/27/2021
Dr. Wasihun 19 Dr. Wasihun 12/27/2021
20

Canonical Form Standard Form

 Refers to an LP problem with an objective function, all of the
variables are non-negative and where all of the variables and their  Refers to an LP problem in canonical form.
coefficients are on the left-hand sides of the constraints, and all of  In addition, all of the constraints are expressed as equalities
the parameters are on the right-hand sides of the constraints. and every variable is represented in the same order of
This model formulation is in canonical form sequence on every line of the linear programming problem.

Max Z = 6XT + 8XC This model formulation is in standard form:

Subject to: Max Z = 6XT + 8XC

30XT + 20XC < 300 Subject to:
5XT + 10XC < 110 30XT + 20XC < 300
where: XT, XC > 0 5XT + 10XC < 110
where: XT, XC > 0
12/27/2021
Dr. Wasihun 12/27/2021
21 Dr. Wasihun 22

Example1 Example 1: Solution

• A cereal manufacturer is investigating the possibility of  Solution
introducing a new cereal. It would be composed of wheat, X1 = ounces of wheat per box
rice, and corn flakes. The cost per ounces and dietary X2 = ounces of rice per box
requirements are shown in the following table:
X3 = ounces of corn per box
Requirement
g. per oz. Wheat Rice Corn per 12 oz. Box
 Minimize Z = 0.03x1 + 0.05x2 x+ 0.02x3
Protein 4 2 2 At least 27g.
Carbohydrate 20 25 21 At least 240g.
 Subject to:
Calories 90 110 100 No more than
1260 calories
Protein 4x1 + 2x2 + 2x3 ≥ 27 g.
Cost per oz. .03 .05 .02 Carbohydrates 20x1 + 25x2 + 21x3 ≥ 240 g.
Formulate an LP model for this problem that will determine Calories 90x1 + 110x2 + 100x3 ≤ 1260 calo.
the optimal quantities of wheat, rice, and corn per box that Box size x1 + x2 + x3 = 12 ounces
will achieve the requirements at minimum cost. x1, x2 and x3 > 0
12/27/2021 Dr. Wasihun 23 12/27/2021 Dr. Wasihun 24

4
 27/12/2021

Example 2 Example 2: Solution

A conservative investor has $100,000 to invest. The investor has
decided to use three vehicles for generating income: municipal X1 = amount invested in bonds
bonds, a certificate of deposit(CD) and a money market account. X2 = amount invested in the CD
After reading a financial newsletter, the investor also has identified
several additional restrictions on the investments.
X3 = amount invested in the money market account
1. No more than 40 percent of the investment should be in bonds
2. The proportion allocated to the money markets account should Max z = 0.08X1 + 0.09x2 + 0.07x3
be at least double the amount in the CD.
The annual return will be 8 percent for bond, 9 percent for the CD, Subject to:
and 7 percent for the money market account. Assume the entire Amount in bonds X1 ≤ $ 40,000
amount will be invested. Money/CD -2X2 + X3 ≥ 0
Formulate the LP model for the problem, ignoring any transaction
Total amount x1 + x2 + x3 = $ 100,000
costs and the potential for different investment lives. Assume that
the investor wants to maximize the total annual return. x1, x2, and x3 ≥ 0
12/27/2021 Dr. Wasihun 25 12/27/2021 Dr. Wasihun 26

Solving LP Problems Graphical LP Solution Procedure

 There are two methods for solving LP problems. 1) Formulate the LP problem
 The graphical and the simplex methods. 2) Plot the constraints on a graph

1. A graphical solution method can be used to solve a 3) Identify the feasible solution region
linear program problems with only two variables. 4) Find the coordinates of the corner points

5) Determine value of the objective function at each of the

2. The simplex method can be used for two or more
variables. coordinates

6) Find most attractive value of the objective function

Dr. Wasihun 12/27/2021

27 Dr. Wasihun 12/27/2021
28

Let’s continue with the example on maximization problem. Wood Furniture Problem
Assume that wood Furniture Company wants to produce tables and chairs. A
Corner points approach
unit of table requires 30 units of wood and 5 units of labor. A unit of chair
requires 20 units of wood and 10 units of labor. The company has 300 and 110
units of wood and labor, respectively. A unit of table and chair contribute $ 6 XT = 4 tables
and 8, respectively, to the profit. XC = 9 chairs
P = 6(4) + 8(9) = 96 $
Max Z = 6XT + 8XC
Subject to:
30XT + 20XC < 300
5XT + 10XC < 110
where: XT, XC > 0
First find x and y intercepts for each constraints:
x 0
y 0

12/27/2021
12/27/2021 Dr. Wasihun 29 Dr. Wasihun 30

5
 27/12/2021

Graphical method…
Example 2.
A firm is engaged in producing two products, A and B. Each unit of
Corner Values T & C Profit level Decision to Feasible product A requires 2 kg of raw material and 4 hours of labor for
point (Z) produce
processing, whereas each unit of product B requires 3 Kg of raw
A (0,0) 0 Feasible material and 3 hours of labor, of the same type. Every week, the firm
has an availability of 60 kg of raw material and 96 labor hours. One unit
B (0, 15) 120 Infeasible
of product A sold yields $40 and one unit of product B sold gives $35 as
C (10, 0) 60 Feasible profit.

D (4, 9) 96 4 tables and 9 Feasible and Required:

chairs optimum a) Formulate this problem as a linear programming problem
E (0, 11) 88 Feasible b) How many units of each of the products should be produced per
week so that the firm can earn the maximum profit.
F (22, 0) 132 Why not this? Infeasible

Dr. Wasihun 12/27/2021

31 Dr. Wasihun 12/27/2021
32

Solution
Formulation … Let x1 = the number of product A to be produced and
x2 = the number of product B to be produced.

Resource Unit Requirements Amount Now, we can write the problem in complete form as follows.

X1 X2 Available
Maximize Z = 40x1 + 35x2
Raw material 2 3 60
Subject to
Labor 4 3 96
2x1 + 3x2 ≤ 60 (Raw material constraint)
Unit profit 40 35
4x1 + 3x2 ≤ 96 (Labor hours constraint)

x1, x1 ≥ 0 (Non-negativity restriction)

12/27/2021 12/27/2021
Dr. Wasihun 33 Dr. Wasihun 34

Exercise
Corner Quantity Quantity Profit Feasibility A company makes two products (X and Y) using two
point combination machines (A and B). Each unit of X that is produced requires
x1 x2 50 minutes of processing time on machine A and 30 minutes
of processing time on machine B. Each unit of Y that is
A 0 0 0, 0 0 Feasible produced requires 24 minutes of processing time on machine
B 30 0 (30, 0) Z=1200 Infeasible A and 33 minutes of processing time on machine B. Available
processing time on machine A is forecasted to be 40 hours
C 0 20 (0,20) Z=700 Feasible and on machine B is forecasted to be 35 hours. The company
D 24 0 (24,0) Z= 960 Feasible expects a profit of $ 75 per unit from X and $ 95 from Y.

E 0 32 (0,32) Z= 1120 Infeasible

a) Formulate the problem as a linear programming.
F 18 8 (18,8) Z= 1000 Feasible b) Solve it using the graphical approach.

12/27/2021
Dr. Wasihun 35 Dr. Wasihun 12/27/2021
36

6
 27/12/2021

Graphical method for LP minimization problems

Fertilizer type A B Requirement
Example:
20 40 > 480 Phosphate
The agricultural institute suggested to a farmer to spread out at least 480
kg of phosphate fertilizer and not less than 720 kg of nitrogen fertilizer 80 40 > 720 Nitrogen
to raise productivity of crops in his field. There are two sources for Cost (Z) 40A 24B
obtaining these: mixtures A and B. Both of these are available in bags Z Minimize Z= 40A + 24B
weighing 100 kg each and they cost $ 40 and 24 respectively. Mixture A
Subject to
contains phosphate and nitrogen equivalent of 20 kg and 80 kg
respectively, while mixture B contains these ingredients equivalent of 20A + 40B > 480
40 kg each.
80A + 40B > 720
a) Formulate this as a linear programming problem.
A, B > 0
b) Determine how many bags of each type the farmer should buy in
order to obtain the required fertilizer at minimum cost.

Dr. Wasihun 12/27/2021

37 Dr. Wasihun 12/27/2021
38

Minimize Z= 40x1 + 24x2 (cost)

Let Z represent the Objective function and
X1 and X2 represent the number of bags of mixtures A and Subject to constraints
B respectively:
20x1 + 40x2 > 480 (phosphate constraint)
Minimize Z= 40x1 + 24x2 (cost) 80x1 + 40x2 > 720 ( Nitrogen constraint)

Constraints: Minimum of 480kg of phosphate and 720 kg of X1, x2 > 0 (Non-negativity restriction)
nitrogen ingredients are required.

20x1 + 40x2 > 480 (Phosphate constraint)

80x1 + 40x2 > 720 (Nitrogen constraint)

12/27/2021
Dr. Wasihun 12/27/2021 39 Dr. Wasihun 40

Corner Z (Cost)
point
A (x1) B (x2)
1 (24, 0) 24 0 960
4 (0, 18) 0 18 432
5 (4, 10) 4 10 400

….. The End…..

The farmer should buy A = 4 bags and B = 10 Bags

Minimize Z= 40A + 24B (cost)

12/27/2021
Dr. Wasihun 41 12/27/2021 Dr. Wasihun 42