Linear Programming: Model

Formulation and Graphical

Solution
Introduction to Management
Science
 The Management Science Approach

◼ Management science uses a scientific approach to solving management

problems.
◼ It is used in a variety of organizations to solve many different types of
problems.
◼ It encompasses a logical mathematical approach to problem solving.
◼ Management science, also known as operations research, quantitative
methods, etc., involves a philosophy of problem solving in a logical manner.

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 The Management Science Process

Figure 1.1

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 Steps in the Management Science Process

▪ Observation - Identification of a problem that exists (or may occur

soon) in a system or organization.
▪ Definition of the Problem - problem must be clearly and
consistently defined, showing its boundaries and interactions with the
objectives of the organization.
▪ Model Construction - Development of the functional mathematical
relationships that describe the decision variables, objective function
and constraints of the problem.
▪ Model Solution - Models solved using management science
techniques.
▪ Model Implementation - Actual use of the model or its solution.

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 Business Use of Management Science

◼ Some application areas:

- Project Planning
- Capital Budgeting
- Inventory Analysis
- Production Planning
- Scheduling
◼ Interfaces - Applications journal published by Institute for Operations
Research and Management Sciences (INFORMS)

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 Decision Support Systems (DSS)

A decision support system is a computer-based system that helps

decision makers address complex problems that cut across different
parts of an organization and operations.

Features of Decision Support Systems

◼ Interactive
◼ Use databases & management science models
◼ Address “what if” questions
◼ Perform sensitivity analysis

Examples include:
ERP – Enterprise Resource Planning
OLAP – Online Analytical Processing

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 Management Science Models
Decision Support Systems (2 of 2)

Figure 1.7 A Decision

Support System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 1-8

LINEAR PROGRAMMING

1-9
Whats Is Linear Programming?
• Many major decisions faced by a manager of a business focus on the best way to
achieve the objectives of the firm, subject to the restrictions placed on the
manager by the operating environment.
• These restrictions can take the form of limited resources, such as time, labor,
energy, material, or money; or they can be in the form of restrictive guidelines,
such as a recipe for make engineering and product specifications.
• One of the most frequent objectives of business firms is to gain the most profit
possible or, in other words, to maximize profit.
• The objective of individual organizational units within a firm (such as a production
or packaging department) is often to minimize cost.
• Objectives of a business frequently are to maximize profit or minimize cost.
• Linear programming is a model that consists of linear relationships representing
a firm's decisions, given an objective and resource constraints.
What Is Linear Programming?
There are three steps in applying the linear programming technique.
• the problem must be identified as being solvable by linear programming.
• the unstructured problem must be formulated as a mathematical model.
• the model must be solved by using established mathematical techniques.
Model Formulation
• A linear programming model consists of certain common components
and characteristics.
• The model components include
• an objective function,
• and model constraints
• decision variables
• parameters.
• Decision variables are mathematical symbols that represent levels of
activity.
• The objective function is a linear relationship that reflects the
objective of an operation. (minimizing or maximizing value)
Model Formulation
• The model constraints are also linear relationships of the decision
variables; they represent the restrictions placed on the firm by the
operating environment. The restrictions can be in the form of limited
resources or restrictive guidelines. For example, only 40 hours of
labor may be available to produce radios during production. The
actual numeric values in the objective function and the constraints,
such as the 40 hours of available labor, are parameters.
• A constraint is a linear relationship that represents a restriction on
decision making.
• Parameters are numerical values that are included in the objective
functions and constraints.
A Maximization Model Example
Beaver Creek Pottery Company is a small crafts operation run by a Native American tribal council. The company
employs skilled artisans to produce clay bowls and mugs with authentic Native American designs and colors.
The two primary resources used by the company are special pottery clay and skilled labor. Given these limited
resources, the company desires to know how many bowls and mugs to produce each day in order to maximize
profit. This is generally referred to as a product mix problem type.
A Maximization Model Example
The two products have the following resource requirements for
production and profit per item produced (i.e., the model parameters):

There are 40 hours of labor and 120 pounds of clay available each day for production. We will formulate
this problem as a linear programming model by defining each component of the model separately and
then combining the components into a single model.
A Maximization Model Example

• Summary of LP Model Formulation Steps

Step 1. Define the decision variables
How many bowls and mugs to produce
Step 2. Define the objective function
Maximize profit
Step 3. Define the constraints
The resources (clay and labor) available
A Maximization Model Example
Decision Variables
• The decision confronting management in this problem is how many bowls and mugs to produce. The two decision
variables represent the number of bowls and mugs to be produced on a daily basis. The quantities to be produced can be
represented symbolically as
• x1 = number of bowls to produce
• x2 = number of mugs to produce

The Objective Function

The objective of the company is to maximize total profit. The company's profit is the sum of the individual profits gained from
each bowl and mug. Profit derived from bowls is determined by multiplying the unit profit of each bowl, $40, by the number
of bowls produced, x1. Likewise, profit derived from mugs is derived from the unit profit of a mug, $50, multiplied by the
number of mugs produced, x2. Thus, total profit, which we will define symbolically as Z, can be expressed mathematically as
$40x1 + $50x2. By placing the term maximize in front of the profit function, we express the objective of the firm to maximize
total profit:
maximize Z = $40x1 + 50x2
where
Z = total profit per day
$40x1 = profit from bowls
$50x2 = profit from mugs
A Maximization Model Example
Model Constraints
In this problem two resources are used for production labor and clay both of which are limited. Production of bowls and mugs requires both
labor and clay. For each bowl produced, 1 hour of labor is required. Therefore, the labor used for the production of bowls is 1x1 hours.
Similarly, each mug requires 2 hours of labor; thus, the labor used to produce mugs every day is 2x2 hours. The total labor used by the
company is the sum of the individual amounts of labor used for each product:

However, the amount of labor represented by 1x1 + 2x2 is limited to 40 hours per day; thus, the complete labor constraint is:

The "less than or equal to“ inequality is employed instead of an equality (=) because the 40 hours of labor is a maximum limitation that can
be used, not an amount that must be used. This constraint allows the company some flexibility; the company is not restricted to using exactly
40 hours but can use whatever amount is necessary to maximize profit, up to and including 40 hours. This means that it is possible to have idle,
or excess, capacity (i.e., some of the 40 hours may not be used).
The constraint for clay is formulated in the same way as the labor constraint. Because each bowl requires 4 pounds of clay, the amount of clay
used daily for the production of bowls is 4x1 pounds; and because each mug requires 3 pounds of clay, the amount of clay used daily for mugs
is 3x2. Given that the amount of clay available for production each day is 120 pounds, the material constraint can be formulated as
A Maximization Model Example
A final restriction is that the number of bowls and mugs produced must be either zero or a positive value
because it is impossible to produce negative items. These restrictions are referred to as nonnegativity
constraints and are expressed mathematically as
Nonnegativity constraints restrict the decision variables to zero or positive values.

The complete linear programming model for this problem can now be summarized as follows:
A Maximization Model Example
The solution of this model will result in numeric values for x1 and x2 that will maximize total profit,
Z. As one possible solution, consider x1 = 5 bowls and x2 = 10 mugs. First, we will substitute this
hypothetical solution into each of the constraints in order to make sure that the solution does not
require more resources than the constraints show are available:

Because neither of the constraints is violated by this hypothetical solution, we say the solution is
feasible (i.e., it is possible). Substituting these solution values in the objective function gives Z =
40(5) + 50(10) = $700. However, for the time being, we do not have any way of knowing whether
$700 is the maximum profit.

A feasible solution does not violate any of the constraints.

A Maximization Model Example
Now consider a solution of x1 = 10 bowls and x2 = 20 mugs. This solution results in a
profit of

Although this is certainly a better solution in terms of profit, it is infeasible (i.e., not
possible) because it violates the resource constraint for labor:

An infeasible problem violates at least one of the constraints.

The solution to this problem must maximize profit without violating the constraints.
The solution that achieves this objective is x1 = 24 bowls and x2 = 8 mugs, with a
corresponding profit of $1,360. The determination of this solution is shown using
the graphical solution approach in the following section.
Graphical Solutions of Linear Programming Models
• Following the formulation of a mathematical model, the next stage in
the application of linear programming to a decision-making problem
is to find the solution of the model. A common solution approach is
to solve algebraically the set of mathematical relationships that form
the model either manually or using a computer program, thus
determining the values for the decision variables. However, because
the relationships are linear, some models and solutions can be
illustrated graphically.
• Graphical solutions are limited to linear programming problems with
only two decision variables.
• The graphical method is realistically limited to models with only two
decision variables, which can be represented on a graph of two
dimensions. Models with three decision variables can be graphed in
three dimensions, but the process is quite cumbersome, and models
of four or more decision variables cannot be graphed at all.
Graphical Solutions of Linear Programming Models
The product mix model will be used to demonstrate the graphical interpretation of a linear programming
problem. Recall that the problem describes Beaver Creek Pottery Company's attempt to decide how many
bowls and mugs to produce daily, given limited amounts of labor and clay. The complete linear programming
model was formulated as
Graphical Solutions of Linear Programming Models
The first step in drawing the graph of the model is to plot the constraints
on the graph. This is done by treating both constraints as equations (or
straight lines) and plotting each line on the graph. Let's consider the labor
constraint line first:

x1 + 2x2 = 40

Constraint lines are plotted as equations.

Graphical Solutions of Linear Programming Models
• A simple procedure for plotting this line is to determine two points
that are on the line and then draw a straight line through the points.
One point can be found by letting x1 = 0 and solving for x2:

• Thus, one point is at the coordinates x1 = 0 and x2 = 20. A second

point can be found by letting x2 = 0 and solving for x1:
Graphical Solutions of Linear Programming Models
Now we have a second point, x1 = 40, x2 = 0. The line on the graph
representing this equation is drawn by connecting these two points
Graphical Solutions of Linear Programming Models
However, this is only the graph of the constraint line and does not
reflect the entire constraint, which also includes the values that are less
than or equal to this line. The area representing the entire constraint
is shown in
Graphical Solutions of Linear Programming Models
• To test the correctness of the constraint area, we check any two pointsone inside
the constraint area and one outside. For example, check point A in Figure above
which is at the intersection of x1 = 10 and x2 = 10. Substituting these values into
the following labor constraint

• shows that point A is indeed within the constraint area, as these values for x 1 and
x2 yield a quantity that does not exceed the limit of 40 hours. Next, we check
point B at x1 = 40 and x2 = 30:

• Point B is obviously outside the constraint area because the values for x 1 and x2
yield a quantity (100) that exceeds the limit of 40 hours.
Graphical Solutions of Linear Programming Models
We draw the line for the clay constraint the same way as the one for
the labor constraintby finding two points on the constraint line and
connecting them with a straight line. First, let x1 = 0 and solve for x2:

Performing this operation results in a point, x1 = 0, x2 = 40. Next, we let

x2 = 0 and then solve for x1:
Graphical Solutions of Linear Programming Models
• This operation yields a second point, x1 = 30, x2 = 0. Plotting these
points on the graph and connecting them with a line gives the
constraint line and area for clay, as shown:
Graphical Solutions of Linear Programming Models
Combining the two individual graphs for both labor and clay, produces
a graph of the model constraints, as shown figure in below. The shaded
area is the area that is common to both model constraints. Therefore,
this is the only area on the graph that contains points (i.e., values for x1
and x2) that will satisfy both constraints simultaneously.
 Graphical Solutions of Linear Programming Models
For example, consider the points R, S, and T in figure below. Point R
satisfies both constraints; thus, we say it is a feasible solution point. Point
S satisfies the clay constraint (4x1 + 3x2 120) but exceeds the labor
constraint; thus, it is infeasible. Point T satisfies neither constraint; thus, it
is also infeasible.
The Optimal Solution Point

The second step in the graphical solution method is to locate the point
in the feasible solution area that will result in the greatest total profit.
To begin the solution analysis, we first plot the objective function line
for an arbitrarily selected level of profit. For example, if we say profit, Z,
is $800, the objective function is
The Optimal Solution Point
Plotting this line just as we plotted the constraint lines results in the graph shown in Figure below. Every point
on this line is in the feasible solution area and will result in a profit of $800 (i.e., every combination of x1 and
x2 on this line will give a Z value of $800). However, let us see whether an even greater profit will still provide a
feasible solution
The Optimal Solution Point
Merencanakan baris ini sama seperti plot garis batasan hasil dalam grafik yang ditunjukkan pada Gambar di bawah
ini. Setiap titik pada garis ini berada di area solusi yang layak dan akan menghasilkan keuntungan sebesar $ 800
(yaitu, setiap kombinasi x1 dan x2 on line ini akan memberikan nilai Z $ 800). Namun, mari kita lihat apakah laba
yang lebih besar masih akan memberikan solusi yang layak. For example, consider profits of $1,200 and $1,600, as
shown in Figure
The Optimal Solution Point
• To find point B, we place a straightedge parallel to the objective
function line $800 = 40x1 + 50x2 in figure below and move it outward
from the origin as far as we can without losing contact with the
feasible solution area. Point B is referred to as the optimal (best)
solution.

The optimal solution is the best feasible solution.

The Solution Values
The third step in the graphical solution approach is to solve for the values of x1 and x2 once the optimal
solution point has been found. It is possible to determine the x1 and x2 coordinates of point B in Figure above
directly from the graph, as shown in Figure below:

The graphical coordinates corresponding to point B in figure are

x1 = 24 and x2 = 8. This is the optimal solution for the decision
variables in the problem. However, unless an absolutely
accurate graph is drawn, it is frequently difficult to determine
the correct solution directly from the graph. A more exact
approach is to determine the solution values mathematically
once the optimal point on the graph has been determined. The
mathematical approach for determining the solution is
described in the following pages. First, however, we will
consider a few characteristics of the solution.
The Solution Values
• The solution point will be on the boundary of the feasible solution
area and at one of the corners of the boundary where two constraint
lines intersect. (The graphical axes, you will recall, are also constraints
because x1 0 and x2 0.) These corners (points A, B, and C in Figure
above) are protrusions, or extremes, in the feasible solution area;
they are called extreme points. It has been proven mathematically
that the optimal solution in a linear programming model will always
occur at an extreme point. Therefore, in our sample problem the
possible solution points are limited to the three extreme points, A, B,
and C. The optimal extreme point is the extreme point the objective
function touches last as it leaves the feasible solution area.
• Extreme points are corner points on the boundary of the feasible
solution area.
The Solution Values
Constraint equations are solved simultaneously at the optimal extreme
point to determine the variable solution values.
First, we convert both equations to functions of x1:
The Solution Values
• Now we let x1 in the first equation equal x1 in the second equation,

• Substituting x2 = 8 into either one of the original equations gives a value for x1:

• Thus, the optimal solution at point B in Figure 2.11 is x1 = 24 and x2 = 8. Substituting these values into the
objective function gives the maximum profit,

In terms of the original problem, the solution indicates that if

the pottery company produces 24 bowls and 8 mugs, it will
receive $1,360, the maximum daily profit possible (given the
resource constraints).
The Solution Values
• Given that the optimal solution will be at one of the extreme corner points, A, B, or C, we can also find the
solution by testing each of the three points to see which results in the greatest profit, rather than by
graphing the objective function and seeing which point it last touches as it moves out of the feasible solution
area. Figure below shows the solution values for all three points, A, B, and C, and the amount of profit, Z, at
each point.
exercise
• Seorang petani sedang membeli pupuk yang mengandung tiga nutrien
A, B, dan C. Kebutuhan minimum adalah 160 satuan A, 200 satuan B,
dan 80 satuan C. Ada dua pupuk terkenal yang tersedia di pasar.
Tumbuh Cepat, harga Rp 4.000,00 per kantong; mengandung tiga
satuan A, lima satuan B, dan satu satuan C. Tumbuh Mudah, harga Rp
3.000,00 per kantong, mengandung 2 satuan tiap nutrien. Jika petani
ingin meminimalkan biaya dan kebutuhan nutrien tetap terjaga, maka
berapa banyak kantong dar tiap merk yang harus dibeli ?