The Role of Linear Programming in Optimizing the Production Process and Its Impact on Decision -

making (A Case Study of Arib Company)

A.D OUAKLI KELTOUM T.D BEN ROUKIBI Bachira

Industry organizational development and creativity laboratory industry organizational development and creativity laboratory
University OF Djillali BOUNAAMA Khemis Miliana Algeria university of Djillali BOUNAAMA Khemis Miliana Algeria
k.ouakli@UNIV-dbkm.dz Bachira-bengouaibi@univ-dbkm.dz

Abstract:

this study aims to clarify the steps of using quantitative methods .in particular
the linear programming method to demonstrate its importance and role in the
decision-making process where we will try through the field study to apply the
linear programming model in an economic institution to make decisions related
to determining the optimal amount of production and use it in the decision-
making process regarding determining the nature and resources.
The study concluded that the application of the linear programming method
helps in addressing problems and making the appropriate decision in the
organization by expressing them mathematically and quantitatively and
formulating them in the framework of a mathematical model, the solution of
this model leads to obtaining the necessary quantitative indicators to support
decision –making and problem solving in practice.
Keywords: quantitative methods, linear programming, decision-making
Jel Classification codes: C44

Introduction:
The economic institutions are witnessing major development in all of its
activities; this is due to its large size and competitors. endeavoring to
accomplish the institution’s goals, the administration adopts a series of
resolutions in conditions characterized of the lack of information, uncertainty
and the difficulty of envisioning the future, all of this requires the presence of
system A and a convenient and efficient method that aids in making the right
decision and this is what earned decision-making a great importance
considering it one of the most important jobs that the managerdoes . Thus the
process of decision-making constitutes the main pillar in the institution and
from here the Urgent need of utilizing the method of quantitative methods
emerged in decision –making , including linear programming which is
considered the most important mean of operational research in the field of
decision-making,whereas this method is considered an efficient scientific tool
in management which allows the ideal distribution of the institutions’
resources in order to attain a certain goal and to help the decision –makers
make the ideal decision .
Through this research we will try to answer the main problematic which can be
read as follows:
How can the linear programming help in making the ideal decision in the
economic institution?
This questioning includes subsidiary questions:
- What is the importance of linear programming?
- To what extent can the linear programming contribute in the process of
decision –making?
- How can the linear programming determine the optimal amount of
production in the economic institution?
The objective of the research:
The research aims to study the capacity of implementing one of the
quantitative methods which the operational research uses in determining the
optimal amount of production which is the linear programming, and adopting it
in assessing the decision and choosing the best one and knowing the extent of
its contribution in decision -making in order to achieve the objectives of the
institution whether it was glorifying the profits A or minimizing the costs etc. .

The importance of the research:

The quantitative methods are considered one of the most important incomes
of business management that helps the institution in guiding the use of its
resources and its elements of production notably amid rarity. The decision-
making process is considered the essence of the administrative process.
Furthermore the decisions made effects the future of the institution and
determine the extent of its success and durability.

First: the essence of linear programming:

The linear programming is considered one of the simplest mathematical
methods in solving the issues that faces the institutions, and it aims to solve
complicated cases by hiring the optimal ---of production in order to achieve the
laid down objectives.
1. The definition of linear programming:
The linear programming witnessed so many definitions that differ according to
intellectuals and analyzers, here are the important ones:
- The first definition: “it is a mathematical way that allows the reaching to
the ideal A and the optimal solutions possible to a group of problems
that includes certain mathematical conditions”(MERJANE,59:2002)
- The second definition: “a mathematical method that is used in finding
the optimal solution on how the institution uses its resources
“(KAABOUR,2005:114)
- The third definition: “it is a mathematical method that allows the
obtainment of the best solution to problems with many possible
alternative solutions”(ELKHATIB and Others:46)
- The forth definition: it is also ”a mathematical method that cares for the
problems that the administration to set the practical plan and to make
economical decisions including the distribution of the available
resources among the competing uses whereas the highest level of
incomes A and minimizing the costs to a minimum”(YOUCEF:267)
From the previous definitions we can conclude that the linear programming
is a tool A and mathematical method that is based on finding the optimal
way of the optimal use of resources amid the capacities and resources
available without prejudice to attaining thelaid down objectives through
gaining the biggest profit possible A and minimizing the costs to the utmost,
and it is used as a tool that the institution can use by making decisions more
competent and efficient when it comes to its resources.
2. Drafting the model of linear programming:
The drafting A and building the linear programming is considered the most
important step in researching the importance of the objective , which means
turning the case from an expressive reality form to a clear mathematical
formulation involving a number of changes as the objective function
(MAHER,2008:19)
And it is found in cases of optimizing A and minimizing a number of
limitations in form of equations or probabilities:
 [ Max ] Z=C 1 X 1+C 2 X 2+ C3 X 3 … … … … .+C n X n

- State of Minimum: the mathematical model is as follows:

[ Min ] Z=C 1 X 1 +C 2 X 2+C 3 X 3 … … … … .+C n X n
And the mathematical model constitute of:
- The objective function:
It is the scale of the model’s efficiency and it is defined by a
mathematical function of the decision changes and it is always either
maximizing or minimizing (ALAABD,1998:266), it represents the main
goal of the problem related to the optimality and this function is written
according to the following mathematical formulation:

n
opt ∫ ( x ) =a0 + ∑ ¿ 1 C J X J
j

Whereas:

 Opt: means optimality (optimalité),either Maximizing (MAX) A or

Minimizing (MIN)
 Cj: transactions of the objective function ,either the unitary proceed or
the unitary cost of each product.
 Xj: symbols of quantities (the number of units) produced of each product
which are the unknowns that we are looking for.
 J: indicator of the number of the model’s variables (unknowns) which is
estimated at (n)
- The limitations of the problem:

It represents the group of determinates that should be taken into

consideration when achieving the objective , therefore if we wish to
achieve the maximum possible profit from producing two products, there is
no doubt that there are many limitations to be considered when opting to
achieve that goal, for example ; the market cannot absorb any size of
production that could be produced , in addition the resources of the
company like the raw materials,machines,funds and the limited
employment are also limitations to be taken into consideration when
formulating the problem. It is expressed mathematically in the form of
equations or probabilities of the following mathematical formula (ALAABD,
1998:266):

∑ aij x j (≥ ,=, ≤ ) b i
Whereas:

 aij: the technical transactions ;the amounts consumed of the

resources ( production capacities) for the unitary production from
the products
 bi: the available amounts of resources
 i: the number of lines which is the number of limitations(m)
 j:the number of pillars which is the number of variables ;
unknowns (n)
- the condition of minus :
this condition means that all the values of the variables in the problem
are real and not negative so the values must be positive A and with zero
value : 0≤ x j (Mohamed WALEICH 1990:16)
3- The formulation of the linear programming model:
When formulating a model of linear programming whether it was a
problem of optimizing profits or minimizing costs, it will be clear how the
models are solved in three different techniques:
- the graphic technique: this technique is used in the situations of
decision-making where the number of alternative measures is no more
than two(AZAAM :30)
- the simplex: it is used when either the number of variables in the linear
program is two or more , it functions with the simplex algorithm
- the algebra technique: this technique is used when the number of the
variables in the mathematical model is only two.(RATOUL 2004 : 71 )

Secondly: the principles of decision-making:

The decision-making is the essence of the management process and its main
mean of achieving the institution’s objectives; for without decisions, the
essential activities of the administration cannot be done .decision-making is
not easy for it is complicated and also there are many influencers that
effects the decision-maker and because it requires a number of measures
and practical activities to reach a proper decision .
 1- the definition of decision-making and the steps of making it:
Here we recognize the definition of decision making and its steps:
1.1. Definition of decision-making:
Here we show you the most important definitions:
- the first definition: “ it is the process that is built on the study and the
objective thinking to reach a certain resolution, meaning choosing and
favoring the alternatives A and the available capacities”(BAKIA 2001:503)
- the second definition: “ it is the order that a higher authority issues to a
lower one , so the latter commits to it in order to achieve the purpose
that the organization aims towards “
- the third definition: it is also “ a management process and the main pillar
in the administrative work and it is a series or a back to back steps that
aims to a certain result or attaining a certain goal, the process of
decision-making is considered as a group of back to back scientific steps
that the decision –maker uses in order to pick the rightful and truthful
decision “ ( SAYED : 2019)

We can conclude from the previous definitions that the process of decision
making is the essence of the administrative operation and a back to back
steps that the decision-maker resort to it in an endeavor to pick the right
and the ideal decision through favoring between the alternatives and the
available capacities after doing the analysis and the study .

In general, the decision-making is the essence of the administrative and

production operation; as it is the most important and the steps of decision
making are:

- recognizing the consisted problem

- determining the available alternatives to solve the problematic
- Assessing the available alternatives to determine the best one.

We could add other steps to this list that the decision-maker can find it
important to reach a right decision and the moral of the story is not the
number of steps of the decision-making process but the efficiency of it to gain a
right decision

2. The methods of decision making:

The methods of decision-making differ, however there are the traditional
methods (non-quantitative) and other modern scientific methods (quantitative)
, and the decision-makers must realize these methods so they can be able to
use it with full confidence , we summarize it in the next charter:

Chart 1: methods of decision-making

Traditional method Typical method Scientific method

- Experience: resorting to - Personal gut: depending This method is considered one of
former experiences on the decision-makers the scientific methods that are
- Personal judgment: on point of view based on following scientific steps
non objective principals - Revising lists: making a in making decisions through the
- Opinions: depending on list of a large number of help of all the modern means in
sharing and giving aspects that effects the the field of decision-making with
opinions results of the decision the need for decision-makers to
- Experience : resorting to - Descriptive style: depends possess scientific and technical
previous experiences on describing facts and talents that allows them to use
the relation between the methods and styles of scientific
reasons and the variables aspect in making their decisions.

Source: by researchers

3. The conditions of decision making:

Decision making varies in terms of its complexity, simplicity, and ease of

making, as the environment in which the decision is made includes a number of
variables and human and natural influences that affect the type of decision
taken, and the decision can be divided Depending on the circumstances to:

- Because there is only one state of nature in Decision making under risk
Decision making under risk refers to the situation in which there are a
number of different strategies for achieving a goal and each strategy has
more than one outcome or return.
- Decision making under a state of uncertainty. The state of uncertainty
means that state in which there is not a sufficient amount of information
available about the variables and the results objectives of the project and
its policy, and the management is in a due to the lack of... data and
information related

From the above, we conclude that the issue of decision-making is one of the
issues in which every member of the organization is equal, because everyone
faces this issue, but to varying degrees and with different responsibilities, and all
the decisions made daily may not always be subject to certain standards, so we
choose the best methods to use them in This is provided that it is useful in
solving the problem, as linear programming is considered one of the scientific
methods for studying problems and making decisions through A combination of
alternatives and then comparing them to reach the optimal, efficient and
effective solution with the aim of achieving rationalization Using available
resources to achieve goals.

To examine further and delve deeper into this topic, we will discuss below a
case study of a productive economic institution and identify it On the
possibilities of applying linear programming in making production decisions and
what is related to it.

Third: A case study of Lactobacillus ARIB for the production of milk and
its derivatives:

Through this topic, we try to use the linear programming method in making
productive decisions and determine its effectiveness at the level of the economic
institution. We have applied this method to the institution, to help make the
optimal and right decision.

1. Definition of Lactobacillus and the capabilities it has:

Below we will review the definition of Lactobacillus and the
capabilities it has It has is available
Malbna Arib is an economic institution with a productive nature
specializing in the production of milk and its derivatives. It is a
company with a shareholding and the total cost of the project
was estimated at 150,000,000
he institution sits on a vast area estimated at 14 hectares, in
addition to the presence of a good number of private cow
breeders that it deals with. The institution obtained Upon its
independence on 21 OCTO 1991 and starting in july 1997 it
became Milk Industrial Complex, and the institution itself chose
the name “Malabna arib,” and it is now a company with shares
that controls its various products except milk, as it is a strategic
product whose price is controlled by the Directorate of the
Production Units Complex and by order of the state. The daily
production capacity of the institution is 340,360 liters per day,
and its capital in the year 2021 is estimated at 710,120,000.00
 DZD. 2.1. The capabilities that the Lactobacillus has Covering
and meeting needs on a large scale extends beyond the borders
of the state, such as the states of Chlef, Tipaza, and Medea.
These capabilities are as follows:
- Investments valued at 82,393,600.00 DZD distributed among the
companies that own workshops equipped for production and
from 1.2.1. Financial and material capabilities: The dairy’s
capabilities in 2021 were estimated as follows: Among them are
(milk production workshop, yoghurt production workshop and
dairy derivatives production workshop), and a water filtration
station polluted water and an industrial water treatment plant. It
also owns two wells equipped with two pumps to bring water to
Lactobacillus. - It also has administrative buildings equipped with
the necessary facilities, and warehouses for refrigeration and
preservation.
- People’s contributions amounted to 98,458,000 DZD.
- Total income is estimated at 265,500,000 DZD.
- Inventories were estimated at 282,496,529.21 DZD.
- the sales were was estimated at 934,466,409 DZD.
- The daily production capacity is estimated at 340,360 liters per
day, distributed as follows:
- - Pasteurized milk 340,360 litres, laban 9,000 litres, 6,000 litres.
- - Yoghurt 60,000 containers with a capacity of 100 g.
- - Chocolate 59,000 100g container Caramel 59,000 100g
container.
2.2.1. Human potential:
The laxative has significant human capabilities, enabling it to perform
its activity appropriately and appropriately for various situations
Logistic and economic, as they are divided into two parts
(administrative and production). The number of permanent workers
was Initially 830 workers, the number was reduced in 2005 to 258,
reaching 302 workers in 2021.

Chart n°02:
Products The amount of The amount of The daily sales The unitary cost The daily
production in the sales in the according to the balance
trimester trimester preparations
1xyoghurt 1131312 116836215788.67 15788.67 10.54 56565.6
2x yoghurt 138864 135883 3575.86 12.52 15429.33
caramel
3xyoghurt 318384 294616 5261 12.11 21225.6
 4xyoghurt 247296 247220 5749.30 13.02 2248145
mamzouj
5xyoghurt 289968 289650 5793 9.57 28996.8
bifuduce

Source: by researchers according to the data of the production

service
2. Implementing the method of linear programming in decision-
making in the dairy of Arib:
After addressing the importance of using the method of linear
programming and its efficiency in the economic institutions where we
implemented this method on the reality of the company which is an
object of study , to help with choosing the optimal and rational decision
and with supplying the practical context and with knowing the importance
and efficiency of the method of linear programming in decision-making.

1-2 Methodology of research:

The dairy of Arib produces five (5) types of yoghurt , using five 5
fundamental raw materials, the designated official of the production
process wants to determine the perfect combination that achieve the
institution’s objectives ( a great daily profit) , we are relying on five (5)
products of regular consumption which are X1,X2,X3,X4,X5 and named:
yoghurt,caramel yoghurt, chocolate yoghurt,yoghurt mamzouj,yoghurt
bifiduce , considering that the rest of the products (milk,dairyand the rest
of the products)are subjected to special regulations and codified prices ,
the following chart shows the information of the materials used in the
production process:
Chart 3: the amount of available raw materials during a day and its quantity in
composing every product

The usage of used raw materials in each product

The used Yoghurt X1 Caramel Chocolate Yoghurt Yoghurt The
raw yoghurt X2 yoghurt X3 mixed with bifiduce X5 available
materials fruit X4 quantity of
raw
material
Fresh milk 0.27 0.0391 0.0391 0.027 0.0283 2323 KG
Carbon 0.021 0.021 0.021 0.021 0.021 1115 kg
Crystallized 0.0088 0.0083 0.0096 0.0058 0.0088 633kg
sugar
Powder 0.0086 0.0087 0.0062 0.0082 0.0086 546 kg
Time 2.05 2.05 2.05 2.05 2.05 36000

Source: by researchers according to the data of the production service

As we show through the following chart the details of products
concerning the unitary cost , the price of sales and the margin of profit of
one day .

Chart N°4: the cost of production and the price of the manufactory’s
sales and the margin of profit:
X1 X2 X3 X4 X5
the price of sale 17.01 20.00 20.00 21;00 20.00
of the factory (1)
The unitary 10.54 12.52 12.11 13.02 09.57
cost(2)
Profit (1-2) 06.47 07.46 07.89 07.98 10.43
Source: by researchers according to the data of production service

2-2 the formulation of an optimal production program:

We will try to formulate a linear program to determine the optimal

production aiming to make the greatest profit:
- The objective function for the optimal production: Max(z)= x 1+ x2 + x 3 + x 4 + x 5

The limitations:
0.27 x 1+0.0391 x 2+ 0.0391 x 3 +0.027 x 4 + 0.0283 x 5 ≤2323

0.021 x 1+0.021 x 2+ 0.0 21 x 3 +0.0 21 x 4 +0.02 1 x 5 ≤ 1115

0.0088 x 1+0.0083 x 2+ 0.0 096 x 3+ 0.0 058 x 4 + 0.0 088 x5 ≤ 633

0.0086 x 1+0.0087 x 2+ 0.0 06 2 x 3 +0.0 08 2 x 4 +0.0 086 ≤ 546

2.05 x 1+2.05 x 2+ 2.0 5 x 3+ 2.0 5 x 4 +2 .05 x 5 ≤36000

x 1; x 2 ; x 3 ; x 4 ; x 5 ≥ 0

And using the simplex charts we can find the optimal solution for the program:

x 1=0 , x 2=0 , x3 =0 , x 4=0 x 5=212381 z=212381

This implies that in order for us to achieve an optimal production of 212381 ,
we must produce 212381 of x 5 which is yoghurt bifiduce , while we note that there is
no need to produce x 1; x 2 ; x 3 ; x 4 which are: (yoghurt, caramel yoghurt, chocolate yoghurt,
yoghurt mixed with fruit) to reach to goal.

- The function of objective of the optimal cost:

Min ( z ) =10.54 x 1+12.52 x 2+ 12.11 x3 +13.02 x 4 +09.57 x 5

- limitations :
0.27 x 1+0.0391 x 2+ 0.0391 x 3 +0.027 x 4 + 0.0283 x 5 ≤2323

0.021 x 1+0.021 x 2+ 0.0 21 x 3 +0.0 21 x 4 +0.02 1 x 5 ≤ 1115

0.0088 x 1+0.0083 x 2+ 0.0 096 x 3+ 0.0 058 x 4 + 0.0 088 x5 ≤ 633

0.0086 x 1+0.0087 x 2+ 0.0 06 2 x 3 +0.0 08 2 x 4 +0.0 086 ≤ 546

2.05 x 1+2.05 x 2+ 2.0 5 x 3+ 2.0 5 x 4 +2 .05 x 5 ≤36000

x 1; x 2 ; x 3 ; x 4 ; x 5 ≥ 0

And using the simplex charts we can find the optimal solution for the program:

x 1=0 , x 2=0 , x3 =0 , x 4=0 x 5=720000 z=336117

This means in order to attain the lowest cost of 336117 we must produce 720000 of x 5 which
is yoghurt bifiduce , while we note that there is no need to produce x 1; x 2 ; x 3 ; x 4 which are:
(yoghurt, caramel yoghurt, chocolate yoghurt, yoghurt mixed with fruit) to reach to goal.

- The function of objective of the optimal income:

Max ( z )=17.01 x 1 +20.00 x 2+20.00 x 3+21.00 x 4 +20.00 x 5

- Limitations:
0.27 x 1+0.0391 x 2+ 0.0391 x 3 +0.027 x 4 + 0.0283 x 5 ≤2323

0.0088 x 1+0.0083 x 2+ 0.0 096 x 3+ 0.0 058 x 4 + 0.0 088 x5 ≤ 633

0.0086 x 1+0.0087 x 2+ 0.0 06 2 x 3 +0.0 08 2 x 4 +0.0 086 ≤ 546

2.05 x 1+2.05 x 2+ 2.0 5 x 3+ 2.0 5 x 4 +2 .05 x 5 ≤36000

x 1; x 2 ; x 3 ; x 4 ; x 5 ≥ 0

And using the simplex charts we can find the optimal solution for the program:
 x 1=0 , x 2=0 , x3 =0 , x 4=0 x 5=720000 0 z=737561

This means in order to attain the lowest cost of 737561 we must produce 720000 of x 4 which
is yoghurt mixed with fruits , while we note that there is no need to produce x 1; x 2 ; x 3 ; x 4
which are (yoghurt, caramel yoghurt, chocolate yoghurt, yoghurt mixed with fruit) to reach
the goal.

-the function of objective for the greatest profit:

Max ( z )=6.47 x 1+ 7.46 x 2 +7.89 x 3+ 7.98 x 4 +10.43 x 5

The limits:

0.27 x 1+0.0391 x 2+ 0.0391 x 3 +0.027 x 4 + 0.0283 x 5 ≤2323

0.0088 x 1+0.0083 x 2+ 0.0 096 x 3+ 0.0 058 x 4 + 0.0 088 x5 ≤ 633

0.0086 x 1+0.0087 x 2+ 0.0 06 2 x 3 +0.0 08 2 x 4 +0.0 086 ≤ 546

2.05 x 1+2.05 x 2+ 2.0 5 x 3+ 2.0 5 x 4 +2 .05 x 5 ≤36000

x 1; x 2 ; x 3 ; x 4 ; x 5 ≥ 0

And using the simplex charts we can find the optimal solution for the program:

x 1=0 , x 2=0 , x3 =0 , x 4=0 x 5=720000 0 z=183161

This means in order to attain the lowest cost of 183161 we must produce 720000 of x 5
which is yoghurt bifiduce , while we note that there is no need to produce x 1; x 2 ; x 3 ; x 4
which are (yoghurt, caramel yoghurt, chocolate yoghurt, yoghurt mixed with fruit) to reach
the goal.

2: Tools and methods:

In order to do our research we will attempt to rely on the following tools:

- In theory: we relied on the library scan in order to compose a theoretical base for the
object of research , depending on different books ,sources ,doctoral thesis and
specialized magazines and national and international seminars.
- In practice: the tools of field study are: observing and the personal interviews for the
purpose of collecting informational and examining it to guarantee an accurate
diagnosis , and using a group of tools and practical ,quantitative and mathematical
programs in solving the problematic.

The result of the study:

Through the study and formulation of the linear program as an attempt to determine the
optimal production to achieve the goal , the greatest profit of the institution of dairy
ARIB indicates the following:

- In case of aiming at the greatest production , the institution must dedicate its
resources to produce yoghurt bifiduce x5 a production energy of 212381 unit daily
- In case of aiming at the lowest cost, the institution must dedicate its resources to
produce yoghurt x1 a production energy of 720000 unit daily
- In case of aiming at the OPTIMAL INCOME , the institution must dedicate its
resources to produce yoghurt x5 a production energy of 720000 unit daily
- In case of aiming at the greatest profit, the institution must dedicate its resources to
produce yoghurt bifiduce x5 a production energy of 212381 unit daily

CONCLUSION:
The process of decision-making is considered one of the most important
responsibilities that the manager encounters. It is the essence of the modern
administrative practice in any institution for the purpose of solving daily problems
where the economic institutions can gain a lot of benefits by implementing and using
linear programming, it helps organize the concept of the decision notably its capacity
of measuring the dangers, it also plays a fundamental role in decision-making for it is
considered an effective mean to reach the best and finest results. The good quality
and the accuracy of the linear programming emerges in accordance with manager’s
capacity of using and interpreting it. Moreover, utilizing linear programming with all
its features might contribute in decision-making with accuracy to gain the optimal
solutions, whereas we projected and embodied so many quantitative applications on
the giving data from the institution to look for solutions through linear programming
( determining the optimal production, the optimal cost , the optimal income and the
greatest profit)
And via the results obtained through the study , we offer the following suggestions
and recommendations:
- Investing in indulging in the technique of linear programming and any other
quantitative scientific methods and publicizing it so all institutions can use it to make
the optimal and rational decision.
- The necessity of training the human resource on how to implement and use the
method of linear programming in institutions.
- Investing in and following the methods and scientific techniques of successful and
rightful decision-making.

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