PAMANTASAN NG LUNGSOD NG MAYNILA

COLLEGE OF BUSINESS ADMINISTRATION

DEPARTMENT OF BUSINESS ECONOMICS

LINEAR PROGRAMMING

BY

Janna Marie Borja

Bellinda Evaristo
Erica Anne Lui
Alessandro Renae Mabaquiao
Erma Maranga
Fatima Olendan

2024
 PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

TASK NO. 2 LINEAR PROGRAMMING

I. CONCEPTS

a. What is “Linear Programming”?

Linear programming is a mathematical modelling method that involves maximizing or

minimizing a linear function while considering various restrictions. It assists you in solving
some extremely complex LP and linear optimization problems by making a few simple
assumptions.

b. Provide a brief history of LP.

Fourier used linear programming implicitly in the early 1800s, but Leonid Kantorovich
formalised and applied it to economic problems in the 1930s. Kantorivich's work was hidden
behind the Iron Curtain (and generally neglected), making it obscure in the West. By the early
1940s, Tjalling Koopmans rediscovered linear programming and used it to solve shipping
problems. In 1947, George Dantzig introduced the simplex method, the first full solution for
solving linear programming problems. Koopmans coined the term "linear programming"
during a 1948 discussion with Dantzig. Kantorovich and Koopmans received the 1975 Nobel
Prize in Economics for their contributions to the theory of optimal resource allocation.
Koopmans proposed to Kantorovich that they withdraw the prize in protest of Dantzig's
exclusion, but Kantorovich regarded the medal as vindication of his use of mathematics in
economics, which his Soviet colleagues had dismissed as "a means for apologists of
capitalism".

c. What are the uses of LP? When is it good to use?

Linear programming is used in business and industry for production planning, transportation
and routing, and numerous scheduling applications. Airlines schedule flights using linear
programs that account for both aircraft and crew scheduling. Delivery services arrange and
route shipments using linear programs in order to save shipment time or cost. Retailers utilize
linear programming to plan how to order products from manufacturers and coordinate
deliveries to their stores. Manufacturing businesses utilize linear programming to plan and
schedule their production. Financial firms use linear programming to decide the mix of
financial products they offer or to arrange payments that transfer funds across institutions.
 PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

When dealing with a problem with several resource restrictions, linear programming can
provide the optimum solution. Whether it's increasing profit or space, or eliminating expense
and waste, this tool is a quick and effective approach to structure the problem and discover a
solution.

d. What are the methods in solving LP problems? Their differences? When to

use?

There are several approaches to solving linear programming problems. The two important
approaches are the graphical method, and simplex method.

1. Simplex Method

The simplex method is a commonly used tool for solving linear programming optimization
issues. Typically, it consists of a function and some limits expressed as inequalities. The
inequality specifies a polygonal area, with the solution frequently found at a vertex. This
strategy involves systematically studying the vertices as prospective solutions. The strategy
approaches and eventually achieves the maximum or lowest value of the goal function
through an iterative process. Furthermore, the method assists the decision-maker in
recognizing redundant limits, a complete solution, many alternatives, and an infeasible issue,
resulting in a comprehensive understanding of the business situation. However, this method is
useful only for systems of inequalities involving two variables.

2. Graphical Method

The graphical method is used to improve two-variable linear programming. If the problem
contains two choice factors, a graphical method is the most effective way to choose the
optimum answer. In this method, the set of inequalities is subject to restrictions. The
inequalities are then plotted along the XY plane. Once all of the inequalities have been
displayed on the XY graph, the intersecting region will help determine the viable zone. The
viable zone will provide the ideal answer while also explaining what values our model can
take.
 PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

e. What is the process involved in solving LP problems using graphical

methods?

1. Formulate the LP problem:

● Define the objective function you want to maximize or minimize (e.g., profit, cost).
● Set up constraints representing limitations as linear inequalities (e.g., x + y <= 100).

2. Construct a graph and plot the constraint lines:

● Create a coordinate plane with your decision variables (x and y) on the axes.
● Convert each constraint inequality to a linear equation by setting one variable to zero
and solving for the other.
● Plot these equations as lines on the graph.

3. Determine the valid side of each constraint line:

● For each constraint, choose a test point not on the line and evaluate it in the inequality.

4. Identify the feasible solution region:

● The feasible region is the area where all constraints are satisfied (the intersection of
shaded areas from step 3).

5. Plot the objective function:

● Convert the objective function to a linear equation similar to the constraints.

● However, instead of plotting it as a solid line, treat it as a movable line with a specific
direction depending on maximization or minimization (upward for maximize,
downward for minimize).

6. Find the optimal solution:

● Move the objective function line until it touches the boundary of the feasible region.
● The point of intersection between the objective function and the boundary of the
feasible region is the optimal solution.
● The value of the objective function at this point represents the optimal value
(maximum or minimum).

II. APPLICATIONS

A. ABI handles radio and TV ad jobs and placements for a wide range of clients. Like any
other ad firm, their objective is to maximize their total audience exposure for their client’s
 PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

products. Each radio spot results to about 1,000 exposures, while TV ad reaches 3,000
exposures based on research. Radio spot costs about Php 5,000 while Php 20,000 for TV. The
max budget is Php 1 million. Contracts with networks (radio and TV) require 100 spots per
month. ABI hires account executives to place the spots. Experience indicate that it takes
about 20 hours of executive effort for a radio spot and 40 hours for each TV spot. The
account executives are available for 4,000 hours per month.

1. What are the decision variables?

2. Specify the objective function.
3. Formulae each of the constraints.

○
 PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

B. A dietician has learned from a nutrition book that his family needs at least 300 grams of
protein and at least 60 milligrams of iron per day for sound health. These nutrients can be
obtained from meat and vegetable products. On the average, each pound of meat cost Php 60
with 150 grams of protein and 15 milligrams of iron; while vegetables is at Php 15 with 10
grams of protein and 5 milligrams of iron. The dietician wants to determine the quantities of
food that will meet the nutritional requirements at the least possible cost.

1. What are the decision variables?

2. = 150x + 15y = 60
3. =10x + 5y = 15
4.
5. Specify the objective function.
6. 300x + 60y = Z
7.
8. Formulate and solve each of the constraints.
 PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

9. Plot the constraints on a graph.

10. Determine the vertices and the respective quantities of meat and vegetables, and their
costs.
 PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

11. What is the optimal solution?

The Optimum Solution is the coordinates with (0,3) with a price of 180. It is the
middle choice of both equations

12. What is the decision?

The decision is that in order for a family to sustain 300 grams of protein and at least
60 milligrams of iron per day for sound health they need at least PHP 180 pesos per day to
sustain.
 PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

C. Light Yagami’s Furniture Shop manufactures two products: book cabinets and dressers,
which pass through two process: Assembly and Furnishing. The assembly department has 60
hours of work available while furnishing department has 48 hours per week. Manufacturing
one book cabinets need 4 hours in assembly and 2 hours in finishing. To produce a dresser, it
would need 2 hours in assembly and 4 hours in finishing. If the profit generated in Php 80
and 60 for each of the products respectively, how many book cabinets and dressers should be
produced in order to produce the maximum profit per week?
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COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

D. Arthrun Zala Ammunitions creates two products: Grenade Launchers (C) and AK47 guns
(D). The firm wants to minimize the costs of production. Refer to the following equations:
Min = 2C + 10D Subject to: 2C + D + S ≤ 6 5C + 4D ≥ 20 C,D ≥ 0

1. How much of the two products must be produced to minimize the cost? How much is
the cost?
2. Use the Linear Programming – Simplex Method. All data are in million pesos.
PAMANTASAN NG LUNGSOD NG MAYNILA
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF BUSINESS ECONOMICS

1.