21-01-2025

Linear Programming
Problem (LPP) - Formulations
Sessions 2 - 4

Linear Programming

 Linear programming method is a technique for choosing

the best alternative from a set of feasible alternatives, in
situations which the objective function as well as the
constraints can be expressed as linear mathematical
functions.
 The word programming does not refer here to computer
programming; rather, it is essentially a synonym for
planning.
 Thus, linear programming involves the planning of
activities to obtain an optimal result, i.e., a result that
reaches the specified goal best (according to the
mathematical model) among all feasible alternatives.

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Requirements for linear programming

 There should an objective that should be clearly
identifiable and measurable in quantitative terms.
 The activities and resources to be included should be
distinctly identifiable and measurable in quantitative
terms.
 Resources must be in limited supply.
 The objective function and the constraint equations or
inequalities must be linear in nature.
 There should be a series of feasible alternative courses of
action available to the decision-maker.

Applications of Linear Programming

 A manufacturer wants to develop a production
schedule and an inventory policy that will satisfy sales
demand in future periods. Ideally, the schedule and
policy will enable the company to satisfy demand and
at the same time minimize the total production and
inventory costs.
 A financial analyst must select an investment portfolio
from a variety of stock and bond investment
alternatives. The analyst would like to establish the
portfolio that maximizes the return on investment.

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Applications of Linear Programming

 A marketing manager wants to determine how best to
allocate a fixed advertising budget among alternative
advertising media such as radio, television, newspaper,
and magazine. The manager would like to determine
the media mix that maximizes advertising effectiveness.
 A company has warehouses in a number of locations
throughout the country. For a set of customer demands,
the company would like to determine how much each
warehouse should ship to each customer so that total
transportation costs are minimized.

Example 1
 Par, Inc., is a small manufacturer of golf equipment and
supplies whose management has decided to move into the
market for medium- and high-priced golf bags. Par, Inc.’s
distributor is enthusiastic about the new product line and has
agreed to buy all the golf bags Par, Inc., produces over the
next three months.
 After a thorough investigation of the steps involved in
manufacturing a golf bag, management determined that
each golf bag produced will require the following operations:
1. Cutting and dyeing the material
2. Sewing
3. Finishing (inserting umbrella holder, club separators, etc.)
4. Inspection and packaging

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Example 1 contd…
 The director of manufacturing analyzed each of the
operations and concluded that if the company produces a
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medium-priced standard model, each bag will require hour
10
1
in the cutting and dyeing department, hour in the sewing
2
1
department, 1 hour in the finishing department, and hour in
10
the inspection and packaging department. The more
expensive deluxe model will require 1 hour for cutting and
5 2 1
dyeing, hour for sewing, hour for finishing, and 4 hour for
6 3
inspection and packaging.

Example 1 contd…
 Par, Inc.’s production is constrained by a limited number
of hours available in each department. After studying
departmental workload projections, the director of
manufacturing estimates that 630 hours for cutting and
dyeing, 600 hours for sewing, 708 hours for finishing, and
135 hours for inspection and packaging will be available
for the production of golf bags during the next three
months.
 The accounting department analyzed the production
data, assigned all relevant variable costs, and arrived at
prices for both bags that will result in a profit contribution
of $10 for every standard bag and $9 for every deluxe
bag produced.

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Problem Formulation
 Describe the Objective The objective is to maximize the
total contribution to profit.
 Describe Each Constraints
 Constraint 1: Number of hours of cutting and dyeing time used
must be less than or equal to the number of hours of cutting and
dyeing time available.
 Constraint 2: Number of hours of sewing time used must be less
than or equal to the number of hours of sewing time available.
 Constraint 3: Number of hours of finishing time used must be less
than or equal to the number of hours of finishing time available.
 Constraint 4: Number of hours of inspection and packaging time
used must be less than or equal to the number of hours of
inspection and packaging time available.

Problem Formulation
 Define the Decision Variables The controllable inputs for
Par, Inc., are (1) the number of standard bags produced
and (2) the number of deluxe bags produced. Let
 S = number of standard bags
 D = number of deluxe bags
 Write the Objective in Terms of the Decision Variables
Par, Inc.’s profit contribution comes from two sources: (1)
the profit contribution made by producing S standard
bags and (2) the profit contribution made by producing
D deluxe bags. Thus, we have Total Profit Contribution =
10S + 9D
 The objective function is Max 10S + 9D

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Problem Formulation
Write the Constraints in Terms of the Decision
Variables
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Constraint 1: 𝑆 + 1𝐷 ≤ 630
10
1 5
Constraint 2: 𝑆 + 𝐷 ≤ 600
2 6
2
Constraint 3: 1𝑆 + 𝐷 ≤ 708
3
1 1
Constraint 4: 𝑆 + 𝐷 ≤ 135
10 4
Constraint 5: S, D ≥ 0

Complete Mathematical Model

Maximize 10S + 9D
Subject to (s.t.)
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 10 𝑆 + 1𝐷 ≤ 630 Cutting & Dyeing
1 5
 2 𝑆 + 6 𝐷 ≤ 600 Sewing
2
1𝑆 + 3 𝐷 ≤ 708 Finishing
1 1
 10 𝑆 + 4 𝐷 ≤ 135 Inspection and Packaging
S, D ≥ 0

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Example 2: Maximization Case

 A firm is engaged in producing two products, A and B. Each
unit of product A requires 2 kg of raw material and 4 labor
hours for processing, whereas each unit of product B requires
3 kg of raw 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 of product A sold yields Rs. 40
and one unit of product B sold gives Rs. 35 as profit.
 Formulate the problem as a linear programming problem to
determine how many units of each of the products should be
produced per week so that the firm can earn the maximum
profit. Assume that there is no marketing constraint so that all
that is produced can be sold.

Solution
 Decision variables:
 Let
 𝑥1 = number of units produced of product A
 𝑥2 = number of units produced of product B
 The objective function:
 Maximize Z = 40 𝑥1 + 35 𝑥2
 Constraints
 2 𝑥1 + 3 𝑥2 ≤ 60
 4 𝑥1 + 3 𝑥2 ≤ 96
 𝑥1 , 𝑥2 ≥ 0

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Example 3: Minimization Case

 The Agricultural Research Institute suggested to a farmer
to spread out at least 4800 kg of a special phosphate
fertilizer and not less than 7200 kg of a special nitrogen
fertilizer to raise productivity of crops in his fields. There
are two sources for obtaining these—mixtures A and B.
Both of these are available in bags weighing 100 kg
each and they cost Rs. 40 and Rs. 24 respectively.
Mixture A contains phosphate and nitrogen equivalent
of 20 kg and 80 kg respectively, while mixture B contains
these ingredients equivalent of 50 kg each. Write this as
a linear programming problem to determine how many
bags of each type the farmer should buy in order to
obtain the required fertilizer at minimum cost.

Solution
 Decision variables
 Let
 𝑥1 = number of bags of mixture A
 𝑥2 = number of bags of mixture B
 The objective function:
 Minimize Z = 40 𝑥1 + 24 𝑥2
 Constraints
 20 𝑥1 + 50 𝑥2 ≥ 4800
 80 𝑥1 + 50 𝑥2 ≥ 7200
 𝑥1 , 𝑥2 ≥ 0

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General Statement of Linear

Programing Problems
 In general terms, a linear programing problem can be written
as:
 Maximize Z = 𝑐1 𝑥1 + 𝑐2 𝑥2 + ⋯ + 𝑐𝑛 𝑥𝑛
 Subject to
 𝑎11 𝑥1 + 𝑎12 𝑥2 + ⋯ + 𝑎1𝑛 𝑥𝑛 ≤ 𝑏1
 𝑎21 𝑥1 + 𝑎22 𝑥2 + ⋯ + 𝑎2𝑛 𝑥𝑛 ≤ 𝑏2
.
.
 𝑎𝑚1 𝑥1 + 𝑎𝑚2 𝑥2 + ⋯ + 𝑎𝑚𝑛 𝑥𝑛 ≤ 𝑏𝑚
 𝑥1 , 𝑥2 ,…, 𝑥𝑛 ≥ 0

Characteristics of the constraints

 Generally, the constraints in the maximization problems
are of the ≤ type, and of the ≥ type in the minimization
problems. But a given problem may contain a mix of the
constraints, involving ≤, ≥, and/ or =.
 Usually, the decision variables are non-negative.
However, they need not always be so.
 Consider an investment problem, where 𝑥1 represents the
amount to be invested in the shares of a particular company,
then variable 𝑥1 shall be non-negative since we may decide to
invest (𝑥1 > 0) or not to invest (𝑥1 =0). But if we already have such
shares which may be sold, if the need be, then 𝑥1 may take
positive value (more investment), zero value (indicating no new
investment in it) or negative value (implying disinvestment in this
share). Hence, 𝑥1 shall be unrestricted in sign or a free variable.

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Assumptions underlying linear

programming
 Proportionality: There is a constant return to scale, i.e., there is no
economies of scale.
 Additivity: In the objective function and constraint inequalities both, the
total of all the activities is given by the sum total of each activity
conducted separately, i.e., there is no interaction among the decision
variables (no product is a byproduct of another)
 Continuity: The decision variables are continuous. As a consequence,
combinations of output with fractional values, in the context of
production problems, are possible and obtained frequently.
 Certainty: The objective function coefficients, the coefficients of the
inequality/ equality of the constraints and the constraint (resource)
values are known with certainty.
 Finite choices: A limited number of choices is available to the decision-
maker and the decision variables do not assume negative values.

Linear Programming Applications in

Marketing, Finance, & Operations

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Example 4: Media Selection (Marketing)

 The marketing department of Everest Company has collected information
on the problem of advertising for its products. This relates to the advertising
media available, the number of families expected to be reached with
each alternative, cost per advertisement, the maximum availability of each
medium and the expected exposure of each one (measured as the
relative value of one advertisement in each of the media). The information
is given below:
Advertising No. of families Cost per ad Maximum Expected
Media expected to cover (₹) availability (no. exposure (Units)
of times)
TV (30 sec) 3000 8000 8 80

Radio (50 sec) 7000 3000 30 20

Newspaper (1/4 5000 4000 4 50

page) Sunday
edition
Magazine (1 2000 3000 2 60
page)

Example 4 contd…
 Other information and requirements
 The advertising budget is Rs. 70,000
 At least 40,000 families should be covered
 At least two insertions be given in the Sunday edition of a daily
but not more than 4 ads should be given on the TV.
 Draft this as a linear programming problem.

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Solution
 Decision variables:
 𝑥1 : Number of ads on TV; 𝑥2 : Number of ads on radio
 𝑥3 : Number of ads on newspaper; 𝑥4 : Number of ads in a magazine
 Maximize Z = 80 𝑥1 + 20 𝑥2 + 50 𝑥3 + 60 𝑥4
 Subject to:
 3000 𝑥1 + 7000 𝑥2 + 5000 𝑥3 + 2000 𝑥4 ≥ 40,000
 8000 𝑥1 + 3000 𝑥2 + 4000 𝑥3 + 3000 𝑥4 ≤ 70,000
 𝑥1 ≤8
 𝑥2 ≤ 30
 𝑥3 ≤4
 𝑥4 ≤ 2
 𝑥3 ≥2
 𝑥1 ≤4
 𝑥1 , 𝑥2 , 𝑥3 , 𝑥4 ≥ 0

Example 5: Portfolio Selection (Finance)

 An investment company is seeking investment opportunities for
₹10,00,000 in various industry sectors. Based on its current
investments, the firm’s top financial analyst recommends that all
new investments be made in the oil industry, in the steel industry, or
in government bonds. Specifically, the analyst identified five
investment opportunities and projected their annual rates of returns,
as given below:

Investment Projected Rate of Return (%)

Indian Oil 7.3
Oil and Natural Gas Corporation (ONGC) 10.3
Tata Steel 6.4
Steel Authority of India 7.5
Government bonds 4.5

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Example 5 contd…
 Management of the company issues the following investment
guidelines:
 Neither industry (oil or steel) should receive more than ₹ 5,00,000.
 Government bonds should be at least 25% of the steel industry
investments.
 The investment in ONGC, the high-return but high-risk investment,
cannot be more than 60% of the total oil industry investment.
 What portfolio recommendations—investments and amounts—
should be made for the available ₹ 10,00,000?

Solution to Example 5
 Decision variables:
 𝑥1 : Amount invested in Indian Oil; 𝑥2 : Amount invested in ONGC
 𝑥3 : Amount invested in Tata Steel; 𝑥4 : Amount invested in Steel Authority
of India
 𝑥5 : Amount invested in Government Bonds
 Maximize Z = 0.073 𝑥1 + 0.103 𝑥2 + 0.064 𝑥3 + 0.075 𝑥4 + 0.045 𝑥5
 Subject to:
 𝑥1 + 𝑥2 + 𝑥3 + 𝑥4 + 𝑥5 = 10,00,000
 𝑥1 + 𝑥2 ≤ 5,00,000
 𝑥3 + 𝑥4 ≤ 5,00,000
 𝑥5 ≥ 0.25 (𝑥3 + 𝑥4 )
 𝑥2 ≤ 0.60 (𝑥1 + 𝑥2 )
 𝑥1 , 𝑥2 , 𝑥3 , 𝑥4 , 𝑥5 ≥ 0

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Example 6: Make or Buy Decision

(Operations)
 A company markets various business and engineering products. Currently, it
is preparing to introduce two new calculators: one for the business market
called the Financial Manager and one for the engineering market called
the Technician. Each calculator has three components: a base, an
electronic cartridge, and a faceplate or top. The same base is used for
both calculators, but the cartridges and tops are different. All components
can be manufactured by the company or purchased from outside
suppliers. The manufacturing costs and purchase prices for the components
are summarized in Table below:

Example 6 contd…
 Company forecasters indicate that 3000 Financial Manager
calculators and 2000 Technician calculators will be needed.
However, manufacturing capacity is limited. The company has 200
hours of regular manufacturing time and 50 hours of overtime that
can be scheduled for the calculators. Overtime involves a premium
at the additional cost of $9 per hour. Table below shows
manufacturing times (in minutes) for the components.

 The problem for the company is to determine how many units of

each component to manufacture and how many units of each
component to purchase.

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Example 3 Solution
 Decision Variables
 BM = number of bases manufactured
 BP = number of bases purchased
 FCM = number of Financial cartridges manufactured
 FCP = number of Financial cartridges purchased
 TCM = number of Technician cartridges manufactured
 TCP = number of Technician cartridges purchased
 FTM = number of Financial tops manufactured
 FTP = number of Financial tops purchased
 TTM = number of Technician tops manufactured
 TTP = number of Technician tops purchased
 OT = number of hours of overtime to be scheduled

Example 6 Solution

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Exercise 1
 An electronic company is engaged in the production of two
components C1 and C2 that are used in radio sets. Each unit of C1
costs the company Rs 5 in wages and Rs 5 in material, while each of
C2 costs the company Rs 25 in wages and Rs 15 in material. The
selling price of C1 is Rs 30 per unit and of C2 it is Rs 70 per unit.
Because of the company’s strong monopoly in these components,
it is assumed that the company can sell, at the prevailing prices, as
many units as it produces. The company’s production capacity is,
however, limited by two considerations. First, at the beginning of
period 1, the company has an initial balance of Rs 4,000 (cash plus
bank credit plus collections from past credit sales). Second, the
company has, in each period, 2,000 hours of machine time and
1,400 hours of assembly time. The production of each C1 requires 3
hours of machine time and 2 hours of assembly time, whereas the
production of each C2 requires 2 hours of machine time and 3
hours of assembly time. Formulate this problem as an LP model so as
to maximize the total profit to the company.

Answer

 Maximize Z = 20𝑥1 + 30𝑥2

 Subject to:
 10 𝑥1 + 40 𝑥2 ≤ 4,000 → Budget constraint
 3 𝑥1 + 02 𝑥2 ≤ 2,000 → Machine time constraint
 2 𝑥1 + 03 𝑥2 ≤ 1,400 → Assembly time constraint
 𝑥1 , 𝑥2 ≥ 0 → Non-negativity constraint

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Exercise 2
 A company has two grades of inspectors 1 and 2, the members of
which are to be assigned for a quality control inspection. It is
required that at least 2,000 pieces be inspected per 8-hour day.
Grade 1 inspectors can check pieces at the rate of 40 per hour,
with an accuracy of 97 per cent. Grade 2 inspectors check at the
rate of 30 pieces per hour with an accuracy of 95 per cent. The
wage rate of a Grade 1 inspector is Rs 5 per hour while that of a
Grade 2 inspector is Rs 4 per hour. An error made by an inspector
costs Rs 3 to the company. There are only nine Grade 1 inspectors
and eleven Grade 2 inspectors available to the company. The
company wishes to assign work to the available inspectors so as to
minimize the total cost of the inspection. Formulate this problem as
an LP model so as to minimize the daily inspection cost.

Answer
 Hourly cost of each inspector of Grade 1 and 2 can be computed as
follows:
 Inspector Grade 1 : Rs (5 + 3 × 40 × 0.03) = Rs 8.60
 Inspector Grade 2 : Rs (4 + 3 × 30 × 0.05) = Rs 8.50
 Based on the given data, the LP model can be formulated as follows:
 Minimize (daily inspection cost) Z = 8 (8.60 𝑥1 + 8.50 𝑥2 ) = 68.80 𝑥1 + 68.00 𝑥2
 subject to the constraints
 Total number of pieces that must be inspected in an 8-hour day
 8 × 40 𝑥1 + 8 × 30 𝑥2 ≥ 2000
 Number of inspectors of Grade 1 and 2 available
 𝑥1 ≤ 9
 𝑥2 ≤ 11
 and 𝑥1 , 𝑥2 ≥ 0.

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Exercise 3

 A voice recorder company manufactures models A, B and C, which

have profit contributions per unit of Rs 15, Rs 40 and Rs 60,
respectively. The weekly minimum production requirements are 25
units for model A, 130 units for model B and 55 units for model C.
Each type of recorder requires a certain amount of time for the
manufacturing of the component parts for assembling and for
packing. Specifically, a dozen units of model A require 4 hours for
manufacturing, 3 hours for assembling and 1 hour for packaging.
The corresponding figures for a dozen units of model B are 2.5, 4
and 2 and for a dozen units of model C are 6, 9 and 4. During the
forthcoming week, the company has available 130 hours of
manufacturing, 170 hours of assembling and 52 hours of packaging
time. Formulate this problem as an LP model so as to maximize the
total profit to the company.

Answer

 Maximize (total profit) = 15 𝑥1 + 40 𝑥2 + 60 𝑥3

 subject to:
 𝑥1 ≥ 25
 𝑥2 ≥ 130
 𝑥3 ≥ 55
4𝑥1 2.5𝑥2 6𝑥
 + + 3 ≤ 130 (Manufacturing time)
12 12 12
3𝑥1 4𝑥2 9𝑥3
 + + ≤ 170 (Assembling time)
12 12 12
𝑥1 2𝑥2 4𝑥3
 + + ≤ 52 (Packaging time)
12 12 12
 𝑥1 , 𝑥2 , 𝑥3 ≥ 0

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Exercise 4
 Consider the following problem faced by a production planner of a
soft drink plant. He has two bottling machines A and B. A is designed for
8-ounce bottles and B for 16-ounce bottles. However, each can also be
used for both types of bottles with some loss of efficiency. The
manufacturing data is as follows:
Machine 8-ounce Bottle 16-ounce Bottle
A 100/ minute 40/ minute
B 60/ minute 75/ minute
 The machines can be run for 8 hours per day, 5 days per week. The
profit on an 8-ounce bottle is Rs 1.5 and on a 16-ounce bottle is Rs 2.5.
Weekly production of the drink cannot exceed 3,00,000 bottles and the
market can absorb 25,000, 8-ounce bottles and 7,000, 16-ounce bottles
per week. The planner wishes to maximize his profit, subject of course,
to all the production and marketing restrictions. Formulate this problem
as an LP model to maximize total profit.

Answer
 Decision variables: 𝑥1 units of 8-ounce bottles and 𝑥2 units of 16-ounce
bottles
 Maximize (total profit) Z = 1.5 𝑥1 + 2.5 𝑥2
 Subject to
𝑥1 𝑥
 + 2 ≤ 2400 (Machine A time)
100 40
𝑥1 𝑥
 + 2 ≤ 2400 (Machine B time)
60 75

 𝑥1 + 𝑥2 ≤ 3,00,000 (Production)
 𝑥1 ≤ 25,000
 𝑥2 ≤ 7,000
 𝑥1 , 𝑥2 ≥ 0

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