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 vii

Contents

Preface xi
Symbols and Abbreviations xv

1 Introduction 1

2 Mathematical Foundations 13
2.1 Matrix Algebra 13
2.2 Vector Algebra 20
2.3 Simultaneous Linear Equation Systems 22
2.4 Linear Dependence 26
2.5 Convex Sets and n-Dimensional Geometry 29

3 Introduction to Linear Programming 35

3.1 Canonical and Standard Forms 35
3.2 A Graphical Solution to the Linear Programming Problem 37
3.3 Properties of the Feasible Region 38
3.4 Existence and Location of Optimal Solutions 38
3.5 Basic Feasible and Extreme Point Solutions 39
3.6 Solutions and Requirement Spaces 41

4 Computational Aspects of Linear Programming 43

4.1 The Simplex Method 43
4.2 Improving a Basic Feasible Solution 48
4.3 Degenerate Basic Feasible Solutions 66
4.4 Summary of the Simplex Method 69

5 Variations of the Standard Simplex Routine 71

5.1 The M-Penalty Method 71
5.2 Inconsistency and Redundancy 78
5.3 Minimization of the Objective Function 85
viii Contents

5.4 Unrestricted Variables 86

5.5 The Two-Phase Method 87

6 Duality Theory 95
6.1 The Symmetric Dual 95
6.2 Unsymmetric Duals 97
6.3 Duality Theorems 100
6.4 Constructing the Dual Solution 106
6.5 Dual Simplex Method 113
6.6 Computational Aspects of the Dual Simplex Method 114
6.7 Summary of the Dual Simplex Method 121

7 Linear Programming and the Theory of the Firm 123

7.1 The Technology of the Firm 123
7.2 The Single-Process Production Function 125
7.3 The Multiactivity Production Function 129
7.4 The Single-Activity Profit Maximization Model 139
7.5 The Multiactivity Profit Maximization Model 143
7.6 Profit Indifference Curves 146
7.7 Activity Levels Interpreted as Individual Product Levels 148
7.8 The Simplex Method as an Internal Resource Allocation Process 155
7.9 The Dual Simplex Method as an Internalized Resource Allocation
Process 157
7.10 A Generalized Multiactivity Profit-Maximization Model 157
7.11 Factor Learning and the Optimum Product-Mix Model 161
7.12 Joint Production Processes 165
7.13 The Single-Process Product Transformation Function 167
7.14 The Multiactivity Joint-Production Model 171
7.15 Joint Production and Cost Minimization 180
7.16 Cost Indifference Curves 184
7.17 Activity Levels Interpreted as Individual Resource Levels 186

8 Sensitivity Analysis 195

8.1 Introduction 195
8.2 Sensitivity Analysis 195
8.2.1 Changing an Objective Function Coefficient 196
8.2.2 Changing a Component of the Requirements Vector 200
8.2.3 Changing a Component of the Coefficient Matrix 202
8.3 Summary of Sensitivity Effects 209

9 Analyzing Structural Changes 217

9.1 Introduction 217
9.2 Addition of a New Variable 217
 Contents ix

9.3 Addition of a New Structural Constraint 219

9.4 Deletion of a Variable 223
9.5 Deletion of a Structural Constraint 223

10 Parametric Programming 227

10.1 Introduction 227
10.2 Parametric Analysis 227
10.2.1 Parametrizing the Objective Function 228
10.2.2 Parametrizing the Requirements Vector 236
10.2.3 Parametrizing an Activity Vector 245
10.A Updating the Basis Inverse 256

11 Parametric Programming and the Theory of the Firm 257

11.1 The Supply Function for the Output of an Activity (or for
an Individual Product) 257
11.2 The Demand Function for a Variable Input 262
11.3 The Marginal (Net) Revenue Productivity Function for an Input 269
11.4 The Marginal Cost Function for an Activity (or Individual
Product) 276
11.5 Minimizing the Cost of Producing a Given Output 284
11.6 Determination of Marginal Productivity, Average Productivity,
Marginal Cost, and Average Cost Functions 286

12 Duality Revisited 297

12.1 Introduction 297
12.2 A Reformulation of the Primal and Dual Problems 297
12.3 Lagrangian Saddle Points 311
12.4 Duality and Complementary Slackness Theorems 315

13 Simplex-Based Methods of Optimization 321

13.1 Introduction 321
13.2 Quadratic Programming 321
13.3 Dual Quadratic Programs 325
13.4 Complementary Pivot Method 329
13.5 Quadratic Programming and Activity Analysis 335
13.6 Linear Fractional Functional Programming 338
13.7 Duality in Linear Fractional Functional Programming 347
13.8 Resource Allocation with a Fractional Objective 353
13.9 Game Theory and Linear Programming 356
13.9.1 Introduction 356
13.9.2 Matrix Games 357
13.9.3 Transformation of a Matrix Game to a Linear Program 361
13.A Quadratic Forms 363
x Contents

13.A.1 General Structure 363

13.A.2 Symmetric Quadratic Forms 366
13.A.3 Classification of Quadratic Forms 367
13.A.4 Necessary Conditions for the Definiteness and Semi-Definiteness of
Quadratic Forms 368
13.A.5 Necessary and Sufficient Conditions for the Definiteness and
Semi-Definiteness of Quadratic Forms 369

14 Data Envelopment Analysis (DEA) 373

14.1 Introduction 373
14.2 Set Theoretic Representation of a Production Technology 374
14.3 Output and Input Distance Functions 377
14.4 Technical and Allocative Efficiency 379
14.4.1 Measuring Technical Efficiency 379
14.4.2 Allocative, Cost, and Revenue Efficiency 382
14.5 Data Envelopment Analysis (DEA) Modeling 385
14.6 The Production Correspondence 386
14.7 Input-Oriented DEA Model under CRS 387
14.8 Input and Output Slack Variables 390
14.9 Modeling VRS 398
14.9.1 The Basic BCC (1984) DEA Model 398
14.9.2 Solving the BCC (1984) Model 400
14.9.3 BCC (1984) Returns to Scale 401
14.10 Output-Oriented DEA Models 402

References and Suggested Reading 405

Index 411
 xi

Preface

Economists, engineers, and management scientists have long known and

employed the power and versatility of linear programming as a tool for solving
resource allocation problems. Such problems have ranged from formulating a
simple model geared to determining an optimal product mix (e.g. a producing
unit seeks to allocate its limited inputs to a set of production activities under a
given linear technology in order to determine the quantities of the various
products that will maximize profit) to the application of an input analytical tech-
nique called data envelopment analysis (DEA) – a procedure used to estimate
multiple-input, multiple-output production correspondences so that the pro-
ductive efficiency of decision making units (DMUs) can be compared. Indeed,
DEA has now become the subject of virtually innumerable articles in profes-
sional journals, textbooks, and research monographs.
One of the drawbacks of many of the books pertaining to linear programming
applications, and especially those addressing DEA modeling, is that their cov-
erage of linear programming fundamentals is woefully deficient – especially in
the treatment of duality. In fact, this latter area is of paramount importance and
represents the “bulk of the action,” so to speak, when resource allocation
decisions are to be made.
That said, this book addresses the aforementioned shortcomings involving
the inadequate offering of linear programming theory and provides the founda-
tion for the development of DEA. This book will appeal to those wishing to solve
linear optimization problems in areas such as economics (including banking
and finance), business administration and management, agriculture and energy,
strategic planning, public decision-making, health care, and so on. The material
is presented at the advanced undergraduate to beginning graduate level and
moves at an unhurried pace. The text is replete with many detailed example
problems, and the theoretical material is offered only after the reader has been
introduced to the requisite mathematical foundations. The only prerequisites
are a beginning calculus course and some familiarity with linear algebra and
matrices.
xii Preface

Looking to specifics, Chapter 1 provides an introduction to the primal and

dual problems via an optimum product mix problem, while Chapter 2 reviews
the rudiments of vector and matrix operations and then considers topics such as
simultaneous linear equation systems, linear dependence, convex sets, and
some n-dimensional geometry. Specialized mathematical topics are offered in
chapter appendices.
Chapter 3 provides an introduction to the canonical and standard forms of a
linear programming problem. It covers the properties of the feasible region, the
existence and location of optimal solutions, and the correspondence between
basic feasible solutions and extreme point solutions.
The material in Chapter 4 addresses the computational aspects of linear
programming. Here the simplex method is developed and the detection of
degeneracy is presented.
Chapter 5 considers variations of the standard simplex theme. Topics such as
the M-penalty and two-phase methods are developed, along with the detection
of inconsistency and redundancy.
Duality theory is presented in Chapter 6. Here symmetric, as well as unsym-
metric, duals are covered, along with an assortment of duality theorems. The
construction of the dual solution and the dual simplex method round out this
key chapter.
Chapter 7 begins with a basic introduction to the technology of a firm via
activity analysis and then moves into single- and multiple-process production
functions, as well as single- and multiple-activity profit maximization models.
Both the primal and dual simplex methods are then presented as internal
resource allocation mechanisms. Factor learning is next introduced in the con-
text of an optimal product mix. All this is followed by a discussion of joint pro-
duction processes and production transformation functions, along with the
treatment of cost minimization in a joint production setting.
The discussion in Chapter 8 deals with the sensitivity analysis of the optimal
solution (e.g. changing an objective function coefficient or changing a compo-
nent of the requirements vector) while Chapter 9 analyzes structural changes
(e.g. addition of a new variable or structural constraint). Chapter 10 focuses
on parametric programming and consequently sets the stage for the material
presented in the next chapter. To this end, Chapter 11 employs parametric pro-
gramming to develop concepts such as the demand function for a variable input
and the supply function for the output of an activity. Notions such as the mar-
ginal and average productivity functions along with marginal and average cost
functions are also developed.
In Chapter 12, the concept of duality is revisited; the primal and dual pro-
blems are reformulated and re-examined in the context of Lagrangian saddle
points, and a host of duality and complementary slackness theorems are offered.
This treatment affords the reader an alternative view of duality theory and,
 Preface xiii

depending on the level of mathematical sophistication of the reader, can be con-

sidered as optional or can be omitted on a first reading.
Chapter 13 deals with primal and dual quadratic programs, the complemen-
tary pivot method, primal and dual linear fractional functional programs, and
(matrix) game theory solutions via linear programming.
Data envelopment analysis (DEA) is the subject of Chapter 14. Topics such as
the set theoretic representation of a production technology, input and output
distance functions, technical and allocative efficiency, cost and revenue effi-
ciency, the production correspondence, input-oriented models under constant
and variable returns to scale, and output-oriented models are presented. DEA
model solutions are also discussed.
A note of thanks is extended to Bharat Kolluri, Rao Singamsetti, and Jim Peta.
I have benefited considerably from conversations held with these colleagues
over a great many years. Additionally, Alice Schoenrock accurately and
promptly typed the entire manuscript. Her efforts are greatly appreciated.
I would also like to thank Mindy Okura-Marszycki, editor, Mathematics and
Statistics, and Kathleen Pagliaro, assistant editor, at John Wiley & Sons, for their
professionalism and encouragement.
 xv

Symbols and Abbreviations

■ Denotes end of example

n
n-dimensional Euclidean space
n
+ {x n
|x ≥ O}
(xo) Tangent support cone
Region of admissible solutions
(xo)+ Polar support cone
(xo)∗ Dual support cone
A Transpose of a matrix A
Index set of binding constraints
∇ Del operator
O Null matrix (vector)
In Identity matrix of order n
(m × n) Order of a matrix (with m rows and n columns)
A B Matrix A is transformed into matrix B
|A| Determinant of a square matrix A
Set of all square matrices
A−1 Inverse of matrix A
n Vector space
x Norm of x
ei ith unit column vector
ρ(A) Rank of a matrix A
dim Dimension of a vector space
δ(xo) Spherical δ-neighborhood of xo
xc Convex combination
Hyperplane
+ −
( ), ( ) Open half-planes
+ −
[ ], [ ] Closed half-planes
Cone
Ray or half-line
lim Lower limit
xvi Symbols and Abbreviations

lim Upper limit

AE Allocative efficiency
BCC Banker, Charnes, and Cooper
CCR Charnes, Cooper, and Rhodes
CE Cost efficiency
CRS Constant returns to scale
DBLP Dual of PBLP (multiplier form of (primal) linear program)
DEA Data envelopment analysis
DLP Dual of PLP
DMU Decision making unit
EDLP Extension of DLP
Eff Efficient
IPF Input distance function
Isoq Isoquant
LCP Linear complementarity problem
ODF Output distance function
P1 Phase 1
P2 Phase 2
PBLP Envelopment form of the (primal) linear program
PLP Primal linear program
RE Revenue efficiency
TE Technical efficiency
VRS Variable returns to scale
 1

Introduction

This book deals with the application of linear programming to firm decision
making. In particular, an important resource allocation problem that often
arises in actual practice is when a set of inputs, some of which are limited in
supply over a particular production period, is to be utilized to produce, using
a given technology, a mix of products that will maximize total profit. While a
model such as this can be constructed in a variety of ways and under different
sets of assumptions, the discussion that follows shall be limited to the linear
case, i.e. we will consider the short-run static profit-maximizing behavior of
the multiproduct, multifactor competitive firm that employs a fixed-coefficients
technology under certainty (Dorfman 1951, 1953; Naylor 1966).
How may we interpret the assumptions underlying this profit maximiza-
tion model?

1) All-around perfect competition – the prices of the firm’s product and

variable inputs are given.
2) The firm employs a static model – all prices, the technology, and the
supplies of the fixed factors remain constant over the production period.
3) The firm operates under conditions of certainty – the model is deterministic
in that all prices and the technology behave in a completely systematic (non-
random) fashion.
4) All factors and products are perfectly divisible – fractional (noninteger) quan-
tities of factors and products are admissible at an optimal feasible solution.
5) The character of the firm’s production activities, which represent specific
ways of combining fixed and variable factors in order to produce a unit of
output (in the case where the firm produces a single product) or a unit of
an individual product (when the number of activities equals or exceeds
the number of products), is determined by a set of technical decisions inter-
nal to the firm. These input activities are:
a) independent in that no interaction effects exist between activities;
b) linear, i.e. the input/output ratios for each activity are constant along
with returns to scale (if the use of all inputs in an activity increases by

Linear Programming and Resource Allocation Modeling, First Edition. Michael J. Panik.
© 2019 John Wiley & Sons, Inc. Published 2019 by John Wiley & Sons, Inc.
2 1 Introduction

a fixed amount, the output produced by that activity increases by the

same amount);
c) additive, e.g. if two activities are used simultaneously, the final quantities
of inputs and outputs will be the arithmetic sums of the quantities that
would result if these activities were operated separately. In addition, total
profit generated from all activities equals the sum of the profits from each
individual activity; and
d) finite – the number of input activities or processes available for use dur-
ing any production period is limited.
6) All structural relations exhibit direct proportionality – the objective func-
tion and all constraints are linear; unit profit and the fixed-factor inputs per
unit of output for each activity are directly proportional to the level of oper-
ation of the activity (thus, marginal profit equals average profit).
7) The firm’s objective is to maximize total profit subject to a set of structural
activities, fixed-factor availabilities, and nonnegativity restrictions on the
activity levels. Actually, this objective is accomplished in two distinct stages.
First, a technical optimization problem is solved in that the firm chooses a set
of production activities that requires the minimum amount of the fixed and
variable inputs per unit of output. Second, the firm solves the aforemen-
tioned constrained maximum problem.
8) The firm operates in the short run in that a certain number of its inputs are
fixed in quantity.

Why is this linear model for the firm important? It is intuitively clear that the
more sophisticated the type of capital equipment employed in a production proc-
ess, the more inflexible it is likely to be relative to the other factors of production
with which it is combined. That is, the machinery in question must be used in
fixed proportions with regard to certain other factors of production (Dorfman
1953, p. 143). For the type of process just described, no factor substitution is pos-
sible; a given output level can be produced by one and only one input combina-
tion, i.e. the inputs are perfectly complementary. For example, it is widely
recognized that certain types of chemical processes exhibit this characteristic
in that, to induce a particular type of chemical reaction, the input proportions
(coefficient) must be (approximately) fixed. Moreover, mechanical processes such
as those encountered in cotton textile manufacturing and machine-tool produc-
tion are characterized by the presence of this limitationality, i.e. in the latter case,
constant production times are logged on a fixed set of machines by a given num-
ber of operators working with specific grades of raw materials.
For example, suppose that a firm produces three types of precision tools
(denoted x1, x2, and x3) made from high-grade steel. Four separate production
operations are used: casting, grinding, sharpening, and polishing. The set of
input–output coefficients (expressed in minutes per unit of output), which
describe the firm’s technology (the firm’s stage one problem, as alluded to
 1 Introduction 3

above, has been solved) is presented in Table 1.1. (Note that each of the three
columns represents a separate input activity or process.)
Additionally, capacity limitations exist with respect to each of the four pro-
duction operations in that upper limits on their availability are in force. That
is, per production run, the firm has at its disposal 5000 minutes of casting time,
3000 minutes of grinding time, 3700 minutes of sharpening time, and 2000 min-
utes of polishing time. Finally, the unit profit values for tools x1, x2, and x3 are
$22.50, $19.75, and $26.86, respectively. (Here these figures each depict unit
revenue less unit variable cost and are computed before deducting fixed costs.
Moreover, we are tacitly assuming that what is produced is sold.) Given this
information, it is easily shown that the optimization problem the firm must
solve (i.e. the stage-two problem mentioned above) will look like (1.1):
max f = 22 50x1 + 19 75x2 + 26 86x3 s t subject to
13x1 + 10x2 + 16x3 ≤ 5000
12x1 + 8x2 + 20x3 ≤ 3000
11
8x1 + 4x2 + 9x3 ≤ 3700
5x1 + 4x2 + 6x3 ≤ 2000
x1 , x2 ,x3 ≥ 0
How may we rationalize the structure of this problem? First, the objective func-
tion f represents total profit, which is the sum of the individual (gross) profit
contributions of the three products, i.e.
3
total profit = total profit from xj sales
j=1

3
= unit profit from xj sales number of units of xj sold
j=1

Table 1.1 Input–output coefficients.

Tools

x1 x2 x3 Operations

13 10 16 Casting
12 8 20 Grinding
8 4 9 Sharpening
5 4 6 Polishing
4 1 Introduction

Next, if we consider the first structural constraint inequality (the others can be
interpreted in a similar fashion), we see that total casting time used per produc-
tion run cannot exceed the total amount available, i.e.
3
total casting time used = total casting time used by xj
j=1

3
= casting time used per unit of xj
j=1
number of units of xj produced ≤ 5000
Finally, the activity levels (product quantities) x1, x2, and x3 are nonnegative,
thus indicating that the production activities are nonreversible, i.e. the fixed
inputs cannot be created from the outputs.
To solve (1.1) we shall employ a specialized computational technique called the
simplex method. The details of the simplex routine, as well as its mathematical
foundations and embellishments, will be presented in Chapters 2–5. Putting com-
putational considerations aside for the time being, the types of information sets
that the firm obtains from an optimal solution to (1.1) can be characterized as
follows. The optimal product mix is determined (from this result management
can specify which product to produce in positive amounts and which ones to omit
from the production plan) as well as the optimal activity levels (which indicate
the exact number of units of each product produced). In addition, optimal
resource utilization information is also generated (the solution reveals the
amounts of the fixed or scarce resources employed in support of the optimal
activity levels) along with the excess (slack) capacity figures (if the total amount
available of some fixed resource is not fully utilized, the optimal solution indicates
the amount left idle). Finally, the optimal dollar value of total profit is revealed.
Associated with (1.1) (hereafter called the primal problem) is a symmetric
problem called its dual. While Chapter 6 presents duality theory in considerable
detail, let us simply note without further elaboration here that the dual problem
deals with the internal valuation (pricing) of the firm’s fixed or scarce resources.
These (nonmarket) prices or, as they are commonly called, shadow prices serve
to signal the firm when it would be beneficial, in terms of recouping forgone
profit (since the capacity limitations restrict the firm’s production and thus
profit opportunities) to acquire additional units of the fixed factors. Relative
to (1.1), the dual problem appears as
min g = 5000u1 + 3000u2 + 3700u3 + 2000u4 s t
13u1 + 12u2 + 8u3 + 5u4 ≥ 22 50
10u1 + 8u2 + 4u3 + 4u4 ≥ 19 75 12
16u1 + 20u2 + 9u3 + 6u4 ≥ 26 86
u1 ,u2 ,u3 ,u4 ≥ 0,
 1 Introduction 5

where the dual variables u1, …, u4 are the shadow prices associated with the pri-
mal capacity constraints.
What is the interpretation of the form of this dual problem? First, the objec-
tive g depicts the total imputed (accounting) value of the firm’s fixed
resources, i.e.
total imputed value of all fixed resources
4
= total imputed value of the ith resource
i=1
4
= number of units of the ith resource available
i=1
shadow price of the ith resource
Clearly, the firm must make the value of this figure as small as possible. That is,
it must minimize forgone profit. Next, looking to the first structural constraint
inequality in (1.2) (the rationalization of the others follows suit), we see that the
total imputed value of all resources going into the production of a unit of x1
cannot fall short of the profit per unit of x1, i.e.
total imputed value of all resources per unit of x1
4
= imputed value of the ith resource per unit of x1
i=1
4
= number of units of the ith resource per unit of x1
i=1
shadow price of the ith resource ≥ 22 50
Finally, as is the case for any set of prices, the shadow prices u1, …, u4 are all
nonnegative.
As will become evident in Chapter 6, the dual problem does not have to be
solved explicitly; its optimal solution is obtained as a byproduct of the optimal
solution to the primal problem (and vice versa). What sort of information is pro-
vided by the optimal dual solution? The optimal (internal) valuation of the
firm’s fixed resources is exhibited (from this data the firm can discern which
resources are in excess supply and which ones are “scarce” in the sense that total
profit could possibly be increased if the supply of the latter were augmented)
along with the optimal shadow price configuration (each such price indicates
the increase in total profit resulting from a one unit increase in the associated
fixed input). Moreover, the optimal (imputed) value of inputs for each prod-
uct is provided (the solution indicates the imputed value of all fixed resources
entering into the production of a unit of each of the firm’s outputs) as well as the
optimal accounting loss figures (here, management is provided with informa-
tion pertaining to the amount by which the imputed value of all resources used
6 1 Introduction

to produce a unit of some product exceeds the unit profit level for the same).
Finally, the optimal imputed value of all fixed resources is determined. Inter-
estingly enough, this quantity equals the optimal dollar value of total profit
obtained from the primal problem, as it must at an optimal feasible solution
to the primal-dual pair of problems.
In the preceding model we made the assumption that the various production
activities were technologically independent. However, if we now assume that they
are technologically interdependent in that each product can be produced by
employing more than one process, then we may revise the firm’s objective to
one where a set of production quotas are to be fulfilled at minimum cost. By invok-
ing this assumption we may construct what is called a joint production model.
As far as a full description of this type of production program is concerned, let
us frame it in terms of the short-run static cost-minimizing behavior of a multi-
product, multifactor competitive firm that employs a fixed-coefficients technol-
ogy. How can we interpret the assumptions given in support of this model?

1) Perfect competition in the factor markets – the prices of the firm’s primary
and shadow inputs are given.
2) The firm employs a static model – all prices, the technology, and the output
quotas remain constant over the production period.
3) The firm operates under conditions of certainty – the model is deterministic
in that all prices and the technology behave in a completely systematic (non-
random) fashion.
4) All factors and products are perfectly divisible – fractional quantities of fac-
tors and products are admissible at an optimal feasible solution.
5) The character of the firm’s production activities, which now represent ways
of producing a set of outputs from the application of one unit of a primary
input, is determined by a set of technical decisions internal to the firm. These
output activities are:
a) independent in that no interaction effects exist among activities;
b) linear, i.e. the output/input ratios for each activity are constant along
with the input response to an increase in outputs (if the production of
all outputs in an activity increases by a fixed amount, then the input level
required by the process must increase by the same amount);
c) additive, e.g. if two activities are used simultaneously, the final quantities
of inputs and outputs will be the arithmetic sums of the quantities which
would result if these activities were operated separately. Moreover, the
total cost figure resulting from all output activities equals the sum of
the costs from each individual activity; and
d) finite – the number of output activities or processes available for use dur-
ing any production period is limited.
6) All structural relations exhibit direct proportionality – the objective func-
tion and all constraints are linear; unit cost and the fixed-output per unit of
 1 Introduction 7

input values for each activity are directly proportional to the level of oper-
ation of the activity. (Thus marginal cost equals average cost.)
7) The firm’s objective is to minimize total cost subject to a set of structural
activities, fixed output quotas, and nonnegativity restrictions on the activity
levels. This objective is also accomplished in two stages, i.e. in stage one a
technical optimization problem is solved in that the firm chooses a set of out-
put activities which yield the maximum amounts of the various outputs per
unit of the primary factors. Second, the firm solves the indicated constrained
minimization problem.
8) The short-run prevails in that the firm’s minimum output requirements are
fixed in quantity.

For the type of output activities just described, no output substitution is possi-
ble; producing more of one output and less of another is not technologically
feasible, i.e. the outputs are perfectly complementary or limitational in that
they must all change together.
As an example of the type of model just described, let us assume that a firm
employs three grades of the primary input labor (denoted x1, x2, and x3) to pro-
duce four separate products: chairs, benches, tables, and stools. The set of out-
put–input coefficients (expressed in units of output per man-hour) which
describe the firm’s technology appears in Table 1.2. (Here each of the three col-
umns depicts a separate output activity.) Additionally, output quotas exist with
respect to each of the four products in that lower limits on the number of units
produced must not be violated, i.e. per production run, the firm must produce at
least eight chairs, four benches, two tables, and eight stools. Finally, the unit cost
coefficients for the labor grades x1, x2, and x3 are $8.50, $9.75, and $9.08, respec-
tively. (Each of these latter figures depicts unit primary resource cost plus unit

Table 1.2 Output–input coefficients.

Grades of Labor

x1 x2 x3 Outputs

1 1 1
Chairs
16 14 18
1 1 1
Benches
4 4 6
1 1 1
Tables
20 25 30
1 1 1
Stools
4 3 6
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the population. We must wait because a society is alive, and includes
all its members. It cannot outstrip its own inferior parts, however
neglected and behindhand they may be. And their numbers—
numbers resultant from their low condition—complicate the problem
hopelessly. That is, hopelessly on this old fallacious notion that the
child can have no help from all the strong, rich world, save what his
father and mother can filter through their personal limitations. We
are beginning to change this by our efforts at free public education.
We shall change it more and more as we grow consciously awake to
our true social responsibility to the child.
We cannot afford to have one citizen grow up below the standards
of common comfort, health, and general education. To the scared
cry, "But, if you take the responsibility off these people, they will
simply flood the world with wretched babies!" comes the answer of
natural law, "Improve the individual, and you check this crude
fecundity." It is because they are neglected and inferior that they
have so many children. Make higher-class people of the children,
and you check this constant influx of low-grade life, and gradually
introduce a better-born population.
When the wise, beneficent parental love of Human Society for its
young really does its duty, tenderly removing obstructions from the
path of all our little ones, we shall give to them those common
human advantages without which they cannot grow to the happiness
which is their right, the usefulness which is their duty. All parents
who are able to do more for their children would be free to do so, as
those who can afford private schools, or educate their little ones at
home, are not compelled to send them to the public schools.
As now society provides the school for the young citizen, on the
ground of public advantage, without regard to the inability of the
parent, so we must learn to provide a far richer and more complete
education, and all else that the parent falls short in, because it is
necessary for the good of society, and because we love our children.
 Index.
Absence of mind, 54.
"Acquired traits not transmissible," 9.
experiments with guinea-pigs, 11.
Action, bodily, directed by mental processes, 57.
Adult, our houses built only for the, 121.
Age, the presumption of, 156.
not necessarily superiority, 159.
Aged persons, cause of the respect and care for, 160.
Ambition of youth a force to lift mankind, the, 23.
American Revolution, the, mentioned, 35.
Animal mother, the authority of the, 42.
Animals, obedience in, 29.
Arbitrary punishment, effect on the moral sense of, 84.
Authority of the animal mother, the, 42.
effect of, coming between the mind and action of the child,
60.

Babies confided to the care of lower races, 134.

Baby, impressions of a, 49.
considered as a plaything, 175.
our disrespectful treatment of the, 171.
often neglected mind-growth of the, 250.
Baby-garden, a public, 124.
example of the advantages of a, 139.
a private, 125.
Babyhood, education not thought of in connection with, 135.
Bible, the, 114.
Biological advantage of a longer period of immaturity, the, 18.
law of reproduction, 296.
Bodily action directed by mental processes, 57.
Boston, 289.
Brain, effect of obedience on the, 41.
training of children, the, 46.
the office of the, 47.
in early forms of life, 48.
function of the child, 49.
improvement, progress of humanity made through, 149.
Breakfast, unpunctuality at, 149.
Bushmen, the, 293.

Callous child, treatment of the, 92.

Casabianca, 30.
Census Report, United States, 233.
Character, comparatively small progress in the human, 251.
development of, assisted by right education, 252.
Chastity, the virtue of, 26.
Child, importance of the first fifteen years of the life of the, 21.
exercise of the will of the, in games, 22.
trained to obey, 31.
reasons why obedience is demanded from the, 37.
brain function of the, 49.
the, should be trained to presence of mind, 55.
advantage taken of the credulity of the, 56.
what the, feels and thinks ignored, 57.
the mind of the, 57.
effect of authority coming between the mind and action of
the, 60.
culture of the, 63.
table manners, teaching the, 63.
early impressions of a, 77.
result of the deed of a, dependent upon parental
knowledge, 82.
the naughty, 90.
a group of growing faculties, 90.
treatment of the callous, 92.
games, the daily lessons of the, 108.
 teaching generosity to the, 109.
delicacy of perception of the, weakened by false
impressions, 111.
perception in the place of the State of the, 119.
mother and, no separation of, 125.
treatment of the, at home, 170.
attitude of the family towards the, 171.
personal rights of the, 174.
no excuse for contemptuous treatment of the, 177.
necessity for recognising the citizenship of the, 182.
treatment at table of the, 183.
teaching a, consideration, 187.
the need for consideration between mother and, 187.
tendency to repetition of a, 191.
excessive sacrifice of the mother injurious to the, 193.
harmful effect of the mother's sacrificial devotion to the,
197.
effect of association with domestic servants on the, 235.
influence of surroundings on the, 237.
physical conditions of the household a danger to the, 238.
duty of the mother to benefit the, 261.
relation of the State to the, 278.
social responsibility of parents to the, 280.
gradual protection by society of the, 292.
Child-culture and house service, the relation between, 233.
the study of, 265.
Child-training, obedience in, 36.
honesty lacking in, 109.
Childhood, the condition of the brain in, 49.
naturally inconsiderate, 91.
careless, 93.
clumsy, 93.
permanence of, as a human status, 119.
the status of, 180.
Childish faith, an expression of, 56.
Children, importance of the work of rearing, 37.
the most submissive, not the best men, 43.
trained to act without understanding, 51.
present brain-training of, discouraging to racial
advancement, 62.
should be practised in reasoning, 68.
the punishment of, 74.
parents and the punishment of, 75.
over-indulgence of, 75.
learn before school-age, what, 77.
code of ethics among, 87.
the injured clothing of, 94.
lying to, 102.
ethics of, formed from the treatment they receive, 102.
open to instruction in ethics, 104.
sense of justice in, 105.
instruction of, in ethics, 106.
the teaching of ethics to, 115.
a permanent class, 118.
houses not built for, 120.
playgrounds for, beginning to appear, 120.
in institutions, 124.
mortality of, in institutions, 126.
expert care for, 127.
the care of, not servant's work, 127.
trained care for defective, 128.
a place for, to play in, 129.
a special house for little, 129.
the home as a place for, 180.
the private nurse not the proper person to have the care of,
132.
the mischievousness of, 137.
orderly development of the faculties of, 146.
travelling parties of, 150.
the demands of parents on their, 162.
errors of little, not grounds for humour, 172.
"impertinence" of, 175.
 mother's lack of respect for her, 178.
the confidence of, not regarded, 179.
behaviour of women to, 179.
grown people and, 179.
discourtesy to, 181.
the balance of human rights should be understood by, 188.
the questions of, 191.
our love for our, 192.
benefit of mothers observing other peoples', 204.
method of observation of, 206.
the effect of the education of, by house-servants, 240.
improved environment of, a road to racial improvement,
264.
maternal instinct not sufficient to ensure good conditions
for, 267.
the duty of the State to, 290.
Chinese, the, 12.
Christianity a social condition, 295.
Citizenship of the child, necessity for recognising the, 182.
Civic duties, ignoring of, by women, 154.
Class, children a permanent, 118.
Clothing, children's injured, 94.
Collegiate Alumnæ, the Society of, 289.
Combined motherhood, the possibilities of, 284.
Conduct, all, right or wrong, 107.
Confidence of children not regarded, the, 179.
Conservatism, feminine, 169.
Consideration between mother and child, the need for, 187.
Consideration of others not identical with obedience, 40.
teaching a child, 187.
Consistency, the desire for, 58.
Constitution, our inheritance of, 15.
Courage, the virtue of, 27.
Credulity of the child taken advantage of, 56.
Crime, retributive punishment of, 73.
Cruelty to Children, Society for the Prevention of, 75.
Defective children, trained care for, 128.
Development, arrested social, 5.
race, and environment, 7.
of character assisted by right education, 252.
Discipline, the question of, 70.
domestic, 77.
Discourtesy to children, 181.
Discussion between mothers, benefits of, 207.
Doctrine of sacrifice, the, 194.
Domestic discipline, 77.
relation, the small change in, 100.
Service Bureau, 254.
"Don't Mary," 59.

Education, obedience in human, 29.

not thought of in connection with babyhood, 135.
advantages of unconscious, 144.
nothing too expensive that improves, 150.
of children by house-servants, the, 240.
development of character assisted by right, 252.
better, for the young an imperative need, 253.
a social process, 280.
Educational perception, lack of, among mothers, 249.
Emulation, the love of, 23.
Endurance, the virtue of, 26.
Environment and race development, 7.
Eskimo, the, 293.
Ethics, code of, among children, 87.
our knowledge of, 97.
the cause of our small growth in, 97.
and social evolution, 99.
influence of religious custom on, 100.
children cannot learn, from the treatment they receive, 102.
a child open to instruction in, 104.
the science of social relation, 105.
the instruction of children in, 106.
 sense of, shown in games, the, 108.
self-control one of the first essentials in the practice of, 107.
values, long association of, with religious text-books, 114.
the teaching of, to children, 115.
necessity for the study of practical, 114.
necessity for mothers to be grounded in, 116.
Example better than precept, 51.
Experience, 167.

Faith, a childish expression of, 56.

Father, the, awake to the duties of social parentage, 283.
the choice of a, 264.
Family, attitude towards the little child of the, 171.
-life, primitive mental habits fostered in, 169.
Feminine conservatism, 169.
Foolishness of youth due to our training, 21.
French Revolution, the, 53.

Games, the child's daily lessons, 108.

ethical sense shown in, 108.
Generosity, teaching the child, 109.
Girl, reason for the majority of a, at eighteen, 293.
God, Hebrew traditions of, 34.
Goths, the, 61.
Grown people and children, 179.

Habit and tradition, the home the stronghold of, 35.

Hebrew traditions of God, 34.
Home, the, the stronghold of habit and tradition, 35.
as a place for children, 130.
Homes, the mother the domestic servant in the majority of, 233.
Honesty lacking in child-training, 110.
Horse-training, 71.
Hottentots, the, 293.
Household, physical conditions of the, a danger to the child,
238.
 labour, mental capacities developed by, 247.
employment of skilled labour for, 276.
Houses not built for children, 120.
built for the adult only, 121.
House-service and child-culture, the relation between, 233.
qualities developed by, 243.
Housework, few women like, 245.
Human behaviour, the whole scale of, is natural, 256.
character, comparatively small progress in the, 251.
conduct, the word natural applied to, 257.
creature, mental workings of the, 50.
a self-governing intelligence, 40.
parentage, selfishness of, 178.
-parenthood, prolonged, 8.
progress, youth the fountain of, 21.
rights, children to understand the balance of, 188.
status, permanence of childhood as a, 119.
stock, improving the, 263.
being, the, a social constituent, 19.
who does not work contemptible, the, 275.
Humanity, degrees of, 3.
to improve, 6.
the time to develop the inheritance of, 17.
progress of, made through brain improvement, 149.
Humour, errors of the child not grounds for, 172.

Impertinence of children, the, 175.

Immaturity, biological advantage of a longer period of, 18.
Impressions of a baby, the, 49.
of a child, early, 77.
Improve, humanity to, 6.
Improvement, race, transmitted, 4.
all possible, in the individual to be made before parentage,
21.
of the human stock, the, 263.
Individual rights, maintenance of, by the mother, 195.
Individuals, social service must be given by, 20.
Infant mortality shamefully large, 246.
Inheritance of constitution, our, 15.
Intelligence, the human being a self-governing, 40.
Instinct, parental, 177.
our dependence on the maternal, 263.
maternal, not sufficient to ensure good conditions to
children, 267.
Institutions, children in, 124.
mortality of children in, 126.

Jesuits, obedience of the, 34.

Justice, sense of, in children, 105.

Knowledge and wisdom, the difference between, 54.

Koran, the, 114.

Labour, the employment of skilled, for household, 276.

household, mental capacities developed by, 247.
Law of parental love, the, 177.
Life, the brain in early forms of, 48.
Lifetime, the most important decade of a, 18.
Love for our children, our, 192.
the law of parental, 177.
open to measurement by results, 192.
mother, 193, 197.
Lying to children, 102.

Majority of a girl at eighteen, reason for the, 293.

Man, the distinctive power of, 53.
"Mary Don't," 59.
Maternal instinct, our dependence on the, 263.
not sufficient to ensure good conditions for children, 267.
Maternal passion, need for restraint of the, 197.
Maturity, early, a sign of bad social conditions, 294.
Mental capacities developed by household labours, 247.
 habits, primitive, fostered in family life, 169.
workings of the human creature, 50.
Methuselah, 158.
Modification, race, and individual modification, 10.
Moral sense, effect on the, of arbitrary punishment, 84.
Mortality, infant, shamefully large, 246.
Mind, effect of obedience on the growing, 37.
absence of, 54.
presence of, 54.
connection between the, and behaviour, 54.
of a child, the, 57.
effect of authority coming between the child's, and his
action, 60.
Mind-growth of the baby, the often neglected, 280.
failure of the mother to keep in touch with the, 250.
Mother, the authority of the animal, 42.
necessity for the, to be grounded in ethics, 116.
and child, no separation of, 125.
the, not trained as an educator, 135.
and child, the need for consideration between, 187.
excessive sacrifice of the, injurious to the child, 193.
maintenance of individual rights by the, 195.
the domestic servant in the majority of homes, the, 233.
the natural, 258.
duty of the, to benefit the child, 261.
the "unnatural," 265.
Mother's lack of respect for her little children, 179.
sacrificial devotion to the child, harmful effect of, the, 197.
personality, the place for a, 286.
Mothers, the need for union among, 201.
benefits of discussion between, 207.
benefit of, observing other people's children, 204.
lack of educational perception among, 249.
the term natural as applied to, 258.
necessity for enlarging the responsibility of, 287.
public duty of, 288.
Mother's Congress, the, 76.
Mother-love, 193, 197.
Motherhood, progress in, 261.
preparation for, 268.
work during, 271.
possibilities of combined, 284.

Natural law, the wisdom of following, 43.

Natural, the use of the word, 255.
the word, applied to human conduct, 257.
the whole scale of human behaviour is, 256.
the term, as applied to mothers, 258.
Nature, a state of, 256.
Nurse, the private, not a proper person to have the care of
children, 132.
Nursery, a public, suggested, 123.
isolation of the private, injurious to the child, 132.
Nursemaids, difficulty of getting suitable, 212.

Obedience, 27.
the use of, 28.
in animals, 29.
in human education, 29.
the reason for, 31.
our reverence for, easily traced, 32.
in child training, 36.
of the Jesuits, 34.
is demanded from the child, reasons why, 37.
effect of, on the growing mind, 37.
the injurious reaction from, 39.
consideration of others not identical with, 40.
effect of, on the brain, 41.
qualities developed by, 45.
Observation of children, method of, 206.
Old, the advantage of the young over the, 158.
Over-indulgence of children, the, 75.
Parent, continued life of the, 6.
Parentage, traits acquired before, transmissible, 14.
all possible improvement in the individual should be made
before, 21.
not a profession, 165.
selfishness of human, 178.
Parental knowledge, result of the child's deed made dependent
upon, 82.
duty the gift of nature, 164.
instinct, 177.
love, the law of, 177.
Parenthood, prolonged human, 8.
the work of, 37.
Parents, want of publicity and community in the action of, 75.
the punishment of children by, 75.
duty of, to children, 161.
demands of, on their children, 162.
Parents' Congress, the, 70.
social responsibility to the child, 280.
Penology, the advance in, 73.
People, need for a better kind of, 251.
Perception, delicacy of a child's, weakened by false impressions,
111.
Personal example, social duty shown by, 112.
Personal rights of the child, the, 174.
Personality, the place for a mother's, 286.
Philadelphia water supply, the, 289.
Playgrounds, childrens', beginning to appear, 120.
Plaything, a baby considered a, 175.
Precept, example better than, 51.
Prepared Food Association, the, 254.
Presence of mind, 54.
the child trained to constant, 55.
Printing press, main value of the, 5.
Profession, parentage not a, 165.
Progress born into the race, 7.
Protestant Reformation, the, 35.
Public nursery, a, suggested, 123.
baby garden, a, 124.
duty of mothers, 288.
Punishment, retributive, 73.
of children, the, 74.
by parents, 75.
arbitrary, effect of, on the moral sense, 84.

Qualities developed by obedience, 45.

house-service, 243.
Question of discipline, the, 71.
Questions of children, the, 191.

Race improvement transmitted, 4.

development and environment, 7.
progress born into the, 7.
modification and individual modification, 10.
Racial advance, improvement in the environment of children a
road to, 264.
Reaction from obedience, the injurious, 39.
Rearing children, importance of the work of, 37.
Reasoning, children should be practised in, 68.
Repetition, a child's tendency to, 191.
Reproduction, biological law of, 296.
rapid, of the lowest classes resultant from their condition,
297.
Respect to be commanded, not demanded, 166.
Results, love open to measurement by, 192.
Roman Catholic Church, obedience in the, 34.

Sacrifice, the doctrine of, 194.

Salisbury method, the, 37.
Savage, the, as a social constituent, 19.
Schools, the improvement of, 149.
School age, what children learn before, 77.
Self-control one of the first essentials in the practice of ethics,
107.
Servants, domestic, effect of association with, on the child, 235.
Shelley's "Skylark" mentioned, 53.
"Skylark," Shelley's, mentioned, 53.
Skilled labour, employment of, for household work, 271.
Social conditions, early maturity the sign of bad, 284.
constituent, the human being a, 19.
the savage as a, 19.
development, arrested, 5.
duty shown by personal example, 112.
evolution and ethics, 99.
parentage, the father awake to the duties of, 283.
relation, ethics the science of, 105.
service given by individuals, 20.
status, a, at the level of its main constituents, 20.
Society for the Prevention of Cruelty to Children, 75.
Society of Collegiate Alumnæ, the, 289.
Society, gradual protection of the child by, 292.
Species, our power to improve the, 3.
State of nature, a, 256.
State, perception of the child's place in the, 119.
relation of the, to the child, 278.
the duty of the, to children, 290.
Sunday-school, the, 117.
Surroundings, influence of, on the child, 237.

Table manners, teaching a child, 63.

Table, treatment of the child at, 183.
Talmud, the, 114.
Teaching taken up only by women obliged to work, 148.
Thompson's, Mr., story, 29.
Thought and action, connection between, 56.
Traits acquired before parentage transmissible, 14.
"Traits, acquired, not transmissible," 9.
Travelling parties of children, 150.
Treatment of the baby, our disrespectful, 171.
the child, no excuse for contemptuous, 177.

Unconscious education, advantages of, 144.

United States Census Report, the, 233.
Union among mothers, the need of, 201.
"Unnatural" mother, the, 265.
Unpunctuality at breakfast, 189.

Virtue, all, made of necessity, 27.

of chastity, 27.
of courage, the, 27.
of endurance, the, 26.
of obedience, the, 27.
what is a, 25.

Weissman, theory, the, 9.

Will, power of the, 47.
Wisdom and knowledge, 54.
of following natural law, 43.
Woman's brain modified by its kind of exercise, 245.
Women, ignoring of civic duties by, 154.
the care of children the duty of, 155.
behaviour of, to children, 179.
few, like housework, 245.
Work, the, of parenthood, 37.
during motherhood, 271.
the human being who does not, contemptible, 275.

Young, advantage of the, over the old, 158.

better education of the, an imperative need, 253.
ambition of the, a force to lift mankind, 23.
respect due to the, 172.
Youth, the foolishness of, due to our training, 21.
the fountain of human progress, 21.
Zend-Avesta, the, 114.
PRINTED BY MORRISON AND GIBB LIMITED, EDINBURGH
 THE BOOKS OF CHARLOTTE
PERKINS STETSON

(Mrs. G. H. GILMAN)

WOMEN AND ECONOMICS

A STUDY OF THE ECONOMIC RELATION BETWEEN MEN AND
WOMEN AS A FACTOR IN SOCIAL EVOLUTION

358 pages, crown 8vo, cloth, 6s.

In writing this book it has been Mrs. Stetson's purpose to point out,
explain, and justify the changes now going on in the relations of
women to society. The subject is one which must inevitably come
home to every household in the country. No woman, whatever her
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In brief, the position taken is that women have for centuries been
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It has been no part of Mrs. Stetson's purpose to write a dull book.
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WHAT THE CRITICS SAY
"Mrs. Stetson's polemical poetry has a force and vigour of its own,
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Athenæum.
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"The charm of the book lies in its evident sincerity, its eloquent
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