Course Name: Operations Research

Course Code: POM 605

Linear Programming

Tanvir Abir PhD

 Lecture Outline

 Model Formulation
 Graphical Solution Method
 Linear Programming Model
 Solution
 Solving Linear Programming Problems
with Excel
 Sensitivity Analysis

Copyright 2006 John Wiley & Sons, Inc. Supplement 13-2

 Linear Programming (LP)

A model consisting of linear relationships

representing a firm’s objective and resource constraints
LP is a mathematical modeling technique used to determine a
level of operational activity in order to achieve an objective,
subject to restrictions called constraints

Briefly, the most common type of application involves the

general problem of allocating limited resources among
competing activities in a best possible (i.e., optimal) way.

Copyright 2006 John Wiley & Sons, Inc. Supplement 13-3

Types of LP

Supplement 13-4
Types of LP (cont.)

Supplement 13-5
Types of LP (cont.)

Supplement 13-6
 LP Model Formulation

 Decision variables
 mathematical symbols representing levels of activity of an
operation
 Objective function
 a linear relationship reflecting the objective of an operation
 most frequent objective of business firms is to maximize profit
 most frequent objective of individual operational units (such as
a production or packaging department) is to minimize cost
 Constraint
 a linear relationship representing a restriction on decision
making

Supplement 13-7
 LP Model Formulation (cont.)
Max/min z = c1x1 + c2x2 + ... + cnxn

subject to:
a11x1 + a12x2 + ... + a1nxn (≤, =, ≥) b1
a21x1 + a22x2 + ... + a2nxn (≤, =, ≥) b2
:
am1x1 + am2x2 + ... + amnxn (≤, =, ≥) bm

xj = decision variables
bi = constraint levels
cj = objective function coefficients
aij = constraint coefficients

Supplement 13-8
LP Model: Example

RESOURCE REQUIREMENTS
Labor Clay Revenue
PRODUCT (hr/unit) (lb/unit) ($/unit)
Bowl 1 4 40
Mug 2 3 50

There are 40 hours of labor and 120 pounds of clay

available each day

Decision variables
x1 = number of bowls to produce
x2 = number of mugs to produce

Supplement 13-9
 LP Formulation: Example

Maximize Z = $40 x1 + 50 x2

Subject to
x1 + 2x2 40 hr (labor constraint)
4x1 + 3x2 120 lb (clay constraint)
x1 , x2 0

Solution is x1 = 24 bowls x2 = 8 mugs

Revenue = $1,360

Supplement 13-10
 Graphical Solution Method

1. Plot model constraint on a set of coordinates

in a plane
2. Identify the feasible solution space on the
graph where all constraints are satisfied
simultaneously
3. Plot objective function to find the point on
boundary of this space that maximizes (or
minimizes) value of objective function

Copyright 2006 John Wiley & Sons, Inc. Supplement 13-11

Graphical Solution: Example
x2
50 –

40 –
4 x1 + 3 x2 120 lb
30 –

20 – Area common to
both constraints
10 –
x1 + 2 x2 40 hr
0– | | | | | |
10 20 30 40 50 60 x1

Supplement 13-12
 Computing Optimal Values
x2 x1 + 2x2 = 40
40 –
4x1 + 3x2 = 120
4 x1 + 3 x2 120 lb
4x1 + 8x2 = 160
30 – -4x1 - 3x2 = -120
5x2 = 40
20 –
x1 + 2 x2 40 hr x2 = 8
10 –
8 x1 + 2(8) = 40
0– | | 24 | | x1
x1 = 24
10 20 30 40
Z = $50(24) + $50(8) = $1,360

Copyright 2006 John Wiley & Sons, Inc. Supplement 13-13

 Extreme Corner Points

x1 = 0 bowls
x2 x2 = 20 mugs
x1 = 224 bowls
Z = $1,000
40 – x2 = 8 mugs
Z = $1,360 x1 = 30 bowls
30 – x2 = 0 mugs
20 – A
Z = $1,200

10 –
B
0– | | | C|
10 20 30 40 x1

Supplement 13-14
 Objective Function
x2
40 –
4x1 + 3x2 120 lb

30 – Z = 70x1 + 20x2
Optimal point:
x1 = 30 bowls
20 –A
x2 = 0 mugs
Z = $2,100
10 – B

x1 + 2x2 40 hr
0– | | | C |
10 20 30 40 x1
Supplement 13-15
 Minimization Problem

CHEMICAL CONTRIBUTION
Brand Nitrogen (lb/bag) Phosphate (lb/bag)
Gro-plus 2 4
Crop-fast 4 3

Minimize Z = $6x1 + $3x2

subject to
2x1 + 4x2  16 lb of nitrogen
4x1 + 3x2  24 lb of phosphate
x 1, x 2  0

Copyright 2006 John Wiley & Sons, Inc. Supplement 13-16

Graphical Solution
x2

14 –
x1 = 0 bags of Gro-plus
12 – x = 8 bags of Crop-fast
2

10 –
Z = $24

8–A
Z = 6x1 + 3x2
6–

4–
B
2–
C
0– | | | | | | |
2 4 6 8 10 12 14 x1
Supplement 13-17
 Simplex Method
 A mathematical procedure for solving linear programming
problems according to a set of steps
 Slack variables added to ≤ constraints to represent unused
resources
 x1 + 2x2 + s1 = 40 hours of labor
 4x1 + 3x2 + s2 = 120 lb of clay
 Surplus variables subtracted from ≥ constraints to represent
excess above resource requirement. For example
 2x1 + 4x2 ≥ 16 is transformed into
 2x1 + 4x2 - s1 = 16
 Slack/surplus variables have a 0 coefficient in the objective
function
 Z = $40x1 + $50x2 + 0s1 + 0s2

Supplement 13-18
Solution
Points with
Slack
Variables

Supplement 13-19
Solution
Points with
Surplus
Variables

Supplement 13-20
 Solving LP Problems with Excel
Click on “Tools”
to invoke “Solver.”

Objective function
=E6-F6

=E7-F7

=C6*B10+D6*B11

=C7*B10+D7*B11

Decision variables – bowls

(x1)=B10; mugs (x2)=B11

Supplement 13-21
 Solving LP Problems with Excel
(cont.)
After all parameters and constraints
have been input, click on “Solve.”

Objective function

Decision variables

C6*B10+D6*B11≤40
C7*B10+D7*B11≤120

Click on “Add” to
insert constraints

Supplement 13-22
Solving LP Problems with Excel
(cont.)

Supplement 13-23
Sensitivity Analysis

Supplement 13-24
 Sensitivity Analysis

 Sensitivity Analysis deals with  Sensitivity Analysis is used

finding out the amount by which to understand the effect of a
we can change the input data for set of independent variables
the output of our linear on some dependent variable
programming model to remain under certain specific
comparatively unchanged. ... conditions.
The second model is  Forexample, a financial
less sensitive to the changes in analyst wants to find out the
the input data. effect of a company's net
working capital on its profit
margin.

Supplement 13-25
 Sensitivity Analysis

 Below are the steps that you can  In a sensitivity analysis, only
follow to implement a one the unfavorable changes are
dimensional sensitivity analysis in accounted for to consider the
excel.
impact of these changes on
 Step 1 – Create the table in a the profitability of the project.
standard format. ...
 The sensitivity analysis
 Step 2 – Link the reference Input
and Output as given the the snapshot
serves following purposes:
below. ...  It helps in identifying the key
 Step 3 – Select the What-if Analysis variables that are major
tool to perform Sensitivity Analysis influence in the cost and
in Excel. benefits of the project.
https://www.wallstreetmojo.com/sensi
tivity-analysis-in-excel/

Supplement 13-26
Sensitivity Range for Labor
Hours

Supplement 13-27
Sensitivity Range for Bowls

Supplement 13-28
 Sensitivity Analysis

 Sensitivity analysis is a process of varying

input parameters of a model within allowed
area and observing the resulting changes in
the model solution. ... The purpose
of sensitivity analysis is to indicate
the sensitivity of simulation to uncertainties
in the values of input data in the model.

Copyright 2006 John Wiley & Sons, Inc. Supplement 13-29

Thank you for today.

Copyright 2006 John Wiley & Sons, Inc. Supplement 13-30