Chapter 3

linear
programming

Simplex Method
 LEARNING OBJECTIVE
At the end of this topic students should able to:
1. Construct standard form of LP model (simplex model)
2. Setup initial simplex tableau
3. Complete simplex final tableau
4. Interpret solution from final tableau
5. Identify Shadow price and interpret its values
6. Construct dual model and interpret its solutions
7. Identify special cases occur
 Introduction
❧
❧ In large LP problems, the feasible region cannot be
graphed since it has many dimensions

❧ Systematically examines corner points using

algebraic steps until optimal solution is found
 1. Setting up initial simplex solution
1. Converting constraints to equations (Standard Form of LP
Model)
Slack Variables Surplus Variables Artificial Variables

• added to a ❧
• subtracted from a
constraint to convert
• has no physical
meaning in terms of
constraint to convert
it to an equation it to an equation a real world LP
(=). (=). problem.
• represents the • represents an • An artificial variable
amount of unused excess above a is not allowed to
resources. constraint appear in the final
• contribute nothing requirement level. solution to the
• contribute nothing problem.
to the objective • Each artificial
function value to the objective
function value. variable is assigned
an extremely high
cost to ensure it
does not appear in
Whenever an artificial or surplus variable is added to one
the final solution.
of the constraints, it must also be included in the other
equations and in the objective function, just as what we
have done for slack variables.
 ❧
❧
 Example 1
❧
❧
 ❧
2. Finding an Initial Solution Algebraically

3. First Simplex Tableau

 Constructing First Simplex Tableau
(maximization problem)

❧ Determine basic ❧
feasible solution (initial solution mix) by
setting all decision variables equal to zero
❧ Constraints equation (translate to table)
❧ Variables in solution mix are called basic variables
❧ Substitution rates (numbers in the body of simplex tableau)
❧ Cj row (above) Cj column (left most column) are contribution rates. Cj column
represent unit profit for each variable currently in solution mix
❧ Zj row = Sum (profit per unit Si ×substitution rate in ith column)
= gross profit
Cj-Zj row = net profit from introducing one unit of each variable into
solution
❧ Optimal solution is reached when Cj-Zj row has no positive number
 Shadow price

❧ the change in value of the objective function for

every additional unit of a scarce resource.

❧ refer to maximum amount the firm should pay for every

additional unit of resource to make available.

❧ Provided by negatives of numbers in slack variable (

) columns of row
 THE DUAL
❧
❧ Every LP primal (first way of stating a linear
problem) has a dual

❧ Provides useful economic information

❧ Dual variables represent the value of

potential resources
 Dual formulation procedures

1. If the primal is a maximization, the dual is a

minimization, and vice versa

2. The RHS values of the primal constraints become the

dual’s objective function coefficients

3. The primal objective function coefficients become the

RHS values of the dual constraints

4. The transpose of the primal constraint coefficients

become the dual constraint coefficients

5. Constraint inequality signs are reversed

 Special Cases in LP
❧
Infeasible Unbounded Alternate
Degeneracy
problem problem optimal solution
• LP problem • Objection value • More than one • Redundant
with no for maximization optimal constraint that
feasible problem gets solution does not effect
solution very large • Provide greater feasible
• May exist if the without bound flexibility to solution
problem was • When all entries decision maker • Tied ratios in
formulated in pivot column • May exist if the simplex
improperly are non positive, value of calculations
• When artificial thus no leaving equals to zero
variable still in variable (or for a variable
final solution undefined ratio) not in the
mix solution mix
Example (Alternate optimal solution)

Cj 10 20 15 0 0 0

Solution x1 x2 x3 s1 s2 s3 Quantity
mix

❧
10 x1 1 0 1/2 3/4 0 -5/4 37.5

0 s2 0 0 0 -1/2 1 1/2 5

20 x2 0 1 1/2 -1/4 0 3/4 57.5

Zj 10 20 15 5/2 0 5/2 1,525

Cj-Zj 0 0 0 -5/2 0 -5/2

 SENSITIVITY ANALYSIS WITH SIMPLEX TABLEAU

❧ Sensitivity analysis is the analysis of the parameter

changes on the optimal solution.

❧ Changes in Resources or RHS Values

❧ Making changes in the resources or the RHS values result
in changes in the feasible region and often the optimal
point. This would also affect the value of the objective
function.

❧ These changes lead to determining shadow price

 Example 2
❧
❧
Cj Solution ❧ RHS
Mix
x1 x2 S1 S2 S3

S1 0 0 1 -16 0.6 20

x1 1 0 0 2 -0.1 10

x2 0 1 0 -1 0.1 10

Zj P

Cj-Zj
 ❧
T h e final s i m p l e x t a b l e a u f o r t h e a b o v e p r o b l e m is g i v e n b e l o w.

a) C o m p l e t e t h e tableau.
(3 m a r k s )
b) W h a t is t h e v a l u e o f P i n t h e a b o v e tab leau ?

(1 m a r k s )
c) State t h e o p t i ma l solution.
(2 m a r k s )
d) W h i c h r e s o u r c e is n o t fully utilized? S t a t e t h e u n u s e d v alu e.
(2 m a r k s )
e) Is it w o r t h w h i l e t o i n c r e a s e a n a d d i t i o n a l l a b o r h o u r f o r
RM10? Ex p l a i n .
(2
marks)
f) F o r m u l a t e t h e d u a l o f t h i s p r o b l e m a n d g iv e t h e s o l u t i o n o f
t h e dual.