Linear Programming Basic Concepts and Graphical Solutions:

Some of the practical applications in LP are: Air line flight schedule, revenue management (high revenue and low cost) Thousands of constraints are available America Delta Airlines uses LP optimization software for its planning. Global Telephone network and Logistics firms extensively uses LP. 3 important skills required for optimizations problems: 1. Ability to recognize the problem 2. Ability to set up LP model 3. Ability to solve LP model Decision making comes out with a lot of restrictions. Internal restrictions are like labour time, material availability etc. External restrictions are like labour regulations, safety etc. These restrictions are called constraints and this kind of problems are called constrained optimization. Brief History: 1947, George Dantzig used linear algebra to get the solution for this kind of LP problem. Initial response is very low however the computer led to widespread usage. Computers are used but computer programming is not required. Advantages: 1. It helps to make the best possible use of limited resources (time, labour, money etc.) 2. Varieties of applications (inventory, capacity, marketing, finance etc.) 3. High lighting of bottle necks (which constraints is bottle neck) Disadvantages: 1. Objective function and constraints should be linear 2. Uncertainty in resources and decision variables are not taken into consideration 3. Static model does not consider changes and evolution of decision variables 4. If the problem is less rigorous, it looses accuracy and certainty 5. Graphical method is for maximum 2 variables.

Concepts:
Linear straight line relationship Programming refers to use of algorithms (well defined steps to get the solution) It refers to planning process with allocates resources such as labour, material, cost, time etc. LP Solution Methods: Graphical method limited to maximum 2 variables. Though it is possible to construct 3 dimensional graphs for 3 variables, normally this method is restricted to 2 varibles. Simplex method: (exterior point method, more than >= 2 variables) Karmarkars method (Interior method) Characteristics of LP model: Components: The following components will make LP structure: 1. Objective Quantifiable such as profit, cost, time, market share, ROI, distance etc It is either maximize or minimize Only one objective is considered Mathematical statement of objective is called objective function 2. Decision variables What decisions to be made? What actions to be taken? Choices available to the decision maker These are usually input to a process or output from a process 3. Constraints Decisions variables are subjected to restrictions such as raw material availability, machine availability, space constraints etc. RHS specifies the limits of the constraints (<=, >=, =) 4. Parameters Numerical values of the decision variables in the objective function are called parameters. It tells about the impact of 1 unit decision variable on the objective or any constraints. 5. Non negativity No decision variable is allowed to take negative values. Assumptions: 1. Proportionality 2

Each decision variable has the linear impact on the objective function and constraints. In terms of mathematical model 2x1 + 3x2 <= 3 (linear) 2x1^2 + 3 x2 <= 10 (non-linear, x1 is squared) 2x1*x2 + 4 x3 <= 15 (non-linear, x1 & x2 are multiplied) 2x1/x2 + 5 x3 <= 20 (non-linear, x1 / x2 is non-linear) 2/x1 + 5 x3 <= 15 (non-linear since 1/x1 is non-linear) All decision variables should have power as 1. 2. Additivity The decisions variables can be added in the objective function and constraints. Total profit is sum of the profits. 3. Divisibility Non-integer values of decision variables are acceptable. If you require only integers for your decision variables then go for Integer Programming 4. Certainty Relevant constraints are identified and represented in the model. All the parameters are known and they are constant. There is no uncertainty in values and RHS constraints. Formulating a LP Model: Formulation refers to translating the real world problem into a format of mathematical equations that represents objective function and the constraints set. 1. Study the problem A through understanding of the problem is necessary in order to formulate it correctly. Often data collection, problem definition and problem formulations are most important. They are the most difficult and time consuming tasks. Historical records and interviews with the staffs concerned will also help in data collection. Assumptions should be clearly stated in model formulation. It is all about the relevant information into a table. 2. Define Decision Variables What decisions to be made? What actions to be taken? Choices available to the decision maker These are usually input to a process or output from a process

3. Determine objective function Quantifiable such as profit, cost, time, market share, ROI, distance etc It is either maximize or minimize Only one objective is considered Mathematical statement of objective is called objective function

4. Identify constraints Decisions variables are subjected to restrictions such as raw material availability, machine availability, space constraints etc. RHS specifies the limits of the constraints (<=, >=, =) 5. Summarize the model Write down the assumptions, objective function and the constraints (including nonnegativity constraints) so that the problem is ready for solving. Example: The Carpenter's Problem: A carpenter told that he, solely, makes tables and chairs, sells all tables and chairs at a market place. He does not have a stable income and wishes to do his best. The unit profit for a table is Rs. 1000and for a chair is Rs. 700. He uses two types of resources to produce tables and chairs that are wood (cubic feet) and labour (hours). It takes 15 cu. ft. of wood and 10 hours labour to make a table, and 4 cu. ft. of wood and 5 hours labour to make a chair. There are140 cu. ft. of wood available and 56 hours of labour time available. Find the optimal mix of products to maximize the profit.

Model Formulations: 1. Study the problem It is about maximizing the profit %. Data are provided. Company wants the product mix of tables and table. 2. Decision Variable It is a product mix problem. Let, X1 number to tables to produce X2 number of chairs to produce 3. Objective function: Max. 1000 X1 + 700 X2 Or Max 10 X1 + 7 X2 (in 100 of rupees) (It is scaled down to make it suitable for plotting in the graph paper) 4. Constraints: 15 X1 + 4 X2 <= 140 (wood constraints) 10 X1 + 5 X2 <= 56 (labour hours constraints) X1 & X2 >= 0 (non-negativity constraints) 5. Summarizing the model: Max. 1000 X1 + 700 X2 Subject to: 15 X1 + 5 X2 <= 140 (wood constraints) 10 X1 + 5 X2 <= 56 (labour hours constraints)

X1 & X2 >= 0 (non-negativity constraints)

Steps in solving an LP problem graphically:

1. Formulate the LP problem 2. Construct a graph and plot each of the constraints (including non-negativity constraints) 3. Determine the valid side of each constraint line If the line has inequality constraint <= then the region below the line in the first quadrant is the valid side. If the line has inequality constraint >= then the region above the line in the first quadrant is the valid side. If the constraint is = then the line itself a valid line (there is no valid region) 4. Identify the feasible solution region It is the area which satisfies all the constraints 5. Plot the objective function line to determine direction of improvement 6. Find the most attractive corner which satisfies the objective function 7. Determine the values of the decision variables and the value of the objective function for the optimal solution. Carpenters Problem: Explain the steps 1 to 5 using the graphs. The objective function approach to find the optimal solution (Iso-profit line) This approach directly identifies the optimal corner points. Iso-profit line provides same profit for each combination of decision variables in that line. By moving the line parallel to itself we can represent other profit line. Optimal solution exists only in the corner points or extreme points (after identifying the optimal point, determine which two constraints intersect there. Solve these equations simultaneously to obtain the value of decision variable at the optimum). Note: Minimization problems are same as maximization. Optimal point has smallest combinations of decision variables instead of largest. Slacks and Surplus: Slack: The amount of a constraints resource is unused by the optimal solution is called slack. This relates to <= constraints Surplus: The amount by which a constraint resource is exceeded by a solution is called surplus. It relates to >= constraints.

Equal to (=) constraints will never have slack or surplus. A constraint that the optimal solution is on is reflected to as Binding Constraints. A constraint is considered to be binding if changing it also changes the optimal solution. Less severe constraint do not affect the optimal solution are non-binding.

If slack or surplus variables are added to constraints they become equalities. Max. 10 X1 + 7 X2 + 0 S1 + 0 S2 Subject to: 15 X1 + 5 X2 + S1 = 140 (wood constraints) 10 X1 + 5 X2 + S2 = 56 (labour hours constraints) X1, X2, S1 and S2 >= 0 (non-negativity constraints) When all constraints are written as equalities, the linear program is said to be in Standard Form. All variables including slack variables must be nonnegative. Note: In real application of LP, do not convert LP problem into standard form since all commercial softwares accept inequalities constraints.

Properties of Linear Programming Solutions:

Feasible solution: Solution satisfies all the constraints in the model. Several such solutions are possible in a LP model. Optimal solution: It provides the best value for the objective function. Problems with multiple optimal solutions: For some LP model, more than one combination of decision variables yielding the best objective function values. This kind of problems are said to have multiple optimal solution. No feasible solution: This situation sometimes occurs in problems that have a mix of >= and <= constraints. This happen when the problems are formulated incorrectly (either constraint coefficients are incorrect or inequality in the wrong direction. One has to revise the model or focus only on important constraints. Unbounded solutions: In some LP model, the objective function value can be increased or decreased indefinitely without any limitation. Such solutions are known as unbounded solution. Difficulty here is that maximize the objective function but the real goal is minimize objective function. Check inequalities and rethink the problem.

Degenerate solution: In LP problems, intersection of two constraints will define a corner point of a feasible region. But if more than two constraints pass through the corner points of the feasible region, excess constraints will not serve any purpose, and therefore they act as redundant constraints. Under such situation, degeneracy will occur. This means that some iteration will be carried out in simplex method without any improvement in the objective function.