Quantitative Analysis for Managers

Swastee Jessica Johur Kharishma Devi Baichu

: 102094 : 102079

Linear Programming Problems ACKNOWLEDGMENT

It has been a pleasant and enriching experience to carry out this project. However, we must confess that the completion of this research work would have been difficult to achieve without the help and collaboration of many key persons to whom we would always be indebted in our life.

First and foremost, we wish to convey our utmost and deepest gratitude to our Module Coordinator Mr. Bholoa, Tourism and Hospitality Department, University of Technology, Mauritius for having helping us to conceptualize this assignment, and by his precious advice and by providing us his full guidance support.

Furthermore, we are very obliged to all of our team members, who have constantly helped each other out and given theirs support in moments of doubt during the course of this study to make the completion this assignment possible.

Last but not the least; our heartfelt thanks go to our beloved parents, without whose constant support and encouragement, this assignment would have been impossible to carry out.

Linear Programming Problems

Table of content
Introduction Multiple optimal solutions Infeasible solution Unbounded solution Conclusion References Appendix 3 4 7 9 12 13 14

List of tables
Table 1 Table 2 Table 3 Table 4 4 5 9 10

List of figures
Figure 1 Figure 2 Figure 3 6 8 11

Linear Programming Problems

Introduction
Linear Programming History Linear programming is a mathematical technique than enables a decision maker to arrive at the optimal solution to problems involving the allocation of scarce resources. Typically, many economic and technical problems involve maximization or minimization of a certain objective subject to some restrictions. During World War II US army began to formulate certain linear optimization problems. Their solutions were called plans or programs. Today important application areas include airline crew scheduling, shipping or telecommunication networks, oil refining and blending and stock and bond portfolio selection. The linear model consists of the following components: A set of decision variables: It has two or more non-negative variables. An objective functions: Its objective is expressed as a mathematical function. The objective function plots as a line on a two-dimensional graph. A set of constraints: There are constraints that affect possible levels of the variables. In two dimensions as line and ordinarily define areas in which the solution must lie.

As Eugene Lawler said: Linear programming is used to allocate resources, plan production, schedule workers, plan investment portfolios and formulate marketing (and military) strategies. The versatility and economic impact of linear programming in todays industrial world is truly awesome. Sometime special cases may arise like the following: Multiple Optimal Solutions: For multiple optimal solutions to exist, the objective function must be parallel to one of the constraints. Infeasible Problem: These arise from contradictions among the constraints. There is no solution possible until the conflict is resolved.

Linear Programming Problems

Unbounded Problem: Feasible solutions region may be open-ended and the direction of improvement coincides. It occurs when the objective can become infinitely large (max) or infinitely small (min).

1. Multiple optimal solutions [The slope of a line ax1+bx2+c=0 is defined as b/a] The solution to a LPP shall always be unique if the slope of the objective function line is different from the slope of all the constraint lines. In case the slope of objective function line is same as the slope of one of its constraint line, then multiple optimum solutions might exist. A solution to a linear programming problem (LPP) may or may not be unique. This is indicated in a graphical solution by the slope of the line of the objective function which may coincide with the slope of one of the constraints. Example 1 Fred's Coffee sells two blends of beans: Yusip Blend and Exotic Blend. The proportion of Costa Rican beans to Ethiopian beans in Yusip Blend is 2:1 and the proportion of Costa Rican beans to Ethiopian beans in Exotic Blend is 1:2. Profit on the Yusip Blend is $1 per pound, while profit on the Exotic Blend is $0.5 per pound. Each day Fred receives a shipment of 4 pounds of Costa Rican beans and 3 pounds of Ethiopian beans to use for the two blends. How many pounds of each blend should be prepared each day to maximize profit? What is the maximum profit? Solution: Summarize the data in a table: Costa Rican Yusip blend Exotic blend 2 1 Table 1 Ethiopian 1 2

Maximize, Subjected to

Z= x1 + 1/2x2 2x1 + x2 4 x1 + 2x2 3

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x1, x2 0 Replace all inequality sign by equality sign and represent the constraint equation by straight lines as follows: 2x1 + x2 = 4 When x1 = 0, x2 = 4 When x2 = 0, x1 = 2 The straight line of the equation 2x1 + x2 4 passes through (0, 4) and (2, 0). x1 + 2x2 = 3 When x1 = 0, x2 = 3/2 When x2 = 0, x1 = 3 The straight line of the equation x1 + 2x2 3 passes through (0, 3/2) and (3, 0). Z= x1 + 1/2x2 Coordinates O (0, 0) A (2, 0) B (5/3, 2/3) C (0, 3/2) Table 2 As shown in the table above, both point A and B gives the optimal solution. Hence the problem has multiple optimal solutions. ISO profit line method To represent the objective function line, assume that Z = 1 Then, x1 + 1/2x2 = 1 When x1 = 0, x2 = 2
5

Value of Z 0 2 2

Linear Programming Problems

When x2 = 0, x1 = 1

Figure 1 The straight line of the equation passes through (0, 2) and (1, 0). These coordinates represent the objective function by a dotted line as shown in figure 1. If this line is moved parallel from the

Linear Programming Problems

origin instead of touching an extreme point, it coincides with the boundary of the solution space, i.e. AB. It means that points A and B give the optimal solution.

2. Infeasible solution It is a case where there is no solution which satisfies all the constraints at the same time. This may occur if the problem is not correctly formulated. Graphically infeasibility is a case where there is no region which satisfies all constraints simultaneously. However, problem involving more than two variables cannot be easily graphed and it may not be immediately known that the problem is infeasible when the model is constructed. Example 2 Maximize, Subjected to Z= 3x1 + 5x2 x1 + x2 100 5x1 + 10x2 400 x1, x2 0 Solution: Replace all inequality sign by equality sign and represent the constraint equation by straight lines as follows: x1 + x2 = 100 When x1 = 0, x2 = 100 When x2 = 0, x1 = 100 The straight line of the equation x1 + x2 100 passes through (0, 100) and (100, 0). 5x1 + 10x2 = 400 When x1 = 0, x2 = 40 When x2 = 0, x1 = 80 The straight line of the equation 5x1 + 10x2 400 passes through (0, 40) and (80, 0).
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Linear Programming Problems

Linear Programming Problems

Figure 2 To satisfy the first constraint the solution must lie to the left of the line AB. To satisfy the second constraint the solution must lie to the right of the line CD. There is no point (x1, x2) which satisfies both constraints simultaneously. Hence, the problem has no solution because the constraints are inconsistent. 3. Unbounded solution A LPP can fail to have an optimum solution if the objective can be made infinitely large without violating any of the constraints. If we come across unboundedness in solving real problems, then the problem is not correctly formulated. Since no real situation permits any management to have infinite production of goods and infinite profits, unbounded solution results if in a situation ther is a maximization problem all constraints are of greater than or equal to type. In such situation there is no upper limit on feasible region. Similarly, an unbounded solution occurs in minimization problem if all constraints are of less than or equ al to type. Example 3 On a chicken farm, the poultry is given a healthy diet to gain weight. The chickens have to consume a minimum of 15 units of Substance A and another 15 units of Substance B. In the market there are only two classes of compounds: Type X, with a composition of one unit of A to five units of B, and another type, Y, with a composition of five units of A to one of B. The price of Type X is $10 and Type Y, $30. What are the quantities of each type of compound that have to be purchased to cover the needs of the diet with a minimal cost? Solution: Choose the unknowns: X= x1 and Y= x2 Summarize the data in a table: X A B 1 5 Table 3 Minimize, Z= 10x1 + 30x2 Y 1 5 minimal 15 15

Linear Programming Problems

Subjected to x1 +5 x2 15 5x1 + x2 15 x1, x2 0

Replace all inequality sign by equality sign and represent the constraint equation by straight lines as follows: x1 +5 x2 = 15 When x1 = 0, x2 = 3 When x2 = 0, x1 = 15 The straight line of the equation x1 +5 x2 15 passes through (0, 3) and (15, 0). 5x1 + x2 = 15 When x1 = 0, x2 = 15 When x2 = 0, x1 = 3 The straight line of the equation 5x1 + x2 15 passes through (0, 15) and (3, 0). Calculate the value of the objective function at each of the vertices to determine which of them has the maximum or minimum values. It must be taken into account the possible non-existence of a solution if the compound is not bounded. Z= 10x1 + 30x2 Coordinates A (0, 15) B (5/2, 5/2) C (15, 0) Value of Z 450 100 150

Table 4 The minimum cost is $100 for X = 5/2 and Y = 5/2.

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It is easy to see that the feasible region of this problem is unbounded and furthermore, the orientation of the ISO profit lines is such that no matter how far we slide these linesin the direction of increasing the objective function, they will always share some points with the feasible region. Such an LP is characterized as unbounded. Notice however, that even though an unbounded feasible region is a necessary condition for an LP to be unbounded, it is not sufficient to convince yourself. The optimal solution should be graphically identified if the objective function changed to Max f (x1, x2) = - x2

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Linear Programming Problems

Figure 3

Conclusion: Linear programming is not useful for problems that require integer solutions, that involve uncertainty, or that have a non-linear objective function or constraints, but it is applicable to a wide range of business decisions.

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Linear Programming Problems

REFERENCES http://mat.gsia.cmu.edu/classes/QUANT/NOTES/chap7/node5.html http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cts=1331151535905& ved=0CGAQFjAD&url=http%3A%2F%2Fwww.purplemath.com%2Fmodules%2Flinprog4.htm &ei=qcJXT8DoFYqX8QPLn739Dg&usg=AFQjCNFWLDXcvUrGMhN3mo9RTO-gZ_xpvA http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&cts=1331151554776& ved=0CH4QFjAH&url=http%3A%2F%2Fwww.cs.dartmouth.edu%2F~ac%2FTeach%2FCS105 -Winter05%2FNotes%2Fnanda-scribe2.pdf&ei=qcJXT8DoFYqX8QPLn739Dg&usg=AFQjCNEWuzTx3486tg3oo4Gf_ICs8CanXA http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=10&cts=1331151575017 &ved=0CJABEBYwCQ&url=http%3A%2F%2Fmath.tutorvista.com%2Falgebra%2Flinearprograming.html&ei=qcJXT8DoFYqX8QPLn739Dg&usg=AFQjCNGO0OjLLQyjWDRwXN3MP7bO_PHpQ http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=12&cts=1331151596410 &ved=0CEkQFjABOAo&url=http%3A%2F%2Fwww.vitutor.com%2Falg%2Flinear_programm ing%2Fproblems_solutions.html&ei=68JXT427FYLj8APDhPGIDw&usg=AFQjCNFNuleQ2Wt uFL7eG3Wtwtw8z9py8A http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=17&cts=1331151617525 &ved=0CHMQFjAGOAo&url=http%3A%2F%2Fwww.sce.carleton.ca%2Ffaculty%2Fchinneck %2Fpo%2FChapter2.pdf&ei=68JXT427FYLj8APDhPGIDw&usg=AFQjCNErDDjQE2ggQ_wz IMjtpM42mpfZVw http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=26&cts=1331151642628 &ved=0CGkQFjAFOBQ&url=http%3A%2F%2Fwww.purplemath.com%2Fmodules%2Flinprog 3.htm&ei=E8NXTKUA5Sf8gPVuZ2CDw&usg=AFQjCNHSWP3JGu7fm4qj_Jl2QUMtWbnqug http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=88&cts=1331151713231 &ved=0CG4QFjAHOFA&url=http%3A%2F%2Fwww.mhhe.com%2Fengcs%2Findustrial%2Fh illier%2Fetext%2FPDF%2Fchap03.pdf&ei=XsNXT7CNL8TV8gOKpY33Dg&usg=AFQjCNFD 4VqHICRoyPG_h3fe2AwF7Otx6g
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Linear Programming Problems

http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=18&cts=1331151946461 &ved=0CGAQFjAHOAo&url=http%3A%2F%2Famaiu.pbworks.com%2Ff%2FSupplement%2 5236s.pdf&ei=_sNXT4yZOpOn8gOO8PGIDw&usg=AFQjCNGZyTOmv0T1hSqFocQkkVT2SPVdg http://www.google.mu/url?sa=t&rct=j&q=&esrc=s&source=web&cd=39&cts=1331152038480 &ved=0CG8QFjAIOB4&url=http%3A%2F%2Fpine.cs.yale.edu%2Fpinewiki%2FLinearProgra mming%3Faction%3DAttachFile%26do%3Dget%26target%3Dlp.pdf&ei=bcRXT7alBoLh8AO d-4zfDg&usg=AFQjCNHBA3dQh6iS6GtaiyszcRw5JE2q7g http://aix1.uottawa.ca/~jkhoury/programming.htm http://www.algebra.com/algebra/homework/coordinate/word/THEO-2012-01-26.lesson http://lpsolve.sourceforge.net/5.0/LinearProgrammingFAQ.htm#Q6.2

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Appendix
ADVANTAGES AND DISADVANTAGES OF LINEAR PROGRAMMING Linear programming has become nowadays, the mathematical technique most used in solving a variety of problems related with management, from scheduling, media selection, financial planning to capital budgeting, transportation and many others, with the special characteristic that linear programming expect always to maximize or minimize some quantity. Two possibilities appear at the solution of a linear-programming problem: 1-Simplex method, developed by Dr.Dantzing, this method is remarkable due to its efficiency and calculating facility. The simplex method can be used where distributions method cannot. Therefore the field of application is quite broad. In complex cases this method saves time and effort by taking us to the optimal solution in a finite number of steps. 2-Graphically, this option will be developed in the later example. By means of one example we are going to gradually check the advantages and disadvantages of linear programming as a management aid. First of all it is known that one of the main advantages of linear programming is that it fits strictly with reality, as we will see, the example reflects this property. Example: I have designed this example searching for a high grade of reality, suppose we are running a football club and launching a new merchandising campaign and we have to decide the quantity of scarves and shirts produced, considering current constraints. The sale prices of shirts and scarves are 35 and 10 respectively, also we know the maximum annual manufacture capacity is 2000 units, secondly four times more time is needed to sew a shirt compared with a scarf having at the most 2300 hours a year and finally space is limited up to 2500 square inches, requiring shirts and scarves, 3 and 2 square inches respectively. The first advantage is the calculation facility, as can be checked in the first step where we have to model or formulate the problem. This is a process where verbal statement is translated to mathematical statement; here this example is quite simple. The incomes must be maximized knowing the different prices of scarves and shirts but some limitations have been set which are called constraints, in this case limitations are related with capacity, time and sales space.
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Linear Programming Problems

Objective function: 35X+10Y Constraints: 1-capacity x+y<=2000 2-time 4x+y<=2300 3-sales space 3x+2y<=2500 4-nonnegativity constraints x,y>=0 The next step can vary depending of the selected method; two options can be chosen such as graphical or simplex algorithm. In this occasion we have selected the first option due to the fact that only two variables are being studied, but this method sometimes causes objections. The maximum profit is in the point where the second and third constraints intersect each other. As a result is known that X=420 and Y=620. To draw the objective function we have suppose that we want to make the maximum profit equal to 3000, but it means nothing, because we can choose any number, the slope of the line is the matter that concerns us. If we move parallel the function toward larger objective function values, the maximum profit point will be found when the line will be completely outside of the feasible region. Then the largest value is the optimal solution. It can be ascertained that in frequent occasions some variables are ignored in this sort of problems (In our example trends and fashions have been ignored but maybe people prefer to buy a shirt than a scarf for certain reasons). Hence the problem is less rigorous and it lose accuracy and certainly, that become a disadvantage, furthermore the model is static which means that it does not consider the changes and the evolution of variables as time goes by. Another obstacle arises in the formulation process which should be taken into account, values must be known with certainty. Having seen the example it is obviously that talking in disadvantages terms functions lineality is an important bound, it means that each decision variable appears in a separate term and has an exponent of 1, so that non-lineal function cannot be used. This example has been resolved by graphical method because it has only two variables, if it would have had more than two variables we would have used the simplex method, due to the fact of the impossibility of solving problems having more than two variables, with the graphical method. Therefore this is another disadvantage of linear programming; graphical method can be used only under determined conditions. There may be another two problems consisting of numerous optimal solutions, this is not a simple matter despite the fact could seem a minor concern, and the other problem could be infeasibility. When no solution to the linear

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Linear Programming Problems

programming problem satisfies all the constraints, feasible region does not exist and therefore any solution cannot be reached. In this case the problem we have focused on is related with the portfolio selection area, one of the varieties of applications where linear programming can be used, helping managers in inventory design (in the example, number of scarves and shirts), in control and in capacity planning. But this is not the only linear programming advantage, also it can be used in much more different areas such as marketing (helping marketing managers in allocating a fixed advertising budget to various advertising media), finance (resolving situations of capital budgeting, financial planning an so on), product mix problems (problems based on blending resources to produce 1 item, management must decide the quantity of each product), multiple plant location studies (the new location will be where the total production and distribution cost will be minimized), maximizing material utilization (determine the combination of cuts that will meet requirements for the amounts of the different sizes with a minimum trim loss) and finally data envelopment analysis (has been used in efficiency measure) But there still are more advantages; linear programming analysis can help both with determining whether management's plans are feasible and in unbounded cases where the value of the solution is infinitely large, without violating any of the constraints, warning us that the problem is improperly formulated. As we can see, in the example, it does not occur, consequently there are finite solutions and therefore we can ascertain that the problem is properly formulated. It must be mentioned, another remarkable characteristic of linear programming problems such as, the adapting facility to reality, which allows solving, by computer programs, problems with thousands of variables and constraints. The next step to analyze is what happens when we change the values of the objective function or in the constraints. This is another advantage of using linear programming, when can check easily how the results vary when we change the old coefficients for others. This is called sensitivity analysis, which determines how changes affect the optimal solution to the original linear programming problem. The range of values over which the current solution will remain optimal, despite the change of the coefficients, is called range of optimality. For example we suppose that the space for sales in the third constraint is reduced, now the available space is 2499 square inches, therefore we have changed in one unit the right hand side of the third constraint and as a result the solution has varied. The new results are X=420,2 and Y=619,2 therefore it can be seen that the solutions have changed in 0.2 and in 0,8 respectively these variations are called dual prices as well as implicit cost and shadow prices. Dual prices can be used what will happen to the value of the objective function when we make a one unit change in the right-hand side of the constraints. We have to take into account that dual price is only operative for small variations.

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Linear Programming Problems

In conclusion if we evaluate the pros and cons it can be ascertained that is not coincidence that linear programming is the most used program in the management area ,despite it has several arguments against, there are sound reasons which take us to select this method solving management problems owing to the complexity of the problems that can be handled. REFERENCES AND BIBLIOGRAPHY -Anderson, Sweeney and Williams. An introduction to management science.2003 -Elwood S.Buffa. Operations Management: Problems and Models. University of California. Los Angeles.1963 -Lev.B and Weiss.H . Introduction to Mathematical Programming; Quantitative Tools for Decision Making. -www.rincondelvago.com

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