Table of Contents Chapter 2 (Linear Programming: Basic Concepts)

The Wyndor Glass Company Product Mix Problem (Section 2.1) Formulating the Wyndor Problem on a Spreadsheet (Section 2.2) The Algebraic Model for Wyndor (Section 2.3) The Graphical Method Applied to the Wyndor Problem (Section 2.4) Using the Excel Solver with the Wyndor Problem (Section 2.5) A Minimization ExampleThe Profit & Gambit Co. (Section 2.6) Introduction to Linear Programming (UW Lecture) 2.2 2.32.7 2.8 2.92.19 2.202.25 2.262.31 2.322.47

These slides are based upon a lecture introducing the basic concepts of linear programming and the Solver to first-year MBA students at the University of Washington (as taught by one of the authors). The lecture is largely based upon a production problem using lego building blocks.

The Graphical Method and Properties of LP Solutions (UW Lecture)

2.482.56

These slides are based upon a lecture introducing the graphical method and other concepts about linear programming solutions to first-year MBA students at the University of Washington (as taught by one of the authors).

McGraw-Hill/Irwin

2.1

The McGraw-Hill Companies, Inc., 2008

Wyndor Glass Co. Product Mix Problem

Wyndor has developed the following new products:
An 8-foot glass door with aluminum framing. A 4-foot by 6-foot double-hung, wood-framed window.

The company has three plants

Plant 1 produces aluminum frames and hardware. Plant 2 produces wood frames. Plant 3 produces glass and assembles the windows and doors.

Questions:
1. Should they go ahead with launching these two new products? 2. If so, what should be the product mix?

McGraw-Hill/Irwin

2.2

The McGraw-Hill Companies, Inc., 2008

Developing a Spreadsheet Model

Step #1: Data Cells
Enter all of the data for the problem on the spreadsheet. Make consistent use of rows and columns. It is a good idea to color code these data cells (e.g., light blue).

B 3 4 5 6 7 8

Profit

Tables $20.00

Chairs $15.00 Available 6 8

Large Bricks Small Bricks

Bill of Materials 2 1 2 2

McGraw-Hill/Irwin

2.3

The McGraw-Hill Companies, Inc., 2008

Developing a Spreadsheet Model

Step #2: Changing Cells
Add a cell in the spreadsheet for every decision that needs to be made. If you dont have any particular initial values, just enter 0 in each. It is a good idea to color code these changing cells (e.g., yellow with border).
B 3 4 5 6 7 8 9 10 11 12 C D E F G

Unit Profit

Doors $300

Windows $500 Hours Available 1 12 18

Plant 1 Plant 2 Plant 3

Hours Used Per Unit Produced 1 0 0 2 3 2 Doors 0 Windows 0

Units Produced

McGraw-Hill/Irwin

2.4

The McGraw-Hill Companies, Inc., 2008

Developing a Spreadsheet Model

Step #3: Target Cell
Develop an equation that defines the objective of the model. Typically this equation involves the data cells and the changing cells in order to determine a quantity of interest (e.g., total profit or total cost). It is a good idea to color code this cell (e.g., orange with heavy border).
B 3 4 5 6 7 8 9 10 11 12 C D E F G

Unit Profit

Doors $300

Windows $500 Hours Available 1 12 18 Total Profit $800

G 11 Total Profit 12 =SUMPRODUCT(UnitProfit,UnitsProduced)

Plant 1 Plant 2 Plant 3

Hours Used Per Unit Produced 1 0 0 2 3 2 Doors 1 Windows 1

Units Produced

McGraw-Hill/Irwin

2.5

The McGraw-Hill Companies, Inc., 2008

Developing a Spreadsheet Model

Step #4: Constraints
For any resource that is restricted, calculate the amount of that resource used in a cell on the spreadsheet (an output cell). Define the constraint in three consecutive cells. For example, if Quantity A <= Quantity B, put these three items (Quantity A, <=, Quantity B) in consecutive cells.
B 3 4 5 6 7 8 9 10 11 12 C D E F G

Unit Profit

Doors $300

Windows $500 Hours Used 1 2 5 Hours Available 1 12 18 Total Profit $800

Plant 1 Plant 2 Plant 3

Hours Used Per Unit Produced 1 0 0 2 3 2 Doors 1 Windows 1

<= <= <=

Units Produced

E 5 6 7 8 9

Hours Used =SUMPRODUCT(C7:D7,UnitsProduced) =SUMPRODUCT(C8:D8,UnitsProduced) =SUMPRODUCT(C9:D9,UnitsProduced)

McGraw-Hill/Irwin

2.6

The McGraw-Hill Companies, Inc., 2008

A Trial Solution

B 3 4 5 6 7 8 9 10 11 12

Unit Profit

Doors $300

Windows $500 Hours Used 4 6 18 Hours Available 1 12 18 Total Profit $2,700

Plant 1 Plant 2 Plant 3

Hours Used Per Unit Produced 1 0 0 2 3 2 Doors 4 Windows 3

<= <= <=

Units Produced

The spreadsheet for the Wyndor problem with a trial solution (4 doors and 3 windows) entered into the changing cells.

McGraw-Hill/Irwin

2.7

The McGraw-Hill Companies, Inc., 2008

Algebraic Model for Wyndor Glass Co.

Let D = the number of doors to produce W = the number of windows to produce Maximize P = $300D + $500W subject to D4 2W 12 3D + 2W 18 and D 0, W 0.

McGraw-Hill/Irwin

2.8

The McGraw-Hill Companies, Inc., 2008

Graphing the Product Mix

W 8

Production rate (units per week) for windows

7 6 5 4 3 2 1 Origin

A product mix of D = 4 and W = 6 (4, 6)

A product mix of D = 2 and W = 3 (2, 3)

-2

-1

0 -1 -2

2 3 4 5 6 7 8 Production rate (units per week) for doors

McGraw-Hill/Irwin

2.9

The McGraw-Hill Companies, Inc., 2008

Graph Showing Constraints: D 0 and W 0

W
8

Production rate for windows

Production rate for doors

McGraw-Hill/Irwin

2.10

The McGraw-Hill Companies, Inc., 2008

Nonnegative Solutions Permitted by D 4

W 8 D=4

Production rate for windows

6 4 Production rate for doors

McGraw-Hill/Irwin

2.11

The McGraw-Hill Companies, Inc., 2008

Nonnegative Solutions Permitted by 2W 12

Production rate for windows W 8

2 W = 12 6

2 4 Production rate for doors

McGraw-Hill/Irwin

2.12

The McGraw-Hill Companies, Inc., 2008

Boundary Line for Constraint 3D + 2W 18

Production rate for windows W
10

(0, 9)
8 1 (1, 7 _ ) 2

(2, 6) 3 D + 2 W = 18
1 (3, 4 _) 2

(4, 3)
2 1 (5, 1 _) 2

(6, 0)
0 2 4 6 8

Production rate for doors

McGraw-Hill/Irwin

2.13

The McGraw-Hill Companies, Inc., 2008

Changing Right-Hand Side Creates Parallel Constraint Boundary Lines

Production rate for windows W
12

10

3D + 2W = 24
8

3D + 2W = 18
4

3D + 2W = 12

10

Production rate for doors

McGraw-Hill/Irwin

2.14

The McGraw-Hill Companies, Inc., 2008

Nonnegative Solutions Permitted by 3D + 2W 18

Production rate for windows W
10

3D + 2W = 18
4

Production rate for doors

McGraw-Hill/Irwin

2.15

The McGraw-Hill Companies, Inc., 2008

Graph of Feasible Region

Production rate for windows W 10

3 D + 2 W = 18 8 D=4 6 2 W =12

4 Feasible 2 region

2 4 Production rate for doors

McGraw-Hill/Irwin

2.16

The McGraw-Hill Companies, Inc., 2008

Objective Function (P = 1,500)

Production rate for windows 8 W

4 P = 1500 = 300D + 500W

Feasible region

2 4 Production rate for doors

McGraw-Hill/Irwin

2.17

The McGraw-Hill Companies, Inc., 2008

Finding the Optimal Solution

Production rate for windows
8

P = 3600 = 300D + 500W

Optimal solution (2, 6)

P = 3000 = 300D + 500W 6

Feasible
4

P = 1500 = 300D + 500W

region

10

Production rate for doors

McGraw-Hill/Irwin

2.18

The McGraw-Hill Companies, Inc., 2008

Summary of the Graphical Method

Draw the constraint boundary line for each constraint. Use the origin (or any point not on the line) to determine which side of the line is permitted by the constraint. Find the feasible region by determining where all constraints are satisfied simultaneously. Determine the slope of one objective function line. All other objective function lines will have the same slope. Move a straight edge with this slope through the feasible region in the direction of improving values of the objective function. Stop at the last instant that the straight edge still passes through a point in the feasible region. This line given by the straight edge is the optimal objective function line. A feasible point on the optimal objective function line is an optimal solution.

McGraw-Hill/Irwin

2.19

The McGraw-Hill Companies, Inc., 2008

Identifying the Target Cell and Changing Cells

Choose the Solver from the Tools menu. Select the cell you wish to optimize in the Set Target Cell window. Choose Max or Min depending on whether you want to maximize or minimize the target cell. Enter all the changing cells in the By Changing Cells window.

B 3 4 5 6 7 8 9 10 11 12

Unit Profit

Doors $300

Windows $500 Hours Used 1 2 5 Hours Available 1 12 18 Total Profit $800

Plant 1 Plant 2 Plant 3

Hours Used Per Unit Produced 1 0 0 2 3 2 Doors 1 Windows 1

<= <= <=

Units Produced

McGraw-Hill/Irwin

2.20

The McGraw-Hill Companies, Inc., 2008

Adding Constraints
To begin entering constraints, click the Add button to the right of the constraints window. Fill in the entries in the resulting Add Constraint dialogue box.
B 3 4 5 6 7 8 9 10 11 12 C D E F G

Unit Profit

Doors $300

Windows $500 Hours Used 1 2 5 Hours Available 1 12 18 Total Profit $800

Plant 1 Plant 2 Plant 3

Hours Used Per Unit Produced 1 0 0 2 3 2 Doors 1 Windows 1

<= <= <=

Units Produced

McGraw-Hill/Irwin

2.21

The McGraw-Hill Companies, Inc., 2008

The Complete Solver Dialogue Box

McGraw-Hill/Irwin

2.22

The McGraw-Hill Companies, Inc., 2008

Some Important Options

Click on the Options button, and click in both the Assume Linear Model and the Assume Non-Negative box.
Assume Linear Model tells the Solver that this is a linear programming model. Assume Non-Negative adds nonnegativity constraints to all the changing cells.

McGraw-Hill/Irwin

2.23

The McGraw-Hill Companies, Inc., 2008

The Solver Results Dialogue Box

McGraw-Hill/Irwin

2.24

The McGraw-Hill Companies, Inc., 2008

The Optimal Solution

B 3 4 5 6 7 8 9 10 11 12

Unit Profit

Doors $300

Windows $500 Hours Used 2 12 18 Hours Available 1 12 18 Total Profit $3,600

Plant 1 Plant 2 Plant 3

Hours Used Per Unit Produced 1 0 0 2 3 2 Doors 2 Windows 6

<= <= <=

Units Produced

McGraw-Hill/Irwin

2.25

The McGraw-Hill Companies, Inc., 2008

The Profit & Gambit Co.

Management has decided to undertake a major advertising campaign that will focus on the following three key products:
A spray prewash stain remover. A liquid laundry detergent. A powder laundry detergent.

The campaign will use both television and print media The general goal is to increase sales of these products. Management has set the following goals for the campaign:
Sales of the stain remover should increase by at least 3%. Sales of the liquid detergent should increase by at least 18%. Sales of the powder detergent should increase by at least 4%.

Question: how much should they advertise in each medium to meet the sales goals at a minimum total cost?
McGraw-Hill/Irwin

2.26

The McGraw-Hill Companies, Inc., 2008

Profit & Gambit Co. Spreadsheet Model

B 3 4 5 6 7 8 9 10 11 12 13 14

Unit Cost ($millions)

Television 1

Print Media 2 Increased Sales 3% 18% 8% Minimum Increase 3% 18% 4% Total Cost ($millions) 10

Stain Remover Liquid Detergent Powder Detergent

Increase in Sales per Unit of Advertising 0% 1% 3% 2% -1% 4%

>= >= >=

Advertising Units

Television 4

Print Media 3

McGraw-Hill/Irwin

2.27

The McGraw-Hill Companies, Inc., 2008

Algebraic Model for Profit & Gambit

Let TV = the number of units of advertising on television PM = the number of units of advertising in the print media Minimize Cost = TV + 2PM (in millions of dollars) subject to Stain remover increased sales: PM 3 Liquid detergent increased sales: 3TV + 2PM 18 Powder detergent increased sales: TV + 4PM 4 and TV 0, PM 0.

McGraw-Hill/Irwin

2.28

The McGraw-Hill Companies, Inc., 2008

Applying the Graphical Method

Amount of print media advertising PM

10

Feasible region

4 PM = 3 2 -TV + 4 PM = 4 -4 -2 0 2 3 TV + 2 PM = 18 8
10

4 6 Amount of TV advertising

TV

McGraw-Hill/Irwin

2.29

The McGraw-Hill Companies, Inc., 2008

The Optimal Solution

PM

10 Cost = 15 = TV + 2 PM Feasible region

Cost = 10 = TV + 2 PM 4 (4,3) optimal solution 0 5 10 15 TV

Amount of TV advertising
McGraw-Hill/Irwin
The McGraw-Hill Companies, Inc., 2008

2.30

Summary of the Graphical Method

Draw the constraint boundary line for each constraint. Use the origin (or any point not on the line) to determine which side of the line is permitted by the constraint. Find the feasible region by determining where all constraints are satisfied simultaneously. Determine the slope of one objective function line. All other objective function lines will have the same slope. Move a straight edge with this slope through the feasible region in the direction of improving values of the objective function. Stop at the last instant that the straight edge still passes through a point in the feasible region. This line given by the straight edge is the optimal objective function line. A feasible point on the optimal objective function line is an optimal solution.

McGraw-Hill/Irwin

2.31

The McGraw-Hill Companies, Inc., 2008

A Production Problem
Weekly supply of raw materials:

8 Small Bricks

6 Large Bricks

Products:

Table Profit = $20 / Table

McGraw-Hill/Irwin

Chair Profit = $15 / Chair 2.32

The McGraw-Hill Companies, Inc., 2008

Linear Programming
Linear programming uses a mathematical model to find the best allocation of scarce resources to various activities so as to maximize profit or minimize cost. Let T = Number of tables to produce C = Number of chairs to produce Maximize Profit = ($20)T + ($15)C subject to 2T + C 6 large bricks 2T + 2C 8 small bricks and T 0, C 0.

McGraw-Hill/Irwin

2.33

The McGraw-Hill Companies, Inc., 2008

Graphical Representation
Tables 5

4 2 Chairs + 2 Tables = 8 Small Bricks 3

2 Chairs + 2 Tables = 6 Large Bricks 1

Chairs

McGraw-Hill/Irwin

2.34

The McGraw-Hill Companies, Inc., 2008

Components of a Linear Program

Data Cells

Changing Cells (Decision Variables)

Target Cell (Objective Function)

Constraints

McGraw-Hill/Irwin

2.35

The McGraw-Hill Companies, Inc., 2008

Four Assumptions of Linear Programming

Linearity

Divisibility

Certainty

Nonnegativity

McGraw-Hill/Irwin

2.36

The McGraw-Hill Companies, Inc., 2008

When is a Spreadsheet Model Linear?

All equations (output cells) must be of the form = ax + by + cz + where a, b, c are constants (data cells) and x, y, z are changing cells. Suppose C1:C6 are changing cells and D1:D6 are data cells. Which of the following can be part of an LP?
SUMPRODUCT(D1:D6, C1:C6) SUM(C1:C6) C1 * SUM(C4:C6) SUMPRODUCT(C1:C3, C4:C6) IF(C1 > 3, 2*C3 + C4, 3*C3 + C5) IF(D1 > 3, C1, C2) MIN(C1, C2) MIN(D1, D2) * C1 ROUND(C1)

McGraw-Hill/Irwin

2.37

The McGraw-Hill Companies, Inc., 2008

Why Use Linear Programming?

Linear programs are easy (efficient) to solve

The best (optimal) solution is guaranteed to be found (if it exists)

Useful sensitivity analysis information is generated

Many problems are essentially linear

McGraw-Hill/Irwin

2.38

The McGraw-Hill Companies, Inc., 2008

Developing a Spreadsheet Model

Step #1: Data Cells
Enter all of the data for the problem on the spreadsheet. Make consistent use of rows and columns. It is a good idea to color code these data cells (e.g., light blue).

B 3 4 5 6 7 8 Profit

C Tables $20.00

D Chairs $15.00

Large Bricks Small Bricks

Bill of Materials 2 1 2 2

Available 6 8

McGraw-Hill/Irwin

2.39

The McGraw-Hill Companies, Inc., 2008

Developing a Spreadsheet Model

Step #2: Changing Cells
Add a cell in the spreadsheet for every decision that needs to be made. If you dont have any particular initial values, just enter 0 in each. It is a good idea to color code these changing cells (e.g., yellow with border).

B 3 4 5 6 7 8 9 10 11 Profit

C Tables $20.00

D Chairs $15.00

Large Bricks Small Bricks

Bill of Materials 2 1 2 2 Tables 0 Chairs 0

Available 6 8

Production Quantity:

McGraw-Hill/Irwin

2.40

The McGraw-Hill Companies, Inc., 2008

Developing a Spreadsheet Model

Step #3: Target Cell
Develop an equation that defines the objective of the model. Typically this equation involves the data cells and the changing cells in order to determine a quantity of interest (e.g., total profit or total cost). It is a good idea to color code this cell (e.g., orange with heavy border).
B 3 4 5 6 7 8 9 10 11 Profit C Tables $20.00 D Chairs $15.00 E F G

Large Bricks Small Bricks

Bill of Materials 2 1 2 2 Tables Chairs 0

Available 6 8 Total Profit $20.00

Production Quantity:

10

G Total Profit

11 =SUMPRODUCT(C4:D4,C11:D11)

McGraw-Hill/Irwin

2.41

The McGraw-Hill Companies, Inc., 2008

Developing a Spreadsheet Model

Step #4: Constraints
For any resource that is restricted, calculate the amount of that resource used in a cell on the spreadsheet (an output cell). Define the constraint in three consecutive cells. For example, if Quantity A Quantity B, put these three items (Quantity A, , Quantity B) in consecutive cells. Note the use of relative and absolute addressing to make it easy to copy formulas in column E.
B 3 4 5 6 7 8 9 10 11 Profit C Tables $20.00 D Chairs $15.00 E F G

Large Bricks Small Bricks

Bill of Materials 2 1 2 2 Tables Chairs 1

Total Used 3 4

<= <=

Available 6 8 Total Profit $35.00

Production Quantity:

6 7 8
McGraw-Hill/Irwin

E Total Used =SUMPRODUCT(C7:D7,$C$11:$D$11) =SUMPRODUCT(C8:D8,$C$11:$D$11)

The McGraw-Hill Companies, Inc., 2008

2.42

Defining the Target Cell

Choose the Solver from the Tools menu. Select the cell you wish to optimize in the Set Target Cell window. Choose Max or Min depending on whether you want to maximize or minimize the target cell.

B 3 4 5 6 7 8 9 10 11 Profit

C Tables $20.00

D Chairs $15.00

Large Bricks Small Bricks

Bill of Materials 2 1 2 2 Tables Chairs 1

Total Used 3 4

<= <=

Available 6 8 Total Profit $35.00

Production Quantity:

McGraw-Hill/Irwin

2.43

The McGraw-Hill Companies, Inc., 2008

Identifying the Changing Cells

Enter all the changing cells in the By Changing Cells window.
You may either drag the cursor across the cells or type the addresses. If there are multiple sets of changing cells, separate them by typing a comma.

B 3 4 5 6 7 8 9 10 11 Profit

C Tables $20.00

D Chairs $15.00

Large Bricks Small Bricks

Bill of Materials 2 1 2 2 Tables Chairs 1

Total Used 3 4

<= <=

Available 6 8 Total Profit $35.00

Production Quantity:

McGraw-Hill/Irwin

2.44

The McGraw-Hill Companies, Inc., 2008

Adding Constraints
To begin entering constraints, click the Add button to the right of the constraints window. Fill in the entries in the resulting Add Constraint dialogue box.
B 3 4 5 6 7 8 9 10 11 Profit C Tables $20.00 D Chairs $15.00 E F G

Large Bricks Small Bricks

Bill of Materials 2 1 2 2 Tables Chairs 1

Total Used 3 4

<= <=

Available 6 8 Total Profit $35.00

Production Quantity:

McGraw-Hill/Irwin

2.45

The McGraw-Hill Companies, Inc., 2008

Some Important Options

Click on the Options button, and click in both the Assume Linear Model and the Assume Non-Negative box.
Assume Linear Model tells the Solver that this is a linear programming model. Assume Non-Negative adds nonnegativity constraints to all the changing cells.

McGraw-Hill/Irwin

2.46

The McGraw-Hill Companies, Inc., 2008

The Solution
After clicking Solve, you will receive one of four messages:
Solver found a solution. All constraints and optimality conditions are satisfied. Set cell values did not converge. Solver could not find a feasible solution. Conditions for Assume Linear Model are not satisfied.
B 3 4 5 6 7 8 9 10 11 Profit C Tables $20.00 D Chairs $15.00 E F G

Large Bricks Small Bricks

Bill of Materials 2 1 2 2 Tables Chairs 2

Total Used 6 8

<= <=

Available 6 8 Total Profit $70.00

Production Quantity:

McGraw-Hill/Irwin

2.47

The McGraw-Hill Companies, Inc., 2008

The Graphical Method for Solving LPs

Formulate the problem as a linear program Plot the constraints Identify the feasible region Draw an imaginary line parallel to the objective function (Z = a) Find the optimal solution

McGraw-Hill/Irwin

2.48

The McGraw-Hill Companies, Inc., 2008

Example #1
Maximize Z = 3x1 + 5x2 subject to x1 4 2x2 12 3x1 + 2x2 18 and x1 0, x2 0.

x2 10 9 8 7 6 5 4 3 2 1 x1

10

McGraw-Hill/Irwin

2.49

The McGraw-Hill Companies, Inc., 2008

Example #2
Minimize Z = 15x1 + 20x2 subject to x1 +2x2 10 2x1 3x2 6 x1 + x2 6 and x1 0, x2 0.

x2 10 9 8 7 6 5 4 3 2 1 x1

10

McGraw-Hill/Irwin

2.50

The McGraw-Hill Companies, Inc., 2008

Example #3
Maximize Z = x1 + x2 subject to x1 +2x2 = 8 x1 x2 0 and x1 0, x2 0.

x2 10 9 8 7 6 5 4 3 2 1 x1

10

McGraw-Hill/Irwin

2.51

The McGraw-Hill Companies, Inc., 2008

Properties of Linear Programming Solutions

An optimal solution must lie on the boundary of the feasible region. There are exactly four possible outcomes of linear programming:
A unique optimal solution is found. An infinite number of optimal solutions exist. No feasible solutions exist. The objective function is unbounded (there is no optimal solution).

If an LP model has one optimal solution, it must be at a corner point. If an LP model has many optimal solutions, at least two of these optimal solutions are at corner points.

McGraw-Hill/Irwin

2.52

The McGraw-Hill Companies, Inc., 2008

Example #4 (Multiple Optimal Solutions)

Minimize Z = 6x1 + 4x2 subject to x1 4 2x2 12 3x1 + 2x2 18 and x1 0, x2 0.

x2 10 9 8 7 6 5 4 3 2 1 x1

10

McGraw-Hill/Irwin

2.53

The McGraw-Hill Companies, Inc., 2008

Example #5 (No Feasible Solution)

Maximize Z = 3x1 + 5x2 subject to x1 5 x2 4 3x1 + 2x2 18 and x1 0, x2 0.

x2 10 9 8 7 6 5 4 3 2 1 x1

10

McGraw-Hill/Irwin

2.54

The McGraw-Hill Companies, Inc., 2008

Example #6 (Unbounded Solution)

Maximize Z = 5x1 + 12x2 subject to x1 5 2x1 x2 2 and x1 0, x2 0.

x2 10 9 8 7 6 5 4 3 2 1 x1

10

McGraw-Hill/Irwin

2.55

The McGraw-Hill Companies, Inc., 2008

The Simplex Method Algorithm

1. Start at a feasible corner point (often the origin). 2. Check if adjacent corner points improve the objective function:
a) If so, move to adjacent corner and repeat step 2. b) If not, current corner point is optimal. Stop.
x2 10 9 8 7 6 5 4 3 2 1 x1

10

McGraw-Hill/Irwin

2.56

The McGraw-Hill Companies, Inc., 2008