Linear Programming Model Formulation

Topics:
Definition and concept of Linear Programming (LP)
Elements or components of LP
Characteristics of LP
Assumption of LP
Uses/Applications of LP:
• Product mix problem
• Blending problem
• Investment decision problem
• Manpower scheduling problem
 Definition and concept of LP
• Linear programming (LP) is a mathematical technique for
finding optimal solutions to problems that can be
expressed using linear equations and inequalities. It is an
optimization problem for which
-the objective function is linear (of the decision
variables)
-every constraint must be linear equations or
inequalities
-the decision variables i.e. xi  0
• Formulation is the process of translating a real-world
problem into a linear program. Once a problem has been
formulated as a linear program, a computer program can
be used to solve the problem
 Example
A company manufactures two types of products (P1 and P2)

Price and Unit contribution

nutrients P1 P2
RM cost ($)/unit 2 2
Labor Cost ($)/unit 5 4
Machine Time (hr) 2 1
Packaging time (hr) 1 2
Selling Price ($)/unit 10 8

Profit = SP- Cost

Maximum hours availability: Machine time 9 hour /day
Packaging time 9 hours/day
How many units of P1 and P2 to be produced each day in order to
maximize profit?
 Model Formulation
• Decision variables
X1 = no. P1 to be produced each day
X2 = no. of P2 to be produced each day
Objective functions:
Max Z = 3X1+2X2
s.t. 2X1+ X2 9
X1+2X2  9
X1, X20
 Elements/ Components of LP
Components of
LP

Decision Objective Non-negativity

Constraints
variables function constraints
• These variables are a • The objective of a LP • Constraints • The variables of LP
set of quantities that problem is to maximize represent must always take
need to be determined or to minimize some resource non-negative
in order to solve the numerical value. constraints, or values (i.e., they
problem • Maximize the value or the minimum or must be greater
minimize the cost of maximum level than or equal to
• These are called the project of some activity zero)
decision variables or condition
because the problem is
to decide what value
each variable should
take
General Form of a basic LP
 Steps of LP model formulation
The basic steps in formulation are:

1. Identify the decision variables

2. Formulate the objective function
3. Identify and formulate the constraints.
4. Include the non-negativity constraints.
 Characteristics of LP
Alternative courses Limited supply of
Objective function Constraints
of action resources
• It indicates how • Existence of • Resources are • Constraints
each variable alternative limited define the
contributes to the courses of actions possible values
value to be to achieve the that the variables
optimized in objective of a linear
solving the programming
problem. problem may take
• Maximize the • They typically
profit represent
• Minimize the cost resource
constraints, or
the minimum or
maximum level of
some activity or
condition.
 Assumptions of LP
• the value of the objective function and the
The constraints and the response of each resource expressed by the
objective function are linear constraints is proportional to the level of each
activity expressed in the variables.
• the level of activity X1 should not affect the costs
or benefits associated with the level of activity X2

Divisibility • the values of decision variables can be

fraction.

• the model assumes that the responses to the

Certainty values of the variables are exactly equal to the
responses represented by the coefficients.

• formulating a linear program to solve a

Data problem assumes that data are available to
specify the problem.
 Uses of LP: Product Mix Problem
Case: A company produces two lines of
products, earthmoving equipments (E-9) and
forestry equipment (F-9) in the same
departments using same machineries.
Management must now recommend a
production target for the next month, that is,
how many E-9s and F-9s should be produced.
 Major Considerations
1. The company will make a profit of $5000 on each E-9 that is sold and $4000 on
each F-9.
2. Each product goes through both department A and B
3. For next month’s production, these two depts. have 150 and 160 hours available
time.
Dept per E-9 per F-9 Total available
A 10 hrs 15 hrs 150 hrs
B 20 hrs 10 hrs 160 hrs
4. Testing data:
per E-9 per F-9 Requirements on total hrs
Hrs for testing 30 hrs 10 hrs 135 hrs
5. To maintain current mkt position, it is necessary to build at least one F-9 for every
3 E-9 produced
6. A major customer has ordered a total of at-least five E-9s and F-9s ( in any
combination whatever) .
 Blending Problem
Contents and cost price per 16 ounce of gruel
Gruel/mixture Protein content Carbohydrate Fat Content Cost Price ($)
(ounce) content (ounce)
(ounce)
1 3 7 5 4
2 5 4 6 6
3 2 2 6 3
4 3 8 2 2

A 16-ounce of dog food must contain protein, carbohydrate, and fat in at least the
following amounts: protein 3 ounces, carbohydrate 5 ounces, fat 4 ounces. Four
types of gruel to be blended together in various proportions to produce a least- cost
can of dog food satisfying these requirements.
 Manpower Scheduling Problem
The personnel manager must schedule the security force in such a way as to
satisfy the following staffing requirement

Time Min Number of Shift Starting Time Ending Time

officers required
1 Midnight 8 am
Mid night- 4 am 5
2 4 am Noon
4 am-8 am 7
3 8 am 4 pm
8 am-noon 15
4 Noon 8pm
Noon-4 pm 7
5 4 pm Midnight
4 pm-8pm 12
6 8pm 4am
8pm-midnight 9

The personnel manager wants to determine how many officers should work each
shift in order to minimize the total number of officers employed while still
satisfying the staffing requirements.

The officers who work shift 1 are on duty during each of the first two time
intervals
 Investment Problem
• WSDC Corporation is trying to complete its
investment plans for the next two years.
• Currently, WSDC has $2million on hand and
available for investment.
• In 6 months, 12 months and in 18 months,
WSDC expects to receive an income stream
from previous investments.
• There are two development projects in which
WSDC is considering participation.
 Investment Problem
Income from previous investments of WSDC
6-months 12-months 18-months
Income 500,000 400,000 380,000

Foster City Cash flow ( if participated at 100% level)

Initial 6-months 12-months 18-months 24 months
Income -1,000,000 -700,000 1,800,000 400,000 600,000

Middle-Income Housing Cash flow (if participated at 100% level)

Initial 6-months 12-months 18-months 24 months
Income -800,000 500,000 -200,000 -700,000 2,000,000

The problem currently facing WSDC is to decide how much of $2M on hand should
be invested in each of the projects and how much should simply be invested for
the 7% semiannual return. The constraints of this model must say that at the
beginning of each of the four 6-months periods, money invested = money on
hand. The objective is to max the cash on hand at the end of 24 months.