UNIVERSITY OF THE CORDILLERAS

GRADUATE SCHOOL

ADM M006
PRODUCTION MANAGEMENT IN A GLOBAL ECONOMY

LINEAR PROGRAMMING MODELS

Linear programming models are mathematical representations of constrained
optimization problems. These models have certain characteristics in common.
Knowledge of these characteristics enables us to recognize problems that can be
solved using linear programming. In addition, it also can help us formulate LP models.
The characteristics can be grouped into two categories: components and assumptions.
First, let’s consider the components.

The three components provide the structure of a linear programming model:

1. Objective function.
2. Decision variables.
3. Constraints.

Linear programming algorithms require that a single goal or objective, such as the
maximization of profits, be specified. The two general types of objectives are
maximization and minimization. A maximization objective might involve profits, revenues,
efficiency, or rate of return. Conversely, a minimization objective might involve cost,
time, distance traveled, or scrap.

The objective function is a mathematical expression that can be used to determine the
total profit (or cost, etc., depending on the objective) for a given solution.
Decision variables represent choices available to the decision maker in terms of
amounts of either inputs or outputs. For example, some problems require choosing a
combination of inputs to minimize total costs, while others require selecting a
combination of outputs to maximize profits or revenues.
Constraints are limitations that restrict the alternatives available to decision makers. The
three types of constraints are less than or equal to (_), greater than or equal to ( _ ), and
simply equal to ( _ ). A _ constraint implies an upper limit on the amount of some scarce
resource (e.g., machine hours, labor hours, materials) available for use. A _ constraint
specifies a minimum that must be achieved in the final solution (e.g., must contain at
least 10 percent real fruit juice, must get at least 30 MPG on the highway). The _
constraint is more restrictive in the sense that it specifies exactly what a decision
variable should equal (e.g., make 200 units of product A). A linear programming model
can consist of one or more constraints. The constraints of a given problem define the set
of all feasible combinations of decision variables; this set is referred to as the feasible
solution space . Linear programming algorithms are designed to search the feasible
solution space for the combination of decision variables that will yield an optimum in
terms of the objective function.
An LP model consists of a mathematical statement of the objective and a
mathematical statement of each constraint. These statements consist of symbols (e.g., x
1 , x 2 ) that represent the decision variables and numerical values, called parameters .
The parameters are fixed values; the model is solved given those values.

Example 1

An airline offers coach and first-class tickets. For the airline to be profitable, it
must sell a minimum of 25 first-class tickets and a minimum of 40 coach tickets.
The company makes a profit of $225 for each coach ticket and $200 for each
first-class ticket. At most, the plane has a capacity of 150 travelers. How many of
each ticket should be sold in order to maximize profits?

Solution

DECISION VARIABLES

The first step is to identify the unknown quantities. We are asked to find the
number of each ticket that should be sold. Since there are coach and first-class
tickets, we identify those as the unknowns. Let,

x = # of coach tickets to sell to maximize profit

y = # of first-class tickets to sell to maximize profit

OBJECTIVE FUNCTION

Next, we need to identify the objective function. The question often helps us
identify the objective function. Since the goal is the maximize profits, our
objective is identified.

Profit for coach tickets is $225.

If x coach tickets are sold, the total profit for these tickets is 225x.

Profit for first-class tickets is $200. Similarly, if y first class tickets are sold, the total
profit for these tickets is 200y.

MAXIMIZE PROFIT = 225x + 200y

We want to make the value of as large as possible, provided the constraints are
met. In this case, we have the following constraints:

• Sell at least 25 first-class tickets

 • Sell at least 40 coach tickets
• No more than 150 tickets can be sold (no more than 150 people can fit on
the plane)

We need to quantify these.

• At least 25 first-class tickets means that 25 or more should be sold. That

is, y ≥ 25
• At least 40 coach tickets means that 40 or more should be sold. That
is, x ≥ 40
• The sum of first-class and coach tickets should be 150 or fewer. That
is x + y ≤ 150

Thus, the objective function along with the three mathematical constraints is:

Objective Function: MAX PROFIT = 225x + 200y

Constraints: y ≥ 25

x ≥ 40

x + y ≤ 150

We will work to think about these constraints graphically and return to the
objective function afterwards. We will thus deal with the following graph:

Note that we are only interested in the first quadrant, since we cannot have
negative tickets.
We will first plot each of the inequalities as equations, and then worry about the
inequality signs. That is, first plot,

x= 25

y = 40

x + y = 150

The first two equations are horizontal and vertical lines, respectively. To
plot x + y= 150, it is preferable to find the horizontal and vertical intercepts.

To find the vertical intercept, we let

x = 0:
y= 150

Giving us the point (0,150)

To find the horizontal intercept, we let

y = 0:
x = 150

Giving us the point (150,0)

Plotting all three equations gives:

Our next task is to take into account the inequalities.

We first ask, when is y ≥ 25? Since this is a horizontal line running through a y-
value of 25, anything above this line represents a value greater than 25. We
denote this by shading above the line:

This tells us that any point in the green shaded region satisfies the constraint that
y≥ 25.

Next, we deal with x ≥ 40. We ask, when is the x-value larger than 40? Values to
the left are smaller than 40, so we must shade to the right to get values larger
than 40:
The blue area satisfies the second constraint, but since we must satisfy
all constraints, only the region that is green and blue will suffice.

We have one more constraint to consider:

x+ y ≤ 150.

Therefore, we shade below the line:

The region in which the green, blue, and purple shadings intersect satisfies all
three constraints. This region is known as the feasible regions, since this set of
points is feasible, given all constraints. We can verify that a point chosen in this
region satisfies all three constraints. For example, choosing (0,0) gives:

0 ≥ 40 FALSE

0 ≥ 25 FALSE

0 + 0 ≤ 150 TRUE

This gets us to a great point, but still does not answer the question: which point
maximizes profit? Fortunately, there is a theorem discovered by mathematicians
that allows us to answer this question.

First off, we define a new term: a corner point is a point that falls along the
corner of a feasible region. In our situation, we have three corner points, shown
on the graph as the solid black dots:

The objective function along with the three corner points above forms
a bounded linear programming problem. That is, imagine you are looking at
three fence posts connected by fencing (black point and lines, respectively). If
you were to put your dog in the middle, you could be sure it would not escape
(assuming the fence is tall enough). If this is the case, then you have a bounded
linear programming problem. If the dog could walk infinitely in any one direction,
then the problem is unbounded.

Fundamental Theorem of Linear Programming

1. If a solution exists to a bounded linear programming problem, then it

occurs at one of the corner points.
2. If a feasible region is unbounded, then a maximum value for the objective
function does not exist.
3. If a feasible region is unbounded, and the objective function
has only positive coefficients, then a minimum value exist

This means we have to choose among three corner points. To verify the “winner,”
we must see which of these three points maximizes the objective function. To
find the corner points as ordered pairs, we must solve three systems of two
equations each:

• Point A
• x = 40
• y= 25
• Point B
• x = 40
• x + y = 150
• Point C
• y = 25
• x+ y = 150

We could decide to solve by using matrix equations, but these equations are all
simple enough to solve by hand:

Point A

Point already given

Point: (40,25)

Point B

x = 40
 - x + y =150

- y = -110

y = 110

Solve for x

Using x + y = 150

x + 110 = 150

x = 40

Point C

y = 25

- x + y =150

-x = -125

x = 125

Solve for y using x + y = 150

125 + y = 150

y =25

We test each of these three points in the objective function:

Point X Y Profit

A 40 25 225(40) + 200(25) = $14,000

B 40 110 225(40) + 200(110) = $31,000

C 125 25 225(125) + 200(25) = $33,125

The third point, (125,25) maximizes profit.

Therefore, we conclude that the airline should sell 125 coach tickets and 25 first-
class tickets in order to maximize profits.

The above example was rather long and had many steps to complete. We will
summarize the procedure below:

Solving a Linear Programming Problem Graphically

1. Define the variables to be optimized. The question asked is a good

indicator as to what these will be.
2. Write the objective function in words, then convert to mathematical
equation
3. Write the constraints in words, then convert to mathematical inequalities
4. Graph the constraints as equations
5. Shade feasible regions by taking into account the inequality sign and its
direction. If, a) A vertical line

≤, then shade to the left

≥, then shade to the right

b) A horizontal line

≤, then shade below

≥, then shade above

c) A line with a non-zero, defined slope

≤, shade below

≥, shade above

6. Identify the corner points by solving systems of linear equations whose

intersection represents a corner point.

7. Test all corner points in the objective function. The “winning” point is the point
that optimizes the objective function (biggest if maximizing, smallest if
minimizing)
EXAMPLE 2

The company can purchase its fruit through www.driedfruitbaskets.com in bulk

for a reasonable price. Dried apricots cost $9.99/lb. (about 3 servings) and dried
dates cost $7.99/lb. (about 4 servings). The company would like the box of bars
to have at least the recommended daily potassium intake of about 4700 mg,
but would like to keep it under twice the recommended daily intake. There are
407x mg of potassium in x servings of apricots and 271y mg of potassium
in y servings of dates. In order to minimize cost, how many servings of each dried
fruit should go into the box of bars?

Solution

DECISION VARIABLES

We begin by defining the variables. Let,

x = # of servings of dried apricots to take to minimize cost.

y = # of servings of dried dates to take to minimize cost.

OBJECTIVE FUNCTION

For apricots, there are 3 servings in one pound. This means that the cost per
serving is $9.99/3 = $3.33. The cost for x servings would thus be 3.33x.

For dates, there are 4 servings per pound. This means that the cost per serving is
$7.99/4 = $2.00. The cost for y servings would thus be 2.00y.

The total cost for apricots and dates would be

Min Cost = 3.33x + 2.00y

CONSTRAINTS

We have two major constraints (in addition to the constraints that

x ≥ 0 and y ≥ 0, given that negative servings cannot be used):

• Product must contain at least 4700mg of potassium

• Product should contain no more than 4700 × 2 = 9400mg of potassium

Mathematically,
 • There are 407x mg of potassium in x servings of apricots and 271y mg of
potassium in y servings of dates. The sum should be greater than or equal
to 4700mg of potassium, or 407x + 271y ≥ 4700
• The same sum should be less than or equal to 9400 mg of potassium, or
407x + 271y ≤ 9400.

Thus we have,

Objective Function: C = 3.33x + 2.00y

Subject To Constraints:

407x + 271y ≥ 4700

407x + 271y ≤ 9400

x≥0
y≥0

We graph the constraints as equations:

Since the first inequality has ≥, we must shade above and, since the second
inequality has≤, we must shade below (This idea can be confirmed by selecting
points above and below each line in order to verify.):

The feasible region is the green and blue shaded section between the two lines.
We see that there are four corner points that form an upside-down trapezoid, as
shown in the graph below:
We must solve the following systems to find the corner points (bottom-to-top,
right-to-left)

Point A

x=0

407x + 271y =4700

Solution:

0 + 271
y = 4700

y ≈ 17.3

Point: (0,17.3)

Pont B

x=0

407x + 271y = 9400

Solution:
0 + 271y = 9400

y ≈ 34.7

Point: (0,34.7)

Point C

y=0

407x + 271y = 9400

Solution:

407x + 0 = 9400

x ≈ 23.1

Point: (23.1,0)

Point D

y=0

407x + 271y = 4700

Solution:

407x + 0 = 4700

x ≈ 11.5

Point: (11.5,0)

Again, we could solve by using matrix equations, but the systems are
straightforward to solve by substitution. Since the problem is bounded, we now
check to see which one minimizes cost:

Point X Y Cost

A 0 17.3 33.3(0) = 2.00(17.3) = $34.60

B 0 34.7 33.3(0) = 2.00(34.7) = $69.40

 C 23.1 0 33.3(23.1) = 2.00(0) = $76.92

D 11.5 0 33.3(11.5) = 2.00(0) = $38.30

The cheapest route for the company will be to create bars that contain no dried
apricots and 17.3 servings of dried dates to minimize cost to $34.60.

It is interesting to note that each of the corner points corresponds to either a

horizontal or vertical intercept.

Why are we seeing what we’re seeing? This is truly a case of real-world product
creation! Of course, it doesn’t make sense to increase the daily intake for the
box, since this would mean increasing the amount of dried fruit, hence
increasing cost. Since the cost of dried dates is cheaper ($2.00 per serving) and
since for the price of one serving of apricots ($3.33 per serving) we can pay:

407mg/$3.33≈122.2mg per dollar for apricots and

271mg/$2.00≈135.5mg per dollar for dates

It makes complete sense to buy dates, since the same dollar amount yields a
higher content of potassium.

The question still remains: is it desirable to require a larger quantity of dates for a
smaller price, or is it more desirable to require a smaller quantity of apricots for a
larger price? This indeed depends on the constraints. The company might want
to consider the amount of packaging/processing/etc. required in both
instances. Perhaps the manufacturing and packaging costs could add
constraints that alter the decision-making process. A similar problem will be left
as a homework exercise for the reader to think about.

As a mathematical note, what we are seeing occurs as a result of having

constraint lines that are parallel.

There are two terms we should be familiar with when dealing with
inequalities: bounded and unbounded. A feasible region is said to be bounded if
the constraints enclose the feasible region.

That is, if the shading does not continue to cover the entire plane, we are
dealing with a bounded linear programming problem.
Both examples thus far have been examples of bounded linear programming
problems, since the first feasible region was in the shape of a triangle and the
second in the shape of a trapezoid.

If the feasible region cannot be enclosed among the lines formed by constraints,
it is said to be unbounded. An example of an unbounded linear programming
problem would be:

NOTE: IN CASE THE POINT OF ORIGIN IS INCLUDED IN THE AREA OF FEASIBLE REGION

Start naming points from the feasible region (bottom-to-top, right-to-left).

EXAMPLE:

REFERENCES:
Production/Operations Management. William Stevenson.

https://courses.lumenlearning.com/sanjacinto-finitemath1/chapter/reading-meeting-
demands-with-linear-programming/