Contents

 What is OR?

 Why OR?

 Modeling and the problem solving process

 Applications of OR

 Linear Programming

 Problem Formulation

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Lecture 2: Introduction
to Linear Programming
Introduction to Linear Programming

 The Importance of Linear Programming

 Many real world problems lend themselves to linear
programming modeling.
 Many real world problems can be approximated by linear models.
 Three elements: Decision Variables, Objective function and constraints
 There are well-known successful applications in:
 Manufacturing
 Marketing
 Finance (investment)
 Advertising
 Agriculture

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Introduction to Linear Programming
 The Importance of Linear Programming
 There
are efficient solution techniques that solve linear programming
models.
 Theoutput generated from linear programming packages provides
useful “what if” analysis.

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Introduction to Linear Programming
 Assumptions of the linear programming model
 The parameter values are known with certainty.
 The objective function and constraints exhibit constant returns to scale.
 There are no interactions between the decision variables (the additivity assumption).
 The Continuity assumption: Variables can take on any value within a given feasible range.

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Applications of Linear Programming
 Typical applications:
 A manufacturer wants to develop a production schedule and an inventory policy that
will satisfy demand in future periods and at the same time minimize the total
production and inventory costs
 A financial analyst would like to establish an investment portfolio from a variety of
stock and bond investment alternatives that maximizes the return on investment
 A marketing manager wants to determine how best to allocate a fixed advertising
budget among alternative advertising media such as web, radio, television,
newspaper, and magazine that maximizes advertising effectiveness
 A company had warehouses in a number of locations. Given specific customer
demands, the company would like to determine how much each warehouse should
ship to each customer so that total transportation costs are minimized
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The Galaxy Industries Production Problem
 Galaxy manufactures two toy doll models:
 Space Ray.
 Zapper.
 Resources are limited to
 1000 pounds of special plastic.
 40 hours of production time per week.
 Space Rays requires 2 pounds of plastic and 3 minutes of labor per dozen. Zappers requires 1 pound of
plastic and 4 minutes of labor per dozen.
 Marketing requirement
 Total production cannot exceed 700 dozens.
 Number of dozens of Space Rays cannot exceed number of dozens of Zappers by more than 350.

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Management is seeking a production
schedule that will increase the
company’s profit.

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A linear programming model
can provide an insight and an
intelligent solution to this problem.

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The Galaxy Linear Programming Model
 Decisions variables:

 X1 = Weekly production level of Space Rays (in dozens)

 X2 = Weekly production level of Zappers (in dozens).

 Objective Function:
 Weekly profit, to be maximized

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The Galaxy Linear Programming Model

Max 8X1 + 5X2 (Weekly profit)

subject to
2X1 + 1X2 £ 1000 (Plastic)
3X1 + 4X2 £ 2400 (Production Time)
X1 + X2 £ 700 (Total production)
X1 - X2 £ 350 (Mix)
Xj> = 0, j = 1,2 (Nonnegativity)

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Practice Problem

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 The Food Problem
 A nutritionist in a large institution wishes to serve food that provides necessary vitamins for the
consumers. After testing different foods, the nutritionist finds that foods labelled F1, F2 and F3
contain, for every unit of food consumed, the quantity of vitamins A and B that we have shown in
the Table.

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 The Food Problem
 Problem Formulation

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Product Mix Problem
A company is involved in the production of two items (X and Y).
The resources need to produce X and Y are twofold, namely machine time for automatic processing and craftsman time for hand
finishing. The table below gives the number of minutes required for each item:
Item Machine time Craftsman time
X 13 20
Y 19 29
The company has 40 hours of machine time available in the next working week but only 35 hours of craftsman time. Machine time is
costed at £10 per hour worked and craftsman time is costed at £2 per hour worked. Both machine and craftsman idle times incur no
costs. The revenue received for each item produced (all production is sold) is £20 for X and £30 for Y. The company has a specific
contract to produce 10 items of X per week for a particular customer.
Formulate the problem of deciding how much to produce per week as a linear program.
Solve this linear program graphically

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Product Mix Problem
Let x be the number of items of X; y be the number of items of Y; then the LP is:

Maximise 20x + 30y - 10(machine time worked) - 2(craftsman time worked)

subject to:
13x + 19y <= 40(60) machine time
20x + 29y <= 35(60) craftsman time
x >= 10 contract
x,y >= 0

so that the objective function becomes

Maximise 20x + 30y - 10(13x + 19y)/60 - 2(20x + 29y)/60
i.e. maximize 17.1667x + 25.8667y
subject to:
13x + 19y <= 2400
20x + 29y <= 2100
x >= 10
x,y >= 0
It is plain from the diagram below that the maximum occurs at the intersection of x=10 and 20x + 29y <= 2100
Solving simultaneously, rather than by reading values off the graph, we have that x=10 and y=65.52 with the value of
the objective function being £1866.5 16
Product Mix Problem

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