LPP

SIMPLEX METHOD
 Basic Concept of Simplex
• Among all the methods, SIMPLEX METHOD is most
powerful method.
• It deals with iterative process, which consists of first
designing a Basic Feasible Solution or a Program and
proceed towards the OPTIMAL SOLUTION and testing
each feasible solution for Optimality to know
whether the solution on hand is optimal or not.
• If not an optimal solution, redesign the programm,
and test for optimality until the test confirms
OPTIMALITY.
• Hence we can say that the Simplex Method depends
on two concepts known as Feasibility and optimality.
 Basic Concept of Simplex
• The simplex method is based on the property
that the optimal solution to a linear
programming problem, if it exists, can always be
found in one of the basic feasible solution.
• The simplex method is quite simple and
mechanical in nature.
• The iterative steps of the simplex method are
repeated until a finite optimal solution, if exists,
is found.
• If no optimal solution, the method indicates that
no finite solution exists.
 Basic Concept of Simplex
 The simplex method is a general-purpose linear-
programming algorithm widely used to solve large
scale problems.
 Although it lacks the intuitive appeal of the
graphical approach, its ability to handle problems
with more than two decision variables makes it
extremely valuable for solving problems often
encountered in production/operations
management.
 Thus simplex method offers an efficient means of
solving more complex linear programming
problems.
 Basic Concept of Simplex
 This procedure solves the problem in an iterative
manner, that is, repeating the same set of
procedures time after time until an optimal
solution is reached.
 Each iteration brings a higher value for the
objective function so that we are always moving
closer to the optimal solution.
 COMPARIING GRAPHICAL AND SIMPLEX METHODS
1. The graphical method is used when we have two
decision variables in the problem. Whereas in
Simplex method, the problem may have any
number of decision variables.
2. In graphical method, the inequalities are
assumed to be equations, so as to enable to
draw straight lines. But in Simplex method, the
inequalities are converted into equations by: (i)
Adding a SLACK VARIABLE in maximization
problem and subtracting a SURPLUS VARIABLE
in case of minimization problem.
 COMPARING GRAPHICAL AND SIMPLEX METHODS
3. 3. In graphical solution the Isoprofit line moves
away from the origin to towards the far off point
in maximisation problem and in minimisation
problem, the Isocost line moves from far off
distance towards origin to reach the nearest
point to origin.
4. 4. In graphical method, the areas outside the
feasible area (area covered by all the lines of
constraints in the problem) indicates idle
capacity of resource where as in Simplex
method, the presence of slack variable indicates
the idle capacity of the resources.
 COMPARING GRAPHICAL AND SIMPLEX METHODS
5. In graphical solution, if the isoprofit line coincides
with more than one point of the feasible polygon,
then the problem has second alternate solution.
• In case of Simplex method the net evaluation row has
zero for non-basis variable the problem has alternate
solution.
• If two alternative optimum solutions can be
obtained, the infinite number of optimum, solutions
can be obtained.
• However, the beauty of the simplex method lies in
the fact that the relative exchange profitabilities of all
the non -basis variables (vectors) can be determined
simultaneously and easily.
 Why do we Study Simplex Method?
 The simplex method requires simple mathematical
operations (addition, subtraction, multiplication, and
division), but the computations are lengthy and tedious,
and the slightest error can lead to a good deal of
frustration.
 Hence, users rely on computers to handle the
computations while they concentrate on the solutions.
 Still, some familiarity with manual computations is helpful
in understanding the simplex process.
 The student will discover that it is better not to use his/her
calculator in working through these problems because
rounding can easily distort the results.
 Instead, it is better to work with numbers in fractional
form.
 Why do we Study Simplex Method?
 It is important to understand the ideas used
where solution can be produced.
 The simplex approach yields not only the optimal
solution to the variables, and the maximum profit
(or minimum cost) but valuable economic
information as well.
 To be able to use computers successfully and to
interpret LP computer print outs, we need to
know what the simplex method is doing and
why.
 Properties of Max and Min Problems
Objective function
Type of
Type of Constraint’s
Additional
constraint sembols Max Min
variable

Max Profit ≤ Slack added 0 0

Surplus
Min Cost ≥ 0 0
substructed

Artificial -M +M
Min Cost ≥
variable added -A +A

Mixed product
Artificial -M +M
 Steps in Simplex Method
• Step 1. Formulate a LP model of the problem.
• Step 2. Add slack variables to each constraint to obtain
standard form.
• Step 3. Set up the initial simplex tableau.
• Step 4. Choose the non-basic variable with the largest
entry in the net evaluation row (Cj – Zj) to bring into
the basis.
 This identifies the pivot (key) column; the column
associated with the incoming variable.
• Step 5. Choose as the pivot row that row with the
smallest ratio of “bi/ aij”, for aij >0 where j is the pivot
column.
 This identifies the pivot row, the row of the variable
leaving the basis when variable j enters.
• Step 6. a). Divide each element of the pivot
row by the pivot element.
b). According to the entering variable,
find the new values for remaining variables.
• Step 7. Test for optimality. If Cj – Zj  0 for all
columns, we have the optimal solution. If not,
return to step 4.
 Example, Maximization
• A Furniture Ltd., wants to determine the most
profitable combination of products to manufacture
given that its resources are limited. The Furniture
Ltd., makes two products, tables and chairs, which
must be processed through assembly and finishing
departments. Assembly has 60 hours available;
Finishing can handle up to 48 hours of work.
Manufacturing one table requires 4 hours in
assembly and 2 hours in finishing. Each chair
requires 2 hours in assembly and 4 hours in
finishing. Profit is $8 per table and $6 per chair.
 Step 1: Formulate LP Model
Hours required to produce 1 unit at
Processes different process Total
Hours
Tables, X Chairs , Y Available

Assembly 4 2 60
Finishing 2 4 48
8 6
In algebric form:
Maz Z= 8x + 6y---------Objective Function
Assembly----4x+2y≤ 60
Finishing ----2x+4y≤48
X, Y ≥0
 Step 2. Add slack variables or Change
inequalities into equalities .
Z= 8x + 6y
Assembly----4x+2y≤ 60
Finishing ----2x+4y≤48
X, Y ≥0
•Slack Variable is represented by S
•Z= 8x+ 6y +0S1+0S2
•4x+2y+1S1 +0S2=60
•2x+4y+0S1 +1S2=48
•Here the slack variables represent the idle resource, i.e
unutilized hours in producing tables and chairs.
 Step 3. Set up the initial simplex
represent the
coefficients of tableau.
the objective
function.
The number in the Zj row under each variable gives
the total gross amount of outgoing profit when we
consider the exchange between one unit of
column, variable and the basic variables.
• Cj-Zj is net evaluation row:
The number in the, Cj – Zj row gives the net effect
of exchange between one unit of each variable
and basic variables. This they are zeros under
columns of S1, & S2.
• A point of interest to note here is the net
evaluation element of any basis variable (or
problem variable) is ZERO only.
• Suppose variable ‘x’ becomes basis variable, the
entry in net evaluation row under ‘a’ is zero and
so on.
• Generally the entry in net evaluation row is
known as OPPORTUNITY COST.
• Opportunity cost means for not including a
particular profitable variable in the programme,
the manufacturer has to lose the amount
equivalent to the profit contribution of the
variable.
• In the present problem the net evaluation under
the variable ‘X’ is Rs. 8 per unit of table and that
of ‘Y’ is Rs, 6 per unit chair. Hence, if the company
does not manufacture tables at this stage it has to
face a penalty of 8birr for every unit of ‘x-table’
for not manufacturing and the same of product
variable ‘y chair’ is 6birr.
• Hence the opportunity cost of product ‘X’ is
higher than that of ‘Y’, hence ‘X’ will be the
incoming variable.

• In general, select the variable, which is having

higher opportunity cost as the incoming
variable (or select the variable, which is having
highest positive number in the net evaluation
row.
• Positive numbers in Net evaluation raw
indicates that improvements can be made in
profit for each units added.
• Where as negative numbers indicate that any
additional unit of will cause negative profit.
Step 4. Choose a Pivot Column

Column
Pivot

Why?
Step 4. Choose a Pivot Row

Row
Pivot

Column
Pivot

Why?
Step 6: find Pivot Number
How
?

Pivot
Row

This operation help to

Column
Pivot

determine the entering and

leaving variable.
Accordingly, X1 will substitute
 Construct the second tableau, and test
optimality
• For the pivot row, divide every number in the
row by the pivot number (4) i.e
• 60/4 = 15, 4/4= 1, 2/4=1/2, ¼=1/4 , 0/4=0
• Hence, the new row numbers would be:
• 15 1 ½ ¼ 0
• And the values for the remaining row would
be computed based on the following formula:
 Number Corresponding

-
New number in above /below number in the
row = old row the pivot X new row/ the
number replaced row
X1 entered , and S1 leaving:
The compute Zj
Construct the second tableau, and
test optimality

Not, optimal, because there is a

positive number In the Net
evaluation row, which means
there is an opportunity for
imrovement.
 Verification
• In the above table, the net evaluation under S1 is
-5/3 and S2 is -2/3. This resource is completely
utilized to manufacture product x1 and x2. The
profit earned by manufacturing x1 and x2 is Rs.
132.
• As per the law of economics, the worth of
resources used must be equal to the profit
earned.
• Hence the element -5/3 & -2/3 (ignore negative
sign) is known as economic worth or artificial
accounting price.
 Verification…..
• Technically it can be taken as MACHINE HOUR
RATE of the resources or shadow price of the
resource.
• In fact all the elements of reevaluation row
under slack variables are shadow prices of
respective resources.
• This concept is used to check whether the
problem is done correctly or not.
• To do this MULTIPLY THE ELEMENTS IN NET
EVALUATION ROW UNDER SLACK VARIABLES
WITH THE ORIGINAL CAPACITY CONSTRAINTS
GIVEN IN THE PROBLEM AND FIND THE SUM OF
THE SAME.
• THIS SUM MUST BE EQUAL TO THE PROFIT
EARNED BY MANUFACTRUING THE PRODUCT.
• 5/3*60 + 2/3*48 = 132
• Σ Shadow prices of resources used must be
equal to the profit earned.
Verification
 Example 2:
A furniture ltd. wants to produce two products table
and chair whereas the company seeks the most
profitable combination of such products given its
limited resources.
 Example: MiniMazation
• For selecting out going variable (key row) lowest
replacement ratio is selected.
• The objective function is of minimisation type.
• The inequalities are of ≥ type.
• To convert inequalities into equations, surplus
Variables are subtracted and artificial surplus
variables are added.
• While slecting, incoming variable, lowest element
in the net evaluation row is selected (highest
number with negative sign).
• When the element of net evaluation row are
either positive or zeros the solution is optimal.
• Big M-method /Charnes Penalty Method/
• The Big-M Method is a technique, which is used in
removing artificial variables from the basis.
• In this method; we assign coefficients to artificial
variables, undesirable from the objective function
point of view.
• If objective function Z is to be minimized, then a
very large positive price (called penalty) is
assigned to each artificial variable.
• Following are the characteristics of Big-M
Method:
• High penalty cost (or profit) is assumed as M
• M as a coefficient is assigned to artificial
variable A in the objective function Z.
• Big-M method can be applied to minimization as
well as maximization problems with the
following distinctions:
• Minimization problems
• -Assign +M as coefficient of artificial variable A
in the objective function Z of the minimization
problem.
 Example
• Example: Assume the following minimization
problem.
• Min Z = 7X1+9X2
• Subject to 3X1+6X2 >= 36
8X1+4X2 > = 64
X1, X2 > = 0
• We introduce both surplus and artificial
variables into both constraints as follows.
Min Z = 7X1+9X2+0S1+0S2+MA1+MA2
Subject to 3X1+6X2 –S1+A1 = 36
8X1+4X2-S2+A2 = 64
X1 , X 2 > = 0
•So the subsequent tableaus for this problem are
shown below.
•To remind in these tableaus is in transforming
from one tableau to another, we perform
elementary row operations to obtain the unit
vector in the pivot column for the entering
variable into the solution.
 The coefficient of the artificial
Initial Simplex Tableau
variable

Cj 7 9 0 0 M M Qty
Basic V. X1 X2 S1 S2 A1 A2

A1 M 3 6 -1 0 1 0 36

A2 M 8 4 0 -1 0 1 64

Zj 11M 10M -M -M M M 50M

Cj-Zj 7-11M 9-10M M M 0 0

• Note: As the variables A1 and A2 are basis
variables, their Net evaluation is zero.
• Now take 6M and 5M, 6 M is greater and if we
subtract 2.5 from that it is negligible. Hence –6m
will be the lowest element.
• The physical interpretation is if patient purchases
Y now, his cost will be reduced by an amount 6M.
• In other words, if the patient does not purchase
the Y at this point, his penalty is 6M, i.e., the
opportunity cost is 6M.
• As the non-basis variable Y has highest
opportunity cost (highest element with negative
sign), Y is the incoming variable.
 Second Simplex Tableau

Cj 7 9 0 0 M Qty
Basic V. X1 X2 S1 S2 A1

A1 M 0 9/2 -1 3/8 1 12
X1 7 1 ½ 0 -1/8 0 8
Zj 7 7/2+9 -M 3/8M-7/8 M 56+12
/2M M

Cj-Zj 0 11/2- M 7/8-3/8M 0

9/2M
 Third Simplex Tableau
Cj 7 9 0 0 Qty
B V.
X1 X2 S1 S2

X2 9 0 1 -2/9 1/12 8/3

X1 7 1 0 1/9 -1/6 20/3

Zj 7 9 -11/9 -5/12 212/3

Cj-Zj 0 0 11/9 5/12

• The third tableau represents a final
tableau since it is the optimal solution
with entirely zeros and non-negative
values in the Cj-Zj row.
• Therefore, the optimal solution is: X1 =
20/3 and X2 = 8/3 and value of objective
function is 212/3…. 70.
• 11/9 * 36 + 5/12 * 64 = 78+ 15= 70.
 Varification
• In minimization problem, the elements
associated with surplus variables in the optimal
table, represent the marginal worth or imputed
value of one unit of the required item.
• In minimization problem, the imputed value of
surplus variables in optimal solution must be
equal to the optimal cost considering the
minimization constraint value in the initial
tableau.
 Point to Note
• 1. In the mechanics of simplex method of
minimization problem, once an artificial surplus
variable leaves the basis, its exit is final because of
its high cost coefficient (M), which will never
permit the variable to reenter the basis. In order
to save time or to reduce calculations, we can
cross out the column containing the artificial
surplus variable, which reduces the number of
columns.
2. A better and easier method is to allocate a value
for M in big M method; this value must be higher
than the cost coefficients of the decision variables.
Say for example the cost coefficients of the decision
variable in the above problem are for X1 it is 7 and
for X2 it is 9. We can allocate a cost coefficient to M
as Rs.10, which is greater than both coefficients.
Depending on the value of decision variables, this
value may be fixed at a higher level (Preferably the
value must be multiples of 10 so that the
calculation part will be easier.
 Special Issues
• Several special situations which one many
encounter during the application of simplex
method are summarized below:
1.Non feasible solution/ infeasibility
2.Unbounded solution
3.Degeneracy / tie (tie of the key row and tie of
the non basic variable)
 1. Non-feasible Solution/ Infeasibility
• A situation with no feasible solution may exist if
the problem was formulated incorrectly.
• Infeasibility comes about when there is no
solution that satisfies all of the problem’s
constraints.
• An infeasible solution is indicated by looking at
the final tableau Whenever the optimality criteria
is satisfied but still there exist an artificial
variable in the basis or solution mix, this is the
indication of infeasibility.
• Example: Minimization case
Even though all Cj - Zj are positive or 0(i.e. the criterion
for an optimal solution in a minimization case), no
feasible solution is possible because an artificial variable
(A2) remains in the solution mix.
5 8 0 0
Cj
 
M  
Q
  BV X1 X2 S1 S2 A2

5 X1 1 1 -2 3 0 200
0 1 1 2
8 X2 100
0

A2 0 0 0 -1 1 20
M
1,800+200
  Zj 5 8 -2 31-M M
M
 2. Unbounded Solution
• No finite solution may exist in problems that are
not bounded. This means that a variable can be
infinitely large without violating a constraint.
• In the simplex method, the condition of
unboundedness will be discovered prior to
reaching the final tableau.
• We will note the problem when trying to decide
which variable to remove from the solution mix.
• The procedure in unbounded solution is to divide
each quantity column number by the
corresponding pivot column number.
• The row with the smallest positive ratio is
replaced.
• But if the entire ratios turn out to be negative or
undefined, it indicates that the problem is
unbounded.
• Note: A negative ratio means that increasing
that variable would increase resources.
• A zero ratio means that increasing the variable
would not use any resources.
• Example: Maximization case:
 Maximization, unbounded solution
Cj     6 9 0 0  
 
X1 X2 S1 S2 Q
BV
9 X2 -1 1 2 0 30
0 S2 -2 0 -1 1 10
  Zj -9 9 18 0 270
15 0 -18
Note:0 When
Cj – Zj
What is the unbounded solutions
implication of having occur, no outgoing
–ve & zero values in Pivot Column
the entering variable?
variable will exist.
 Degeneracy/Tie for leaving basic variable
• If there is a tie for the smallest ratio, this is a signal
that degeneracy exists.
• This normally happens when the number of
constraints is less than the number of variables in
the LP model.
• It can be overcome by trial and error method.
• If this is resolved by a proper selection of the key
element, degeneracy can be avoided.
• The main drawback to degeneracy is the increase
in the computation, which reduces the efficiency
of the simplex method considerably.
• Because, degeneracy could lead to a situation
known as cycling, in which the simplex algorithm
alternatives back and forth between the same
non-optimal solutions, i.e., it puts a new variable
in, then takes it out in the next tableau, puts it
back in, and so on. Thus, to solve it:
1.Divide the coefficient of slack variables in the
where degeneracy is detected by the
corresponding positive numbers of the key column
in the row, starting from left to right.
2.The row which contains smallest ratio comparing
from left to right column wise becomes the key
row.
 Example
Which basic variable can be used to solve
the tie? Why?
Cj      
5 8 2 0 0 0

SV X1 X2 X3 S1 S2 S3 QTY

8 X2 ¼ 1 1 -2 0 0 10= 40
0 S2 4 0 1/3 -1 1 0 20= 5
0 S3 2 0 2 1/5 0 1 10= 5

  Zj 2 8 8 16 0 0
Cj - Zj 3 3 0 -6 -16 0
THE TIE 80
     
 Column
S2 S3
Row

S2 1 0
S3 0
Column 1

S2 S3
Row

S2 ¼= ¼ 0/4= 0
S3 the ratios from
Comparing left 0
0/2= ½= ½ wise until they are
to right column
not equal, the minimum ratio occurs for the second row (0).
Therefore, s3 is selected to leave the basis.
Two incoming variables : Tie for entering variable
• In order to break this tie, the selection for the key
column can be made arbitrarily.
• However, the number of solution can be
minimized by adopting the following rules:
1.If there is a tie between two decision variables,
then the selection can be made arbitrary.
2.If there is a tie between a decision variable and a
slack (or surplus) variable, then select the decision
variable to enter into basis first.
3.If there is a tie between slack or surplus variable,
then selection can be made arbitrary.
Cj      

  SV X1 X2 S1 S3 Q

 
  Zj    
  Cj - Zj 5 2 5 0  

In such a case, X1 is the entering variable.

 Multiple Optimum Solutions
• This situation occurs when there can be infinite
number of solutions possible for a given problem.
• This situation can be recognized in a simplex
method when one of the non-basic variables in
the Cj-Zj, row have a value of zero.
• This is to mean in the optimal solution when non
basic variable (variable not in the basis) has a zero
value in C-Z row, this is the indication of existence
of multiple solution.
 • To obtain the other solution, we will make a
non- basic variable with a zero C-Z value to
enter in to the basis and solve in the same way
as the one we did in the previous discussion.
Example: Maximization problem
Cj   3 2 0 0  
  BV X1 X2 S1 S2 Q
2 X2 3/2 1 1 0 6
0 S2 1 0 1/2 1 3
  Zj 3 2 2 0 12
C -Z
Max Z=3X1+2X j j 0 0 -2 0
2

  X2=6, S2=3
X1=0,   and MaxZ=12 or: X1=3, X2=3/2 and MaxZ=12  
The Cj - Zj value of the non-basic variable (X1) is 0. Thus, this shows the
 
existence of alternative optimal solution.
Can you identify more alternative optimal solutions?
 Post Optimality Analysis: Duality and Sensitivity
I. Duality:
The term ‘dual’ in a general sense implies two or
double.
Every LP problem can have two forms.
The original formulation of a problem is referred to
as its Primal form.
The other form is referred to as its dual LP problem
or in short dual form.
In general, however, it is immaterial which of the
two problems called primal or dual, since the dual of
the dual is primal.
I. Duality:
The two are the mirror image and/ flip flop of a coin
to each other.
The primal LP attempts to allocate resource by
determining quantities of each product mix that
maximize profit.
The dual LP attempts to achieve production plan
that optimizes resource allocation so that each
product is produced at that quantity . where
marginal opportunity cost equals its marginal
return.
Thus, the main focus of dual is to find for each
resource its best marginal value or shadow price.
• This value reflects the scarcity of resources,
i.e., the maximum additional prices to be paid
to obtain one additional unit of the resources
to maximize profit under the resource
constraints.
• If resource is not completely used, i.e., there
is slack, then its marginal value is zero.
• Analysis of the dual can also enable a manager
to evaluate the potential impact of a new
product, and it can be used to determine the
marginal values of resources (i.e. constraints).
• Relative to a product, a manager would want to
know what impact of adding a new product
would have on the solution quantities and the
profit.
• Relative to resources, a manager can refer to a
dual solution to determine how much profit one
unit of each resource equivalent to.

• Generally speaking, the primal gives solution

results in terms of the amount of profit gained
from producing products, the dual provides
information on the value of the constrained
resources in achieving that profit.
 ? How many ways do we have to maximize
profit_____________________________________
_________________________________.
? Often the manager is less concerned about profit
than about the use of resource in dual. Do you
agree? Dear learner, would you discuss with your
classmates.________________________________
__________________________________________
__________________________________________
__________________________________________
________________________________
 Formulating the Dual
• There are two important forms of primal and
dual problems, namely the symmetrical and
the standard form.
• Symmetrical form
Rules and assumptions in formulating a dual LPP
1.If the primal’ objective is to minimize, the dual’s
will be to maximize; and the vice versa
2.The coefficient’s of the primal’s objective function
become the Right Hand Side (RHS) values for the
dual’s constraints.
3.The primal’s RHS values become the coefficients
of the dual’s objective function.
4.The coefficients of the first “row” of the primal’s
constraints become the coefficients of the first
“column” of the dual’s constraint …..
5.The ≤ constraints become ≥ and the vice versa.
• The number of decision variables in the primal
corresponds to the number of constraints in
the dual and vice versa.
• In order to transform a primal problem into its
dual, all constraints in a maximization problem
should be in < form, and every constraint
should be in > form in a minimization
problem.
Consider this Primal problem:
Minimize Z= 40x1 + 44x2 + 48x3
Subject to: 1x1 + 2x2 + 3x3 > 20
4x1 + 4x2 + 4x3 > 30
x1, x2, x3 > 0

The dual of this problem is:

Maximise Z = 20y1 + 30y2
Subject to:
1y1 + 4y2 < 40
2y1 + 4y2 < 44
       Primal       Dual  
Obj.   Min S.T. 40x1 +44x2 +48x3     Max 20y1 + 30y2  
S.T.
function
  1  20   1   
and
40

RHS 2  30   2 
     
values 44
            3   
48
      Primal       Dual  
Const   1 1x1 + 2x2 + 3x3    1 1y1 + 4y2 
coefficie
  2 4x1 + 4x2 + 4x3    2 2y1 + 4y2 
nts
            3 3y1 + 4y2 

                 
 Formulating the Dual when the Primal has Mixed
Constraints
• This is easier if all constraints in a max problem
are of the < variety, and in a min problem, every
constraint is of the > variety.
• To change the direction of a constraint, multiply
both sides of the constraints by -1. For ex:-1(2x1
+ 3x2 > 18) is -2x1-3x2 < -18
• If a constraint is an equality, it must be replaced
with two constraints, one with a < & with a >
sign. For instance,
4x1 + 5x2 = 20 will be replaced by:
4x1 + 5x2 < 20 & 4x1 + 5x2 > 20
• Then one of these must be multiplied by -1,
depending on whether the primal is maximization
or a minimization problem.
Exercise: Formulate the dual of this LP model.
Maximize z = 50x + 80x
Subject to:
C1 3x + 5x ≤ 45
C2 4x + 2x ≥16
C3 6x +6x = 30
x ,x ≥ 0
SOLUTION
•Since the problem is a max problem, put all the
constraints in to the ≤ form.
•Subsequently, C 2 and C3 will be first adjusted into ≤
constraints.
•C2 will be multiplied by -1:
-1(4x + 2x ≥16) becomes -4x - 2x ≤ -16
• C3 is equality, and must be restated as two
separate constraints.
•Thus, it becomes: 6x +6x ≤ 30 and 6x +6x ≥30.
•Then the second of these must be multiplied by-1. -
1(6x +6x ≥30) becomes -6x -6x ≤ -30
After making the above adjustments, rewrite the LP
model again. Maximize z = 50x + 80x …..S.T
C 3x + 5x ≤ 45
C -4x - 2x ≤ -16
C3 6x +6x ≤ 30
C4 -6x -6x ≤ -30
x,x ≥0
The dual of the above problem will be:
Minimize Z= 45y1 - 16y2 + 30y3 – 30y4
S.T
C1 3x1 -4x2 + 6x3 – 6x4 ≥ 50
C2 3x1 – 2x2 + 6x3 – 6x4 ≥ 80
y1, y2, y3, y4 ≥ 0
 Comparison of the Primal and Dual Simplex
Solutions

• To show that the flip-flopping of values

between the primal and the dual carries over
to their final simplex tableaus, let us look at
the following tables.
• The first table contains the final tableau for
the dual and the second one contains the final
tableau for the primal.
 Final tableau of Dual sol
the Microcomputer pro
C 100 22 39 0 0 M M
Basis Quantity
y1 y2 y3 s1 s2 a1 a2

y3 39 16/3 0 1 1/3 -2/3 -1/3 2/3 40/3

y2 22 -6 1 0 -1 1 1 -1 10
Z 76 22 39 -9 -4 9 4 740
Final tableau of Primal solution to

C-Z
24 0 0 9 4 9-M 4-M
the Microcomputer problem:

C 60 50 0 0 0 Quantity
Basis x1 x2 s1 s2 s3

s1 0 0 0 1 6 -16/3 24
x1 60 1 0 0 1 -1/3 9
x2 50 0 1 0 -1 2/3 4
Zj 60 50 0 10 40/3 740
 Economic Interpretation of Duality
• Suppose a firm has been approached by a
representative of a department store chain that
wants the firm to make microcomputers that will
be sold under the store’s brand name.
• The company has only a limited capacity for
producing computers, and therefore, must,
decide whether to produce its own computers or
produce computers for the department store.
• For convenience, the original problem is repeated
here: x1 = number of Model I computer
x2 = number of Model II computer
 Maximize 60x1 + 50x2
Subject to: Assembly time: 4x1 + 10x2 < 100
Inspection time: 2x1 + 1x2 < 22
Storage space: 3x1 + 3x2 < 39
x1, x2 >= 0
Value Received Resources Minimum Profit
Per Unit of Freed Up
Required Model I 4y1 + 2y2 + 3y3
$60
Model II the department store
Naturally, 10ywould
1 + 1y2want
+ 3y3 to minimize the use
$50of
the scarce resources, because the computer firm almost certainly
would base its charges on the amount of resources required.
Consequently, the objective function for the dual problem focuses on
minimizing the use of the scarce resources. Thus:
Minimize Z= 100y1 + 22y2 + 39y3
 Adding another Variable
• The concepts introduced in the preceding section also
can be applied to evaluating the feasibility of adding
another decision variable to the problem.
• Example, suppose the microcomputer firm is considering
a third model of microcomputer that will yield a profit of
Birr 70 per unit, and this will need resource requirements
of 8 hours of assembly time, 4 hours of inspection time,
and 5 cubic feet of storage space per unit. The dual
constraint for this model would be:

8y1 + 4y2 + 5y3 > 70

• Now, it is assumed that the profit contribution
of the third model is 70 birr, thus the store
department has decided that the additional
resource to be purchased for production should
cost less than 70 birr, which otherwise is un
necessary to produce the third model.
• Hence, this entails that the intention of firm is
to find the best price to be paid for the
additional resources.
• In order to determine if this new variable would
come into the optimal (primal) solution, we can
substitute the dual solution of y1 = 0, y2 = 10, and y3 =
40/3 (i.e., the shadow prices, or marginal values of
the resources) into this constraint to see if it would
be satisfied.
• Thus, we find, 8(0) + 4(10) + 5(40/3) = 106.67.
• Because this amount is greater than the new dual
constraint, the original solution remains optimal.
Hence, the new variable (x3) would not come into
solution. Conversely, if the dual constraint has not
been satisfied, the new variable would have come
into solution.
• In this instance, the marginal value of scarce
resources that would be required for the new
model exceeds the marginal contribution to profit
that the new model would provide.

• That is, Birr106.67 > Birr70.

• Thus, economic analysis is concerned with deciding

whether or not to secure more resource and how
much to pay for these additional resources.
 Managerial Significance of Duality
• The importance of the dual LP problem is explained
in terms of the information it provides about the
value of the resources.
• Thus, dual variables provides basis for deciding how
much to pay for additional unit of resources.
• The maximum amount that should be paid for one
additional unit of a resource is called its shadow
price.
• The total marginal value of the resources equals
the optimal objective function value.
• The dual variables equal the marginal value of
resources (shadow prices).
 Advantages of Duality
• The dual of a primal has less number of constraints,
i.e the number of constraints usually equals the
number of iterations required to solve the problem.
• It avoids the necessity of adding surplus or artificial
variables and solves the problem quickly.
• The dual variables provide an important economic
interpretation of the final solution of an LP
problem.
• It is quite useful when investigating change in the
parameters of an LP problem ( called Sensitivity
analysis).
 2. Sensitivity Analysis
• To proceed with sensitivity analysis, please,
remember the assumption of LP model.
• The model assumed that……………?

1. Technology is fixed;
2. Profit and/or cost contribution of product
mixes are certain and known;
3. consumption of resources per unit of
decision variables is known.
Are implicitly assumed constant and known
with certainty during a planning period.
• However, in reality the model parameters are
simply estimates that are subject to change.
• Hence, the manager tests the effects of change
in a parameter on the solution to the model.
• This is known as sensitivity analysis.
• It begins with the final simplex tableau.
• Its purpose is to explore how changes in any of
the parameters of a problem:
• the Right Hand Side (RHS) values;
• coefficients of the objective function; and
• coefficients of the constraints, would affect the
solution.
To demonstrate sensitivity analysis, the
microcomputer example will again be used.
Maximize Z= 60x1 + 50x2
S.T. Assembly time: 4x1 + 10x2 ≤ 100
Inspection time: 2x1 + 1x2 ≤ 22
Storage space: 3x1 + 3x2 ≤ 39
X1, X2 > = 0

In most cases the effect of changes in the

model can be determined directly from the
final simplex tableau.
1. Change in the RHS of a constraint:
To determine the effect of change in RHS or scarce
resource first examine the shadow price of the optimal
tableau.
The shadow prices are $0 for s1 (Assembly time), $10 for
s2 (Inspection time), and $40/3 for s3 (Storage space). i.e…
Cj 60 50 0 0 0 Quantity
Basis x1 x2 s1 s2 s3

s1 0 0 0 1 6 -16/3 24
x1 60 1 0 0 1 -1/3 9
x2 50 0 1 0 -1 2/3 4
Z 60 50 0 10 40/3 740
C-Z 0 0 Negatives
0 -10of shadow
-40/3 prices  
• A shadow price is a marginal value; it indicates the
impact that a one-unit change in the amount of a
constraint would have on the values of the
objective function.
• These tell us that an increase in the amount of
assembly time would have no effect on profit; if
inspection time is increased by one hour, it will
increase the profit by $10, and if storage space is
increased by 1 cubic foot, profit would increase by
$40/3.
• The reverse also holds. If we decrease them by such
respective amounts, the decrease in profit will take
the same figure.
• What shadow prices do not tell us is the extents
to which the level of a scarce resource can be
changed and still have the same impact per unit.
• The ability to use additional amounts of a
resource will disappear at some point because of
the fixed amounts of the other constraints.
• Therefore, we need to determine the range over
which we can change the right hand side
quantities and still have the same shadow price.
• This is called the range of feasibility, or the right
hand side range.
 Range of Feasibility
• The key to computing the range of feasibility for
the constraint lies in each slack column of the
final simplex tableau.
• To compute the range for each constraint, the
entries in the associated slack column must be
divided into the values in the Quantity column.
• ex., in our case the resulting ratios for S3 =39 are:
24 9 4
-16/3 =-4.5, -1/3 =-27 , 2/3 = +6
Maximization Rules of upper and lower limit decision:
Allowable decrease: The smallest positive ratio
Allowable increase: Negative ratio closest to zero.
• Accordingly, the range of feasibility for the S3
contraint change is 33 < 39 < 43.5.
i.e. 39-6 < 39 < 39+4.5
• Dear Learners do the RHS range of feasibility for
S1 and S2?
• Some times changes on the RHS may be considered
by the manager for given amount. In such cases,
the contemplated change should be within the
feasibility range.
Example:
• The manager in the microcomputer problem is
contemplating a change in the level of the storage
constraint – an increase of 3 cubic feet. Determine
the revised optimal solution for the change.
Solution
• First, note that an increase of 3 cubic feet is within
the range. Then, the effect of an increase of three
cubic feet is computed in the following way:
Basis s3 Current solution Change Revised solution
s1 -16/3 24 3(-16/3)= -16 8
x1 -⅓ 9 3(-⅓) = -1 8
x2 ⅔ 4 3(⅔) = +2 6
Z 40/3 740 3(40/3) = +40 780
 2. A Change in an Objective Function Coefficient
• It is useful to know how much the contribution of
a given decision variable to the objective function
can change without changing the optimal
solution.
• There are two cases:
A.Range of insignificance : changes for a variable
that is not currently in the solution mix, and
B.Range of Optimality: changes for a variable that is
currently in the solution mix.
A. Range of Insignificance:
•If a variable is not currently in the solution in a
maximization problem, its objective function
coefficient would have to increase by an amount
that exceeds the C-Z value for that variable in the
final tableau in order for it to end up as a basic
variable in the optimal solution.
•The range over which a non-basic variable’s
objective function coefficient can change without
causing that variable to enter the solution mix is
called its range of insignificance.
 C 3 2 5 0 0 0  
Basis x1 x2 x3 s s s Quantity
s 0 0 0 0 1 1/5 -4/5 4/5
x1 3 1
132
0 2 0 3/5 -2/5 12/5
x2 2 0 1 0 0 -2/5 3/5 12/5
Z 3 2 6 0 1 0 12
C-Z 0 0 -1 0 -1 0  
• The amount of increase must not be greater than
the absolute value of its c-z value, which is │-1│.
Therefore, its objective function coefficient must
not increase by more than 1.
• Hence, the range of insignificance for x3 is 6 or
less (i.e, its Z value).
• In general the rule is: Range of insignificance for a
non- basic variable is  the Z value of the
variable.
• The allowable increase is the absolute value of its
own C- Z value.
B. Range of Optimality
•It is the range over which objective function
coefficient of a variable that is in solution can
change without changing the optimal values of the
decision variables.
•Note, however, that such a change would change
the optimal value of the objective function.
•For variables that are in solution, the determination
of the range of optimality (the range over which the
objective function coefficient of a variable can
change without changing the optimal values of the
decision variables) requires a different approach.
• Divide the values in row C-Z by the
corresponding row values of the variable in
question and follow the following rule for both
maximization and minimization problems:
Allowable increase: The smallest positive ratio of C-Z
value and the variable’s substitution rate.
Allowable decrease: the smallest negative ratio of C-Z
value and the variable’s substitution rate.

Note: If there is no positive ratio, it means that

there is no upper limit on that variable’s objective
function coefficient.
 • Example: Determine the range of optimality for the
decision variable “X1” in the microcomputer problem.
• Solution: The final simplex tableau for that problem is
repeated here for convenience.
Cj 60 50 0 0 0  
Basis x1 x2 s1 s2 s3 Quantit
y
s1 0 0 0 1 6 -16/3 24
x1 60 1 0 0 1 -1/3 9
x2 50 0 1 0 -1 2/3 4
Z 60 50 0 10 40/3 740
For x1 we
C-Zfind: 0 0 0 -10 -40/3  
Column x1 x2 s 1
s2 s
3 =
C-Z value /X1= 0/1 = 0 0/0 = Undefined 0/0 = Undefined -10/1 = -10 -40/3 /-1/3
• The smallest positive ration is +40. Therefore, the
coefficient of X1 can be increased by Birr 40 without
changing the optimal solution.
• Thus, its upper end limit is (Birr60 +Birr40) = Birr100.
• The smallest negative ratio is -10; therefore, the x 1
coefficient can be decreased by as much as Birr10
from its current value, making the lower end limit of
the range equal to (Birr60 - Birr10 )= Birr 50.
• Therefore, the range of optimality of Cj for decision
variable X1 is 50 < Cj < 100.
• Determine the range of optimality for the
decision variable “X2” in the microcomputer
problem.
THE
END