Ch 1 Linear Programming

Graphical Method &

Excel Solver

1
 History of Linear Programming

 1912-1986, Leonid Kantorovich

Optimal allocation of resources

 1911-1991, George Stigler

Nobel Prize in Economics
Diet problems

 1914-2005, George Dantzig

Simplex algorithm

2
 Introduction

 Many management decisions involve trying to make the most

effective use of limited resources
– Machinery, labor, money, time, warehouse space, raw materials
 Linear programming (LP) is a widely used mathematical
modeling technique designed to help managers in planning and
decision making relative to resource allocation
 Belongs to the broader field of mathematical programming
 In this sense, programming refers to modeling and solving a
problem mathematically

3
 Application of Linear Programming

 Applications of Linear Programming

– Marketing Research
– Production Mix
– Financial portfolio selection
– Diet problem
– Transportation problem
– Transshipment problem
– Assignment Modeling

4
 Requirements of a Linear Programming
Problem

 All LP problems have 4 properties in common

1. All problems seek to maximize or minimize some quantity (the
objective function)
2. The presence of restrictions or constraints that limit the
degree to which we can pursue our objective
3. There must be alternative courses of action to choose from
4. The objective and constraints in problems must be expressed
in terms of linear equations or inequalities

5
 LP Properties and Assumptions
Table 1.1
PROPERTIES OF LINEAR PROGRAMS
1. One objective function
2. One or more constraints
3. Alternative courses of action
4. Objective function and constraints are linear
ASSUMPTIONS OF LP
1. Certainty
2. Proportionality
3. Additivity
4. Divisibility
6 5. Nonnegative variables
 Basic Assumptions of LP

 We assume conditions of certainty exist and numbers in the

objective and constraints are known with certainty and do not
change during the period being studied
 We assume proportionality exists in the objective and constraints
 We assume additivity in that the total of all activities equals the
sum of the individual activities
 We assume divisibility in that solutions need not be whole
numbers
 All answers or variables are nonnegative

7
 Formulating LP Problems

 Formulating a linear program involves developing a

mathematical model to represent the managerial problem
 The steps in formulating a linear program are
1. Completely understand the managerial problem being faced
2. Identify the objective and constraints
3. Define the decision variables
4. Use the decision variables to write mathematical
expressions for the objective function and the constraints

8
 Formulating LP Problems

 One of the most common LP applications is the

product mix problem
 Two or more products are produced using limited resources
such as personnel, machines, and raw materials
 The profit that the firm seeks to maximize is based on the
profit contribution per unit of each product
 The company would like to determine how many units of each
product it should produce so as to maximize overall profit
given its limited resources

9
 Flair Furniture Company

 The Flair Furniture Company produces inexpensive tables

and chairs
 Processes are similar in that both require a certain amount of
hours of carpentry work and in the painting and varnishing
department
 Each table takes 4 hours of carpentry and 2 hours of painting
and varnishing
 Each chair requires 3 of carpentry and 1 hour of painting and
varnishing
 There are 240 hours of carpentry time available and 100
hours of painting and varnishing
 Each table yields a profit of $70 and each chair a profit of $50
10
 Flair Furniture Company

 The company wants to determine the best combination of tables

and chairs to produce to reach the maximum profit
Table 1.2
HOURS REQUIRED TO
PRODUCE 1 UNIT
(C) AVAILABLE HOURS
DEPARTMENT (T) TABLES CHAIRS THIS WEEK
Carpentry 4 3 240

Painting and varnishing 2 1 100

Profit per unit $70 $50

11
 Flair Furniture Company

 The objective is to
Maximize profit
 The constraints are
1. The hours of carpentry time used cannot exceed 240
hours per week
2. The hours of painting and varnishing time used cannot
exceed 100 hours per week
 The decision variables representing the actual decisions we
will make are
T = number of tables to be produced per week
C = number of chairs to be produced per week
12
 Flair Furniture Company

 We create the LP objective function in terms of T and C

Maximize profit = $70T + $50C

 Develop mathematical relationships for the two constraints

 For carpentry, total time used is
(4 hours per table)(Number of tables produced)
+ (3 hours per chair)(Number of chairs produced)
 We know that
Carpentry time used ≤ Carpentry time available
4T + 3C ≤ 240 (hours of carpentry time)
13
 Flair Furniture Company

 Similarly
Painting and varnishing time used
≤ Painting and varnishing time available
2 T + 1C ≤ 100 (hours of painting and varnishing time)

This means that each table produced

requires two hours of painting and
varnishing time

 Both of these constraints restrict production capacity and affect

total profit
14
 Flair Furniture Company
 The values for T and C must be nonnegative
T ≥ 0 (number of tables produced is greater than or equal
to 0)
C ≥ 0 (number of chairs produced is greater than or equal
to 0)
 The complete problem stated mathematically

Maximize profit = $70T + $50C

subject to
4T + 3C ≤ 240 (carpentry constraint)
2T + 1C ≤ 100 (painting and varnishing constraint)
T, C ≥ 0 (nonnegativity constraint)
15
 Graphical Solution to an LP Problem

 The easiest way to solve a small LP problems is with

the graphical solution approach
 The graphical method only works when there are just
two decision variables
 When there are more than two variables, a more
complex approach is needed as it is not possible to
plot the solution on a two-dimensional graph
 The graphical method provides valuable insight into
how other approaches work

16
 Graphical Representation of a Constraint

C
This Axis Represents the Constraint T ≥ 0
100 –
–
80 –
Number of Chairs

–
60 –
–
This Axis Represents the
40 – Constraint C ≥ 0
–
20 –
–
|– | | | | | | | | | | |
Figure 1.1 0 20 40 60 80 100 T
17 Number of Tables
 Graphical Representation of a Constraint

 The first step in solving the problem is to identify a

set or region of feasible solutions
 To do this we plot each constraint equation on a
graph
 We start by graphing the equality portion of the
constraint equations
4T + 3C = 240
 We solve for the axis intercepts and draw the line

18
 Graphical Representation of a Constraint

 When Flair produces no tables, the carpentry

constraint is
4(0) + 3C = 240
3C = 240
C = 80
 Similarly for no chairs
4T + 3(0) = 240
4T = 240
T = 60
 This line is shown on the following graph

19
 Graphical Representation of a Constraint

C
Graph of carpentry constraint equation
100 –
–
80 –
Number of Chairs

(T = 0, C = 80)
–
60 –
–
40 –
–
(T = 60, C = 0)
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
20 Figure 1.2 Number of Tables
 Graphical Representation of a Constraint

C  Any point on or below the constraint

plot will not violate the restriction
100 –
 Any point above the plot will violate
– the restriction
80 –
Number of Chairs

–
60 –
–
(30, 40) (70, 40)
40 –
–
20 –
– (30, 20)
|– | | | | | | | | | | |
0 20 40 60 80 100
21 Figure 1.3 T
Number of Tables
 Graphical Representation of a Constraint

 The point (30, 40) lies on the plot and exactly satisfies
the constraint
4(30) + 3(40) = 240
 The point (30, 20) lies below the plot and satisfies the
constraint
4(30) + 3(20) = 180
 The point (70, 40) lies above the plot and does not
satisfy the constraint
4(70) + 3(40) = 400
22
 Graphical Representation of a Constraint

100 – (T = 0, C = 100)
–
80 –
Number of Chairs

Graph of painting and varnishing

– constraint equation
60 –
–
40 –
–
(T = 50, C = 0)
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
23 Figure 1.4
Number of Tables
 Graphical Representation of a Constraint

 To produce tables and chairs, both departments must be used

 We need to find a solution that satisfies both constraints
simultaneously
 A new graph shows both constraint plots
 The feasible region (or area of feasible solutions) is where all
constraints are satisfied
 Any point inside this region is a feasible solution
 Any point outside the region is an infeasible solution

24
 Graphical Representation of a Constraint

C
 Feasible solution region for Flair Furniture
100 –
–
80 –
Number of Chairs

Painting/Varnishing Constraint
–
60 –
–
40 –
–
Carpentry Constraint
20 – Feasible
– Region
|– | | | | | | | | | | |
0 20 40 60 80 100 T
25 Figure 1.5
Number of Tables
 Graphical Representation of a Constraint

 For the point (30, 20)

Carpentry 4T + 3C ≤ 240 hours available

constraint (4)(30) + (3)(20) = 180 hours used 
Painting 2T + 1C ≤ 100 hours available
constraint (2)(30) + (1)(20) = 80 hours used


 For the point (70, 40)

Carpentry 4T + 3C ≤ 240 hours available
constraint (4)(70) + (3)(40) = 400 hours used 
Painting 2T + 1C ≤ 100 hours available

26
constraint (2)(70) + (1)(40) = 180 hours used 
 Graphical Representation of a Constraint

 For the point (50, 5)

Carpentry 4T + 3C ≤ 240 hours available

constraint (4)(50) + (3)(5) = 215 hours used 
Painting 2T + 1C ≤ 100 hours available
constraint (2)(50) + (1)(5) = 105 hours used 

27
 Isoprofit Line Solution Method

 Once the feasible region has been graphed, we need to find the
optimal solution from the many possible solutions
 The speediest way to do this is to use the isoprofit line method
 Starting with a small but possible profit value, we graph the
objective function
 We move the objective function line in the direction of increasing
profit while maintaining the slope
 The last point it touches in the feasible region is the optimal
solution

28
 Isoprofit Line Solution Method

 For Flair Furniture, choose a profit of $2,100

 The objective function is then
$2,100 = 70T + 50C
 Solving for the axis intercepts, we can draw the graph
 This is obviously not the best possible solution
 Further graphs can be created using larger profits
 The further we move from the origin, the larger the profit will be
 The highest profit ($4,100) will be generated when the isoprofit
line passes through the point (30, 40)

29
 Isoprofit Line Solution Method
C
 Isoprofit line at $2,100
100 –
–
80 –
Number of Chairs

–
60 –
– $2,100 = $70T + $50C
(0, 42)
40 –
–
(30, 0)
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
30 Figure 1.6 Number of Tables
 Isoprofit Line Solution Method
C
 Four isoprofit lines
100 –
–
$3,500 = $70T + $50C
80 –
Number of Chairs

– $2,800 = $70T + $50C

60 –
– $2,100 = $70T + $50C
40 –
– $4,200 = $70T + $50C
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
31 Figure 1.7 Number of Tables
 Isoprofit Line Solution Method
C
 Optimal solution to the
100 – Flair Furniture problem
–
80 –
Number of Chairs

Maximum Profit Line

–
60 – Optimal Solution Point
– (T = 30, C = 40)
40 –
– $4,100 = $70T + $50C
20 –
–
|– | | | | | | | | | | |
0 20 40 60 80 100 T
32 Figure 1.8
Number of Tables
 Corner Point Solution Method

 A second approach to solving LP problems employs

the corner point method
 It involves looking at the profit at every corner point of
the feasible region
 The mathematical theory behind LP is that the optimal
solution must lie at one of the corner points, or
extreme point, in the feasible region
 For Flair Furniture, the feasible region is a four-sided
polygon with four corner points labeled 1, 2, 3, and 4
on the graph
33
 Corner Point Solution Method
C
 Four corner points of
100 – the feasible region
2 –
80 –
Number of Chairs

–
60 –
–
3
40 –
–
20 –
–
1 |– | | | | | | | | | | |
0 20 40 60 80 100 T
34 4
Figure 1.9
Number of Tables
 Corner Point Solution Method

Point 1 : (T = 0, C = 0) Profit = $70(0) + $50(0) = $0

Point 2 : (T = 0, C = 80) Profit = $70(0) + $50(80) = $4,000
Point 4 : (T = 50, C = 0) Profit = $70(50) + $50(0) = $3,500
Point 3 : (T = 30, C = 40) Profit = $70(30) + $50(40) = $4,100

 Because Point 3 returns the highest profit, this is the

optimal solution
 To find the coordinates for Point 3 accurately we
have to solve for the intersection of the two constraint
lines

35
 Corner Point Solution Method

 Using the simultaneous equations method, we multiply

the painting equation by –2 and add it to the carpentry
equation
4T + 3C = 240 (carpentry line)
– 4T – 2C = –200 (painting line)
C = 40
 Substituting 40 for C in either of the original equations
allows us to determine the value of T
4T + (3)(40) = 240 (carpentry line)
4T + 120 = 240
36 T = 30
 Summary of Graphical Solution Methods
Table 1.3
ISOPROFIT METHOD
1. Graph all constraints and find the feasible region.
2. Select a specific profit (or cost) line and graph it to find the slope.
3. Move the objective function line in the direction of increasing profit (or decreasing
cost) while maintaining the slope. The last point it touches in the feasible region is
the optimal solution.
4. Find the values of the decision variables at this last point and compute the profit
(or cost).
CORNER POINT METHOD
1. Graph all constraints and find the feasible region.
2. Find the corner points of the feasible reason.
3. Compute the profit (or cost) at each of the feasible corner points.
4. select the corner point with the best value of the objective function found in Step 3.
37 This is the optimal solution.
 Using Excel’s Solver Command to Solve LP
Problems

 The Solver tool in Excel can be used to find solutions to

 LP problems
 Integer programming problems
 Non-integer programming problems
 Solver may be sensitive to the initial values it uses
 Solver is limited to 200 variables and 100 constraints
 It can be used for small real world problems

38
 Using Solver to Solve the Flair Furniture
Problem

 Recall the model for Flair Furniture is

Maximize profit = $70T + $50C

Subject to 4T + 3C ≤ 240
2T + 1C ≤ 100
 To use Solver, it is necessary to enter formulas based
on the initial model
 Program 1.2A shows how the data and formulas are
entered into Solver to solve this problem
 The following slide details the steps in creating the
Solver model
39
 Using Solver to Solve the Flair Furniture
Problem
Program 1.2A

40
 Using Solver to Solve the Flair Furniture
Problem

1. Enter the variable names and the coefficients for the objective
function and constraints
2. Specify cells where the values of the variables will be located
3. Write a formula to compute the value of the objective function
4. Write formulas to compute the left-hand sides of the constraints
5. Indicate constraint signs (≤, =, and ≥) for display purposes only
6. Input the right-hand side values for each constraint
7. If desired, write a formula for the slack of each constraint

41
 Using Solver to Solve the Flair Furniture
Problem

 Once the model has been entered, the following steps can be used to
solve the problem

1A. In Excel 2003, select Tools—Solver

1B. In Excel 2007, select the Data tab and then select Solver in the
Analysis group

If Solver does not appear in the indicated place, follow the installation
instructions in the text

2. Once Solver has been selected, a window will open for the input of the
Solver Parameters. Move the cursor to the Set Target Cell box and fill
in the cell that is used to calculate the value of the objective function.
42
 Using Solver to Solve the Flair Furniture
Problem

3. Move the cursor to the By Changing Cells box and input the cells that
will contain the values for the variables
4. Move the cursor to the Subject to the Constraints box, and then select
Add

Program 1.2B
43
 Using Solver to Solve the Flair Furniture
Problem

5. The Cell Reference box is for the range of cells that contain the left-
hand sides of the constraints

6. Click the ≤ to change the type of constraint if necessary (If there had
been some ≥ or = constraints in addition to the ≤ constraints, it would be
best to input all of one type [e.g., ≤] first, and then select Add to input
the other type of constraint)

7. Move the cursor to the Constraint box to input the right-hand sides of
the constraints. Click Add to finish this set of constraints and begin
inputting another set, or click OK if there are no other constraints to add.

44
 Using Solver to Solve the Flair Furniture
Problem

8. In the Solver Parameters window, click Options and check Assume

Linear Model and check Assume Non-negative, then click OK

9. Review the information in the Solver window to make sure it is correct,

and click Solve

10. The Solver Solutions window is displayed and indicates that a solution
was found. Select Keep Solver Solution, and the values in the
spreadsheet will be kept at the optimal solution. You may select what
sort of additional information (e.g., Sensitivity) is to be presented from
the reports Window.

45
 Using Solver to Solve the Flair Furniture
Problem

46 Program 1.2C
 Using Solver to Solve the Flair Furniture
Problem

47 Program 1.2D
 Using Solver to Solve the Flair Furniture
Problem
 Excel’s answer report for the Flair Furniture problem

48 Program 1.2E