LINEAR PROGRAMMING:
MODEL FORMULATION
AND COMPUTER
SOLUTION
JOEREMY L. CONCEPCION, CPA
• Objectives of business decisions frequently
OVERVIEW involve maximizing profit or minimizing
costs.
• Linear programming uses linear algebraic
relationships to represent a firm’s decisions,
given a business objective, and resource
constraints.
LINEAR PROGRAMMING
• Steps in application:
1. Identify problem as solvable by linear
programming.
2. Formulate a mathematical model of the
2
MODEL
FORMULATION
MODEL COMPONENTS
LINEAR PROGRAMMING
Decision Variable Objective Constraints Parameters
Function
MODEL COMPONENTS
LINEAR PROGRAMMING
Objective
Constraints
Decision Variable
Parameters
Function
MODEL COMPONENTS
mathematical symbols
representing levels of
activity by the firm.
LINEAR PROGRAMMING
Objective
Constraints
Parameters Decision Variable
Function
MODEL COMPONENTS
a linear mathematical
relationship describing an
objective of the firm, in
terms of decision variables
- this function is to be
maximized or minimized.
LINEAR PROGRAMMING
Decision
Constraints
Variable
Parameters Objective
Function
MODEL COMPONENTS
requirements or restrictions
placed on the firm by the
operating environment,
stated in linear
relationships of the
decision variables.
LINEAR PROGRAMMING
Decision
Objective
Variable
Parameters Constraints
Function
MODEL COMPONENTS
numerical coefficients
and constants used in
the objective function
and constraints.
LINEAR PROGRAMMING
Constraints
Decision
Objective
Variable Parameters
Function
MODEL FORMULATION STEPS
STEP 2
STEP 1 STEP 3
Define the
Define the
Define the decision
objective
variables. constraints.
LINEAR PROGRAMMING
function.
10
MODEL FORMULATION STEPS
STEP 2
STEP 1 STEP 3
Define the
Define the decision Define the
objective
variables. constraints.
LINEAR PROGRAMMING
function.
11
MODEL FORMULATION STEPS
STEP 2
STEP 1 STEP 3
Define the
Define the decision Define the
objective
variables. constraints.
LINEAR PROGRAMMING
function.
12
MAXIMIZATION MODEL EXAMPLE
HAIRY POTTER COMPANY
Resource Requirements:
▪ Product mix problem – Hairy Potter Company
▪ How many bowls and mugs should be produced per day to maximize profits given
labor and materials constraints?
▪ Product resource requirements and unit profit:
Clay Labor Profit
Product
(lb/unit) (Hour/unit) ($/unit)
LINEAR PROGRAMMING
Bowl 4 lb 1 hr 40
Mug 3 lb 2 hr 50
▪ Resource availability/constraints:
Resource Availability
Clay 120 lbs
Labor 40 hours/day
13
HAIRY POTTER –
MANUAL SOLUTION
LINEAR PROGRAMMING
14
HAIRY POTTER – MANUAL SOLUTION
STEP 1: DEFINE DECISION VARIABLES
Decision variables:
x = number of bowls to produce per day
y = number of mugs to produce per day
STEP 2: DEFINE THE OBJECTIVE FUNCTION
Objective function:
Maximize Z = $40x + $50y Clay material constraint
Where Z = profit per day
STEP 3: DEFINE THE CONSTRAINTS Labor constraint
Define the constraints:
4x + 3y ≤ 120
1x + 2y ≤ 40
x, y ≥ 0
HAIRY POTTER – MANUAL SOLUTION
FORMAL MODEL CONSTRUCTION:
Maximize Z = $40x + $50y
Subject to: 4x + 3y ≤ 120
1x + 2y ≤ 40
x, y ≥ 0
HAIRY POTTER – MANUAL SOLUTION
LINEAR PROGRAMMING – MANUAL SOLUTION
Step 1: Use constraint equations
4x + 3y = 120
1x + 2y = 40
Step 2: Find the value of either x or y by subtraction of algebraic
expression. (Suppose value of y should be solved first):
Make the both Xs in the two equations equal by multiplying
the labor constraint by 4:
4 x (1x + 2y = 40) 4x + 8y = 160
LINEAR PROGRAMMING – MANUAL SOLUTION
Step 1: Use constraint equations
4x + 3y = 120
1x + 2y = 40
Step 2: Find the value of either x or y by subtraction of algebraic expression. (Suppose
value of y should be solved first):
Make the both Xs in the two equations equal by multiplying the labor constraint by
4:
4 x (1x + 2y = 40) 4x + 8y = 160
Step 3: Subtract the algebraic expressions.
4x + 3y = 120 -5y = -40
-
4x + 8y = 160 y =8
0x - 5y = -40
LINEAR PROGRAMMING – MANUAL SOLUTION
Step 1: Use constraint equations
4x + 3y = 120
1x + 2y = 40
Step 2: Find the value of either x or y by subtraction of algebraic expression. (Suppose
value of y should be solved first):
Make the both Xs in the two equations equal by multiplying the labor constraint by
4:
4 x (1x + 2y = 40) 4x + 8y = 160
Therefore, the
optimal production
Step 3: Subtract the algebraic expressions.
would be to produce
4x + 3y = 120 -5y = -40
24 bowls and 8 mugs
4x + 8y = 160 y=8
per day.
0x - 5y = -40
Step 4: Substitute the value of y on any of the constraint equation.
4x + 3y = 120; where y = 8
4x + 3(8) = 120
x = 24
LINEAR PROGRAMMING – MANUAL SOLUTION
Step 5: Substitute it into the objective function.
Z = $40x + $50y ; where x=24 and y=8
Z = ($40)(24) + ($50)(8)
Z = $960 + $400
Z = $1,360
The most optimal production of 24 bowls and 8 mugs would yield a
maximized profit of $1,360.
HAIRY POTTER –
COMPUTER SOLUTION
(EXCEL SOLVER)
PRESENTATION TITLE
21
STEP 1:
INSTALL
SOLVER ADD-IN
ON MS EXCEL
LINEAR PROGRAMMING
22
HAIRY POTTER – COMPUTER
SOLUTION
LINEAR PROGRAMMING
24
TRY IT ON
YOUR OWN!
25 LINEAR PROGRAMMING
G TECHS COMPANY - SOLUTION
MODEL CONSTRUCTION:
Maximize Z = $13.10x1+ $9.25x2 + $ 6.50x3
Subject to 0.45x1 + 0.3x2 + 0.2x3 ≤ 10,000
0.04x1 + 0.055x2 + 0.04x3 ≤ 1,700
x1 ≤ 12,000
x2 ≤ 20,000
LINEAR PROGRAMMING
x3 ≤ 9,000
x1,x2,x3 ≥ 0
26
G-TECHS COMPANY - SOLUTION
LINEAR PROGRAMMING
27
POPO COMPANY - SOLUTION
MODEL CONSTRUCTION:
Maximize Z = $150A + $95B + $100C
Subject to $100A + $175B + $200C ≤ $100,000
3.5A + 1A + 1.5C ≤ 1,200
A ≥ 50
B ≥ 50
LINEAR PROGRAMMING
C ≥ 50
A,B,C ≥ 0
28
POPO COMPANY - SOLUTION
LINEAR PROGRAMMING
29
MINIMIZATION
PROBLEM
USING
SOLVER
MINIMIZATION MODEL EXAMPLE
LUMAKI SA FARM FERTILIZER COMPANY
▪ Two brands of fertilizer available – Super-gro, Crop-quick
▪ Field requires at least 16 pounds of nitrogen and 24 pounds of phosphate.
▪ Super-gro costs $6 per bag, Crop-quick $3 per bag
▪ Problem: How much of each brand to purchase to minimize total cost of
fertilizer given following data:
LINEAR PROGRAMMING
Brand Nitrogen (lb/bag) Phospate(lb/bag)
Super-gro 2 lb 4 lb
Crop-quick 4 lb 3 lb
31
HAIRY POTTER – MANUAL SOLUTION
FORMAL MODEL CONSTRUCTION:
Minimize Z = $6x + $3y
Subject to: 2x + 4y ≥ 16 lb. of nitrogen
4x + 3y ≥ 24 lb. of phospate
x, y ≥ 0
Where x = super-gro; and y = crop-quick
LUMAKI SA FARM COMPANY -
SOLUTION
LINEAR PROGRAMMING
33
THANK YOU!
ANY QUESTIONS?
LINEAR PROGRAMMING
34
