Introduction

A key problem faced by managers of a business firm is how to allocate scarce

resources among activities or projects. One of the most frequent objectives of business
firms is to gain more profit or to maximize profit while the objective of an individual
organizational units within the firm is often to minimize the cost. Linear programming is
a method of allocating resources in an optimal way. It is one of the most widely used
operations research (OR) tools. It has been used successfully as a decision-making aid
in almost all industries, and in financial and service organizations.
There are three steps in applying the linear programming technique. First, the
problem must be identified as being solvable by linear programming. Second, the
unstructured problem must be formulated as a mathematical model. Lastly, the model
must be solved by using established mathematical techniques
Programming refers to mathematical programming. In this context, it refers to a
planning process that allocates resources—labor, materials, machines, and capital—in
the best possible (optimal) way so that costs are minimized and profits are maximized.
In Linear programming, these resources are known as decision variables. The criterion
for selecting the best values of the decision variables (e.g., to maximize profits or
minimize costs) is known as the objective function. The limitations on resource
availability form what is known as a constraint set.
The common region determined by all the constraints including the non-negative
constraints x ≥ 0, y ≥ 0 of a linear programming problem is called the feasible region (or
solution region) for the problem. The points within and on the boundary of the feasible
region represent feasible solutions of the constraints while any point outside the feasible
region is an infeasible solution. Additionally, any point in the feasible region that gives
the optimal value (maximum or minimum) of the objective function is called an optimal
solution.

One type of linear programming is graphical method. It is limited to linear

programming models containing only two decision variables and it is valuable because it
produces a picture of the optimization process. That picture may make it easier to
interpret what occurs during an optimization procedure. However, the graphical method
is more difficult when there are three dimensions and impossible when there are more
than three dimensions, so we can use it only for relatively simple cases. Nevertheless,
two-dimensional examples illustrate most of the principles of linear programming.

Highlighted insights

Graphical method: If the linear programming problem is two variable problems, it can
be solved graphically. The steps required for solving a linear programming problem by
graphic method are:
1. Formulate the problem into a linear programming problem.
2. Each inequality in the constraints may be written as equality.
3. Draw straight lines corresponding to the equations obtained in step 2. So
there will be as many straight lines as there are questions.
4. Identify the feasible region. Feasible region is the area which satisfies all
constraints simultaneously.
5. The permissible region or feasible region is a many sided figure. The corner
points of the figure are to be located and their co-ordinates are to be
measured.

Application of Linear Programming:

The primary reason for using linear programming methodology is to ensure that
limited resources are utilized to the fullest extent without any waste and that utilization is
made in such a way that the outcomes are expected to be the best possible. Some of
the examples of linear programming are:
a. A production manager planning to produce various products with the given
resources of raw materials, man-hours, and machine-time for each product
must determine how many products and quantities of each product to
produce so as to maximize the total profit.
 b. An investor has a limited capital to invest in a number of securities such as
stocks and bonds. He can use linear programming approach to establish a
portfolio of stocks and bonds so as to maximize return at a given level of risk.
c. A marketing manager has at his disposal a budget for advertisement in such
media as newspapers, magazines, radio and television. The manager would
like to determine the extent of media mix which would maximize the
advertising effectiveness.
d. A Farm has inventories of a number of items stored in warehouses located in
different parts of the country that are intended to serve various markets.
Within the constraints of the demand for the products and location of markets,
the company would like to determine which warehouse should ship which
product and how much of it to each market so that the total cost of shipment
is minimized.

Advantages of Linear Programming:

 Provide the best allocation of available resources.
 Meet overall objectives of the management.
 Provide clarity of thought and better appreciation of problem.
 Put across our view points more successfully by logical argument supported
by scientific methods.
 It helps decision - makers to use their productive resource effectively.
 The decision-making approach of the user becomes more objective and less
subjective.
 In a production process, bottle necks may occur. For example, in a factory
some machines may be in great demand while others may lie idle for some
time. A significant advantage of linear programming is highlighting of such
bottle necks.

Disadvantages of Linear Programming:

  Linear programming is applicable only to problems where the constraints and
objective function are linear i.e., where they can be expressed as equations
which represent straight lines. In real life situations, when constraints or
objective functions are not linear, this technique cannot be used.
 Factors such as uncertainty and time are not taken into consideration.
 Parameters in the model are assumed to be constant but in real life situations
they are not constants.
 Linear programming deals with only single objective, whereas in real life
situations may have multiple and conflicting objectives.
 In solving a LPP there is no guarantee that we get an integer value. In some
cases of no of men/machine a non-integer value is meaningless.

SAMPLE PROBLEMS:
1. Maximization Model
Beaver Creek Pottery Company is a small crafts operation run by a Native
American tribal council. The company employs skilled artisans to produce clay bowls
and mugs with authentic Native American designs and colors. The two primary
resources used by the company are special pottery clay and skilled labor. Given these
limited resources, the company desires to know how many bowls and mugs to produce
each day in order to maximize profit. The two products have the following resource
requirements for production and profit per item produced (i.e., the model parameters):

Product Labor Clay Profit

(hr/unit) (lb/unit) ($/unit)
Bowl 1 4 40
Mug 2 3 50

There are 40 hours of labor and 120 pounds of clay available each day for production.

Resource availability: 40 hrs of labor per day

120 lbs of clay
Decision Variables: x1 = number of bowls to produce per day
x2 = number of mugs to produce per day
Objective function: Maximize Z = $40x1 + $50x2
Resource Constraints: 1x1 + 2x2  40 hours of labor
4x1 + 3x2  120 pounds of clay
Non-Negativity constraints: x1  0; x2  0

SOLUTION:

If x1 = 0 If x1 = 0
1x1 + 2x2  40 4x1 + 3x2  120
1x1 + 2x2 = 40 4x1 + 3x2 = 120
1(0) + 2x2 = 40 4(0) + 3x2 = 120
2x2 = 40 3x2 = 120
x2 = 20 x2 = 40
(0,20) (0,40)

if x2 = 0 if x2 = 0
1x1 + 2(0) = 40 4x1 + 3(0) = 120
x1= 40 4x1= 120
(40,0) x1= 30
(30,0)

A (0,20) B=? C (30,0) Figure 1. Graph of both constraints

Solve for B:
Step1. Convert both equations to functions of x1:
Eq1. 1x1 + 2x2 = 40 Eq2. 4x1 + 3x2 = 120
x1 = 40 –2x2 4x1 = 120 – 3x2
x1 = 30 – (3x2/4)
Step2. Equate both equations to solve for x2:
40 – 2x2 = 30 – (3x2/4)
5x2/4 = 10
x2 = 8
Figure 2. Graph of Optimal solution coordinates

Step3. Substitute in any equation the value of x2:

x1 = 40 –2x2 x1 = 30 – (3x2/4)
 = 40 – 2(8) = 30 – (3(8)/4)
= 40 – 16 = 30 – (24/4)
= 24 = 30 – 6
= 24 ; therefore, B(24,8)

Step4. Solve for optimal solution by the substituting the values of points A, B and C to
the objective function: Maximize Z = $40x1 + $50x2

A(0,20)
Maximize Z = 40x1 + 50x2
= 40(0) + 50(20)
= 1,000
B(24,8)
Maximize Z = 40x1 + 50x2
= 40(24) + 50(8)
= 1,360
C(30,0)
Optimal solution
Maximize Z = 40x1 + 50x2
= 40(30) + 50(0)
= 1,200

Figure 3. Solutions at All Corner Points

2. Minimization Model
The farmer’s field requires at least 16 pounds of nitrogen and at least 24 pounds
of phosphate. Super-gro costs $6 per bag, and Crop-quick costs $3. The farmer wants
to know how many bags of each brand to purchase in order to minimize the total cost of
fertilizing.
Brand Nitrogen Phosphate
(lb/bag) (lb/bag)
Super-gro 2 4
Crop-quick 4 3

Decision Variables:
x1 = bags of Super-Gro
 x2 = bags of Crop-Quick
The Objective Function:
Minimize Z = $6x1 + 3x2
Where: $6x1 = cost of bags of Super-Gro
$3x2 = cost of bags of Crop-Quick
Model Constraints:
2x1 + 4x2  16 lb (nitrogen constraint)
4x1 + 3x2  24 lb (phosphate constraint)
x1, x2  0
SOLUTION:
If x1 = 0 If x1 = 0
2x1 + 4x2 16 4x1 + 3x2  24
2x1 + 4x2 =16 4x1 + 3x2 = 24
2(0) + 4x2 =16 4(0) + 3x2 = 24
4x2 = 4 3x2 = 24
x2 = 4 x2 = 8
(0,4) (0,8)

if x2 = 0 if x2 = 0
2x1 + 4(0)=16 4x1 + 3(0) = 24
2x1= 16 4x1= 24
x1= 8 x1= 6
(8,0) (6,0) Figure 4. Graph of both constraints

Figure 5. Area of feasible solution

Solve for B:
Step1. Convert both equations to functions of x1:
Eq1. 2x1 + 4x2 = 16 Eq2. 4x1 + 3x2 = 24
2x1 = 16 – 4x2 4x1 = 24 – 3x2
x1 = 8 – 2x2 x1 = 6 – (3x2/4)
Step2. Equate both equations to solve for x2:
8 – 2x2 = 6 – (3x2/4)
5x2/4 = 2
x2 = 1.6
Step3. Substitute in any equation the value of x2:
x1 = 8 – 2x2 x1 = 6 – (3x2/4)
= 8 – 2(1.6) = 6 – (3(1.6)/4)
= 8 – 3.2 = 6 – (4.8/4)
= 4.8 = 6 – 1.2
= 4.8 ; therefore, B(4.6,1.6)

Step4. Solve for optimal solution by the substituting the values of points A, B and C to
the objective function: Minimize Z = 6x1 + 3x2

A (0,8) B=? C (8,0)

A(0,8)
Minimize Z = 6x1 + 3x2
= 6(0) + 3(8)
= 24
14 Optimal Solution

B(4.6,1.6)
Minimize Z = 6x1 + 3x2
= 6(4.6) + 3(1.6)
= 32.4
C(8,0)
Optimal
Minimize Z = 6xsolution
1 + 3x2 Figure 6. Optimal Solution Point
= 6(8) + 3(0)
= 48