LINEAR PROGRAMMING

Linear programming is a mathematical technique that enables a decision maker to choose the best alternative from a set of feasible alternatives. Typically, many economic and technical problems involve maximization or minimization of a certain objective subject to some restrictions.

Typical Applications of Linear Programming

1. A manufacturer wants to develop a production schedule and inventory policy that will satisfy sales demand in future periods and same time minimize the total production and inventory cost. 2. A financial analyst must select an investment portfolio from a variety of stock and bond investment alternatives. He would like to establish the portfolio that maximizes the return on investment.

Typical Applications of Linear Programming

3. A marketing manager wants to determine how best to allocate a fixed advertising budget among alternative advertising media such as radio, TV, newspaper, and magazines. The goal is to maximize advertising effectiveness. 4. A company has warehouses in a number of locations throughout the country. For a set of customer demands for its products, the company would like to determine how much each warehouse should ship to each customer so that the total transportation costs are minimized.

Constructing Linear Programming Models

1. Objective Function. There must be an objective (or goal or target) the firm or organization wants to achieve. For example, maximize profits, minimize cost, maximize total number of expected potential customers, minimize total time used, and so forth.

Constructing Linear Programming Models

2.

The Constraints. The resources must be limited in supply. The mathematical relation which is used to explain this limitation is inequality. The limitation itself is called constraints.
Example: Each unit of product A requires 2 kg of raw material and each unit of B requires 3 kg of same raw material. The total availability of raw material is 60 kg.

So the constraint is 2A + 3B 60
Example: Each unit of product A requires 4 hours of labour and each unit of B requires 3 hours of labour. The total availability of labour hour per week is 96 hours.

So the constraint is 4A + 3B 96

Constructing Linear Programming Models

3.

Non-negativity condition. No. of units produced, labour hours, raw material consumption can not have negative values. x1 0 x2 0

MAXIMIZATION CASE
A firm is engaged in producing two products A and B. Each unit of product A requires 2 kg of raw material and 4 hours of labor for processing. Each unit of product B requires 3 kg of raw material and 3 hours of labor for processing. Every week, the firm has an availability of 60 kg of raw material and 96 labor hours. One unit of product A sold yields Rs 40 and one unit of product B sold gives Rs 35 as profit. Formulate this problem as a linear programming problem to determine as to how many units of each of the products should be produced per week so that the firm can earn maximum profit.

MINIMIZATION CASE
The agricultural research institute suggested to a farmer to spread out at least 4800 kg of a special phosphate fertilizer and not less than 7200 kg of a special nitrogen fertilizer to raise productivity of crops in his fields. There are two sources for obtaining these mixtures A and B. Both of these are available in bags weighing 100 kg each and they cost Rs 40 and Rs 24 respectively. Mixture A contains phosphate and nitrogen equivalent of 20 kg and 80 kg respectively while mixture B contains these ingredients equivalent of 50 kg each. Write this as a linear programming problem to determine how many bags of each type the farmer should buy in order to obtain the required fertilizer at minimum cost.