Linear Programming

Linear programming (LP) is a mathematical method for determining a way to achieve the best
outcome (such as maximum profit or lowest cost) in a given mathematical model for some list
of requirements represented as linear relationships.
It is a powerful technique for aiding managerial decision for certain kinds of problems e.g how
to allocate an organization’s resources to various activities.
It is applicable in both profit-making and not -for-profit organizations.

There are FIVE categories of linear programming problems:-

1) RESOURCE-ALLOCATION PROBLEMS :
Resource allocation is assignment of fixed amount of resources to a given number of
activities in order to achieve the most effective results. Resource allocation is used to
assign the available resources in an economic way.

2) COST-BENEFIT-TRADE-OFF PROBLEMS :

3) MIXED PROBLEMS :

4) TRANSPORTATION PROBLEMS :

5) ASSIGNMENT PROBLEMS :
Types of Functional Constraints
Typical
Type Form* Interpretation Main Usage

For some Resource-

Resource LHS ≤ resource, allocation
constraint RHS Amount used ≤ problems and
Amount available mixed problems

For some benefit, Cost-benefit-

Benefit LHS ≥ Level achieved ≥ trade-off
constraint RHS Minimum problems and
Acceptable mixed problems

For some quantity,

Fixed- Transportation
LHS = Amount provided
requirement problems and
RHS = Required
constraint mixed problems
amount

* LHS = Left-hand side (a SUMPRODUCT function).

RHS = Right-hand side (a constant).

RESOURCE ALLOCATION PROBLEM

 Steps for solving linear programming model :

1. Identify the activities for the problem at hand.

2. Identify an appropriate overall measure of performance (commonly profit).
3. For each activity, estimate the contribution per unit of the activity to the overall
measure of performance.
4. Identify the resources that must be allocated.
5. For each resource, identify the amount available and then the amount used per unit of
each activity.
6. Enter the data in steps 3 and 5 into data cells.
7. Designate changing cells for displaying the decisions.
8. In the row for each resource, use SUMPRODUCT to calculate the total amount used.
Enter <= and the amount available in two adjacent cells.
9. Designate a target cell. Use SUMPRODUCT to calculate this measure of performance

Activities

Unit Profit profit per unit of activity

Resources Resources
Used Available
Constraints

SUMPRODUCT
resource used per unit of activity (resource used per unit,
changing cells) <=

Total Profit
Level of Activity changing cells SUMPRODUCT(profit per unit, changing cells)

CASE STUDY -1 on resource allocation problem

In the MBA program at BIMTECH, students bid for electives in the second year of their program.
Each student has 100 points to bid (total) and must take two electives. There are four electives
available: Management Science, Finance, Operations Management, and Marketing. Each class is
limited to 5 students.

Management Operations

Points Science Finance Management Marketing

Arjun 60 10 10 20

Amit 20 20 40 20

Mohit 45 45 5 5

Garima 50 20 5 25

Divya 30 30 30 10

Arun 50 50 0 0

Ashish 70 20 10 0

Dibyanshu 25 25 35 15

Gaurav 35 15 35 15

Parul 60 10 10 20

Formulate and solve a spreadsheet model to determine an assignment of students to classes so

as to maximize the total bid points of the assignments.

Solution : Linear Programming model

Decision variables,
˃ Management science
˃ Finance
˃ Marketing
˃ Human resource management
Objective function
The goal is to maximize the total bid points of the assignments.
Total Points = SUMPRODUCT(Points, Assignment)

After formulating the model we will assign values to the model in excel which we will solve as
given in the steps earlier :

This is a special kind of assignment problem. The assignees are the students and the tasks are the
classes. Each student is assigned to take two classes. Each class has a limit of five students. Start
by entering the data. The data for this problem are the bid points for each student for each class,
where the corresponding data cells are assigned a range name of Points (C6:F15).
The decisions to be made in this problem are whether or not to assign each student to each class.
Therefore, a table of changing cells is created for each student and class combination in
C19:F28, and given a range name of Assignment. The values in Assignment (C19:F28) will
eventually be determined by the Solver. For now, arbitrary values of 0 and 1 are entered.
The goal is to maximize the total bid points of the assignments.
Total Bid Points = SUMPRODUCT(Points, Assignment).
This formula is entered into cell I30.

H I
30 Total Points =SUMPRODUCT(Points,Assignment)
The functional constraints in this problem are that each student must be assigned to two classes,
each class is limited to five students, and each student can take each class at most once. The
number of classes a student is assigned to is just the sum of the row of changing cells for each
student. For example, for Arjun it is =SUM(C19:F19). This formula is copied into G19:G28. The
number of students assigned to a class is the sum of the column of changing cells for each class.
For example, for Management Science it is =SUM(C19:C28). This formula is copied into
C29:F29.
 K
17 Total
18 Classes
19 =SUM(C19:F19)
20 =SUM(C20:F20)
21 =SUM(C21:F21)
22 =SUM(C22:F22)
23 =SUM(C23:F23)
24 =SUM(C24:F24)
25 =SUM(C25:F25)
26 =SUM(C26:F26)
27 =SUM(C27:F27)
28 =SUM(C28:F28)

B C D E F
29 Total in Class =SUM(C19:C28) =SUM(D19:D28) =SUM(E19:E28) =SUM(F19:F28)

The Solver information and solved spreadsheet are shown below.

 Range Name Cells
Assignment C19:F28
Capacity C31:F31
ClassesToTake I19:I28
Points C6:F15

TotalClasses G19:G28
TotalInClass C29:F29
TotalPoints I30

G
16 Total
17 Classes
18 =SUM(C19:F19)
19 =SUM(C20:F20)
20 =SUM(C21:F21)
21 :
22 :

B C D E F
29 Total in Class =SUM(C18:C27) =SUM(D18:D27) =SUM(E18:E27) =SUM(F18:F27)

H I
30 Total Points =SUMPRODUCT(Points,Assignment)

Thus, the 1’s in Assignment (C19:F28) show the assignments that should be made, achieving a
total of 705 points.
 CASE STUDY -2 : ABC Airways is adding more flights to and from its hub airport and so
needs to hire additional customer service agents.
The five authorized eight-hour shifts are
˃ Shift 1: 6:00 AM to 2:00 PM
˃ Shift 2: 8:00 AM to 4:00 PM
˃ Shift 3: Noon to 8:00 PM
˃ Shift 4: 4:00 PM to midnight
˃ Shift 5: 10:00 PM to 6:00 AM
Question: How many agents should be assigned to each shift?

Time Periods Covered by Shift

Minimum
Number of
Time Period 1 2 3 4 5 Agents Needed
6 AM to 8 AM √ 48
8 AM to 10 AM √ √ 79
10 AM to noon √ √ 65
Noon to 2 PM √ √ √ 87
2 PM to 4 PM √ √ 64
4 PM to 6 PM √ √ 73
6 PM to 8 PM √ √ 82
8 PM to 10 PM √ 43
10 PM to midnight √ √ 52
Midnight to 6 AM √ 15
Daily cost per agent $170 $160 $175 $180 $195

Solution :
» Linear Programming model:
» Let, Si = Number working shift i (for i = 1 to 5),
 » Objective function, to minimize the cost.
» Minimize Cost = $170S1 + $160S2 + $175S3 + $180S4 + $195S5
» Constraints,
Total agents 6AM–8AM: S1 ≥ 48
Total agents 8AM–10AM: S1 + S2 ≥ 79
Total agents 10AM–12PM: S1 + S2 ≥ 65
Total agents 12PM–2PM: S1 + S2 + S3 ≥ 87
Total agents 2PM–4PM: S2 + S3 ≥ 64
Total agents 4PM–6PM: S3 + S4 ≥ 73
Total agents 6PM–8PM: S3 + S4 ≥ 82
Total agents 8PM–10PM: S4 ≥ 43
Total agents 10PM–12AM: S4 + S5 ≥ 52
Total agents 12AM–6AM: S5 ≥ 15
and
Si ≥ 0 (for i = 1 to 5)

The above constraints were entered in the excel sheet in the following manner

Steps for how to solve it through excel after formulating the model :

Spreadsheet Formulation