Chapter II: LINEAR PROGRAMMING

Introduction
Many big choices made by a company rely on the best path to accomplish the firm's objectives,
according to the operational climate constraints imposed on the manager. Such constraints
that take the form of finite capital, such as time, labour, energy, content, or money; or they
may be in the form of stringent instructions, such as a cereal or engineering design manual.
One of the company firms' most important objectives is to get as much income as possible or,
in other terms, to increase profit. The aim of specific business structures within a company
(such as a production or packaging department) is frequently to minimize costs.
Learning Objectives
After studying this module, you should be able to:
1. Understand and define linear programming.
2. Identify all necessary items that must be included in a model.
3. Write a verbal statement of the objective function and each constraint.
4. Define the decision variables.
5. Write the objective function in terms of the decision variables.
6. Write the constraints in terms of the decision variables.
7. Makes a decision about the solution of the problem.

Linear Programming
Linear Programming is a computer science technique to address issues of optimization
process. The word "linear" implies the linearity of all mathematical relationships within a
model. The standard model is the set of linear equations and/or inequalities (called
constraints) and the linear objective function (to be maximized or minimised). The constraints
of non-negativity (variables are negative or positive) are also included in the model. The
manager's aim is to find the right solution for the highest objective function value.2.1
Formulation of the Mathematical Model

Example
ABC, Inc. creates 2 types of toys: car and boat. The car is priced at P550, and the boat at
P700. The cost of the car is P50, while P70 for the boat. The car needs 1 hour of woodwork
labor and 1 hour of painting and assembling labor. The boat requires 2 hours of woodwork
labor and1 hour of painting and assembling labor. Cost of woodwork labor is P30 per hour,
worth of painting and assembling labor is P20 per hour. Monthly, ABC has 5000 existing hours
of woodwork labor and 3000 hours of painting and assembling labor. There is an unlimited

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demand for boat, while an average demand for car is at most 2000. ABC wants to get the best
out of monthly profit (total revenue - total cost).

Formulation
1. Decision variables. The variables would explain thoroughly the management's
decisions to be made. To optimize the income, the manager needs to determine how
many cars and how many boats will be generated per month. In this scenario, the
variables to the decision are:
x1= number of cars produce each month; x2= number of boats produce each month

2. Objective function. This function reflects the criteria of the management which must
be maximized or minimized. The management aims to optimize gross monthly income
in the circumstance of the ABC as the disparity between total monthly revenues and
total monthly costs. Revenue and cost can be represented as the function of the
variables x1 and x2 for decision.

1. Total revenue (TR) = revenue from sold car + revenues from sold boat. The price of
one car is P550 and ABC produces x1 of car, the revenue resulting from the cars is
550x1. Likewise, the revenue from sold boats is 700x2.
The total monthly revenue from production is expressed as:
TR= 500x1 + 700x2

2. Monthly wood cost (WC) = WC of produced cars + WC of produced boats. The wood
cost of production of one car (50 ) and the total number of produced car is x1, the
monthly wood cost of all produced cars is 50x1. Likewise, the monthly wood cost
of all boats is 70x2.
Total monthly wood cost is : WC= 50x1 + 70x2

3. Woodworrk labor cost (WLC) = WLC of produced cars + WLC of produced boats.
One car needs 1 hour of woodwork labor and cost of 1 hour of this labor is 30 , the
unit cost is 30 . The monthly cost of carpentry labor used for all produced cars is
30x1. One boat requires 2 hours, the monthly cost of woodwork labor used for
boats is 60x2.
Total monthly cost of woodwork labor: WLC= 30x1 + 60x2

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 4. Painting and assembling labor cost (PALC) = PALC of produced cars + PALC of
produced boats. Both a piece of car and boat need 1 hour of painting and
assembling labor. Cost of this labor is 20 per hour.

Therefore the total monthly cost of painting and assembling labor:

PALC= 20x1 +20x2

5. The total monthly cost can be expressed as:

TC= WC + WLC + PALC= (50x1 + 70x2) + (30x1 + 60x2) + (20x1 +20x2) TC= 100x1 + 150x2

6. The total profit:

TP = TR − TC = (550x1 + 700x2) − (100x1 + 150x2 ) = 450x1 + 550x2

The objective function in the linear programming model is: Maximize z = 450x1 + 550x2. The
450 and 550 in the function are termed objective function coefficients.

3. Constraints. If no restrictions are imposed, objective function (profit) can expand to

infinity. There are three limits (called constraints) to the development of toys, though:

1. ABC, Inc. has just 5000 hours of woodwork labor accessible per month.
2. No more than 3000 hours of finished labor can be used each month.
3. Because of minimal demand, there will be a maximum of 2000 cars delivered each
month.
Expressing the constraints in mathematical way:

1. One car needs 1 hour of woodwork labor. If ABC manufactures monthly x1 of cars,
x1 hours of labor are consumed. Since one boat requires 2 hours and the
manufacturing quantity equals x2, the monthly consumption of woodwork labor is
2x2 hours.

Total consumption of woodwork labor for both products can be expressed as x1 +

2x2. This is actual use of labor (in hours) that cannot be greater than available
number of hours (5000). With this, the constraint can be:
x1 + 2x2 ≤ 5000

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 2. The creation of the second constraint regarding painting and assembling labor is
like to the foregoing:
x1 + x2 ≤ 3000

3. The last constraint is easy to be construct. The number of produced cars x1 must
be less than or equal to 2000:
x1 ≤ 2000
Technological coefficients are coefficients of the decision variables in the constraints while
numbers 5000, 3000 and 2000 are termed right-hand side values.

4. Non-negativity Constraints. Both decision variables have rational sign restrictions:

because the values of variables reflect numbers of toys made, we would expect
them not to be negative:
x1, x2 ≥ 0

Summary of mathematical model in standard form:

Maximize z = 450x1 + 550x2 subject to
00, x1 + x2 ≤ 3000 , x1 ≤ 2000 ,
x1, x2 ≥ 0 .

2.2. Graphical Solution of Linear Programming Problems

When a linear programming problem only involves two decision variables, it can be graphically
overcome. The next phase proceeds to solution:

Step 1 - Graphing a feasible area

That restriction (including non-negativity constraints) can be drawn very easily; because all
constraints have to be met concurrently, the mixture of drawn constraints defines the area
that is feasible. Each point from the feasible area suits the feasible solution.
There are 3 constraints and 2 non-negativity constraints in the ABC’s problem. Non-negativity
constraints are simple to graph, as all x1 and x2 variations must be in the first quadrant of x1-
x2 plane (Figure 2.1).

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Linear inequality graphing (woodwork labor constraint)
x1 + 2x2 ≤ 5000
The borderline needs to be draw, corresponding to the linear equation
x1 + 2x2 = 5000 .
Coordinates of two points must be find to get the borderline. The simplest way is to look for
the borderline’s intersection points with axes x1 and x2. If x1 is set to zero (i.e. no cars are
manufactured), then x2 = 5000/2 = 2500 (2500 boats can be manufactured). This condition
refers to the point A (0, 2500) in Figure 2.2.
Also, if x2 is set to zero (no boats are manufactured), then x1 = 5000 (5000 cars can be
manufactured). It links to the point B (5000, 0) in Figure 2.2.
Linking points A and B by a straight get a graphical illustration of the equation x1 + 2x2 =
5000 We must now decide which portion of the first quadrant (divided by line AB) conforms
to the x1+ 2x2 5000 inequality.
For this reason the general approach is to pick an arbitrary point (of course not from the line)
and to test if it is feasible. When the point is feasible so the whole area is always feasible.
The best way is to take origin, (0 , 0) in our case. After these coordinates have been substituted
by the constraints, we get 5000 0 (the restriction is met). Therefore, the area of origin included
is feasible (shaded in Figure 2.2).

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Figure 2.2 Woodwork Labor
Note: We omitted negative values of x1 and x2 due to nonnegativity constraints (Figure 2.1)
in graphing the feasible field.
Drawn in Figure 2.3 is the second inequality 3000 x1 + x2 ≤ (painting and assembling labor
constraint), the last constraint 2000x1 ≤ is comprehended in Figure 2.4. Feasible area can
be seen on the left side of the line while 2000x1 = is emphasized by a line parallel to the axis
x2.

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Figure 2.3 Painting and Assembling Labor

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Step 2 - Combining the constraints
If all of the restrictions are drawn independently, they must be placed together in a single
graph. Practically, this final graph may be built by systematic addition of the individual feasible
areas from the beginning. The ultimate graph of the feasible area in the example is seen in
figure

2.5. Any solution in this area is feasible as regards all the constraints.

Step 3 – Graphing an objective function

In the example the goal of the management is represented as the function of profit z= 450x1
+ 550x2. Because of the endless number of equations this feature can not necessarily be
viewed as a single line. The basic equation depends on z value.

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Figure 2.6 introduces three of those equations of values 495,000, 1,485,000 and 2,475,000.
All the lines are parallel to each other and can be constructed in the same way as the
constraints borderline in Step 1. Both points on a specific line produce the same profit, and
hence the lines are typically called isoprofit lines. The arrow expressed income growth.

Step 4 – Finding the optimal solution

Integrating the feasible region with the isoprofit lines, we will consider the isoprofit line that is
as far from the origin as feasible, which also crosses the feasible field.
The dotted isoprofit line in Figure 2.7 correlates to the maximum profit z = 1,550 000. This
line intersects a viable area corner point, which is considered an optimal solution. It is point X
(1000, 2000)

There are two potential ways of seeking the best approach using the model's graphical
representation:

1. The first approach has only been illustrated. We can determine the "best" point of the
feasible area, by finding a slope and the growth direction of the isoprofit line. This level
is the optimal solution, and the isoprofit line suits the ideal objective function optimal
value. Within this section of the text it is important to notice that a convex set is the
feasible field of all linear programming models.

A set of points S is a convex set if the section of the line connecting each pair of points
in S is entirely enclosed in S.

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 The disparity between convex and non-convex sets is shown in Figure 2.8. Although
the first three examples are convex sets (a), (b ) and ( c), the group (d) is non-convex.

The set (a) varies significantly from the sets (b ) and ( c), due to nonlinear border. If the
convex set boundary consists only of linear segments, as seen in cases (b ) and ( c),
the set is called a convex polyhedron, which reflects the standard feasible field of linear
programming models. It is the feature which is useful in linear programming methods.

The key problem is how to measure optimum solution of coordinates X(1000, 2000).
As it is apparent from Figure 2.6, this point is the borderline intersection of two
constraints. Determining the co-ordinates is therefore very simple by solving the series
of two linear equations. The borderlines compare in our situation are:
x1 + 2x2 = 5000 , x1 + x2 = 3000 .

Pretty simple solution: x1 = 1000 and x2 = 2000. Those values are point X coordinates.
Incorporating them into objective function z = 450x1 + 550x2 = 1 550 000.

2. It is important to identify a corner point before beginning to explain the second

approach used to find the best solution in the graph. With respect to the convex
polyhedron definition it is possible to describe the corner point clearly as follows:

A point P in convex polyhedron S is a corner point if it does not lie on any line joining
any pair of other (than P) points in S. Keystone of the second approach is the basic
linear programming theorem:
The optimal feasible solution, if it exists, will occur at one or more of the corner points.

In this theorem, what we need is to define the feasible area's corner points and
determine the objective values for all of those points. The optimal solution is the corner
point and has the highest objective value.

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The feasible area in the example contains 5 corner points (Figure 2.9), of which the
coordinates can be observed in Table 2.1. All the coordinates were calculated in the
manner described above: after classification of the intersected lines, the set of
equations is solved and the x1 and x2 co-ordinates provide the solution. The objective
value z is then calculated for each solution by incorporating the co-ordinates into the
objective function. From the table it is evident that the optimal solution corresponds to
the maximum objective value z = 1,550,000.
Corner point x1 x2 z
A 0 0 0
B 2000 0 900 000
C 2000 1000 1 450 000
D 1000 2000 1 550 000
E 0 2500 1 375 000

Simplex method is a general method used for solving linear programming problems. It
is an iterative algorithm for efficient searching for the optimal solution. The method
uses the Gauss- Jordan method of solving simultaneous equations. In addition, the
method is based on the basic linear programming theorem (the search can
concentrate only on the corner points of the feasible area). The run of algorithm starts
in one of the corner points (usually in the origin) and moves to adjacent corner that
improves the value of the objective function. The process of movement continues until
no further improvement is possible. The simplex method and its variations have been
programmed and therefore even large linear programming problems can be easy
solved.

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2.3 Understanding the Optimal Solution
The appropriate and reliable analysis of the findings is almost as critical as the model itself.
After the solution has been obtained, it is necessary to go back to the start of the modeling
process and compare the variables with their real representations. In the case, x1 represents
the number of cars created each month, and x2 is the number of boats generated every month.
Therefore it is optimal to produce 1000 cars and 2000 boats every month as the optimal
solution we have got x1 = 1000 and x2 = 2000. When the management maintains this output
plan, ABC, Inc. generates income of 1,550,000 per month (see the target role description in
the model).

When the production varied from the measured approach but nevertheless followed all
product constraints, the profit would've been lower. By violating at least one limit, the
management can achieve greater income than 1 550 000. That will be an infeasible approach.
Analyzing the findings ABC would be involved in practical usage of available resources
(working hours) and meeting limited demand. If we integrate the optimal values of x1 and x2
into all the restrictions, we can see whether they are fulfilled exactly as equations or as
inequalities. As for woodwork labor, the limit's left-hand side value is 1000 + 2(2000) = 5000,
which is almost the same as the right-hand side value 5000 (the constraint is obligatory).
Since the right-hand side relates to the hours of work available, equality means that no hour
stays or all available hours are being used for optimal production.
The painting and assembling labor condition is similar. The constraint's left-hand side value
is 1000 + 2000 = 3000, the right-hand side value is always equal to 3000; therefore, all
required painting and assembling labor hours are used. The last constraint relates to demand
limitation (the amount of cars created should be less than or equivalent to 2000). Because
output of 1000 cars is optimal (the constraint is non-binding), this is not the restriction that
affects ABC, Inc's production. The organization could increase cars production as it succeeded
in having more hours of work or developing the technologies (i.e. reducing unit labor
consumption).
Note: Slack variable is defined for the inequality of type “≤”. This variable assesses the
difference between the left-hand side and the right-hand side of the constraint. In both labor
constraints, zero is the slack variable in the example, as both sides of the constraints equal
to each other. In demand constraint, 1000 is the slack variable, as the right-hand side value
is 2000 and left-hand side value is 1000. In inequality of type “≥”, we express a surplus
variable assessing the difference between the left-hand side and the right-hand side of the
constraint. For example, if ABC produce at least 600 cars because of demand requirements
(x1 ≥ 600) then ABC will actually produce 1000 cars, therefore, 400 is the surplus variable.
The estimation of the effect on the optimal solution of the modifications in a particular
environment is the concept of a post-optimal (sensitivity) analysis. We have forecast future
increases in resource stocks (available labor hours) in technology, so it is important to
examine how shifts in commodity prices impact profit.

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Figure 2.10 we compares the original objective function z=450x1+550x2 with the function
z=750x1 + 550x2 (the price of the cars changes from 550 to 850 ), getting a new optimal
solution (2000, 1000) with the profit z = 2,050,000.

Sensitivity analysis defines, typically for coefficients of objective function and right-hand side
values, the array of their potential changes that do not have the cardinal effect on the optimal
solution. Changing the car’s price from 550 to 649 (i.e. the objective function coefficient was
improved from 450 to 549), the optimal solution would be the original corner point (1000,
2000).
Only modification would be higher profit, while the production assembly would be alike. If the
price increased to 651, the optimal solution (2000, 1000) would be attained, and resulting in
this recommendation the business should change the production assembly from the base.
The price 650 provides the business the option to manufacture either 1000 cars (and 2000
boats) or 2000 cars (and 1000 boats).
Modification in coefficients of objective function impacts only its slope, whereas the feasible
area remains static. The best corner point was determined by the slope of the function. If right-
hand side value is modified the feasible area is also modified.

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Figure 2.11 Change in Painting and Assembling Labor

The constraint’s borderline’s movement was due to change (the new borderline is parallel with
the original). Smaller change in the right-hand side value means smaller change in the feasible
area while big changes in the feasible area makes the cardinal change as shown by Figure
2.11 (decrease in available painting and assembling labor from 3000 to 2000 hours). Corner
points original number of 5 decreases to 3. In this situation, new optimal solution is presented
by the corner point (0, 2000).

As the optimal corner point is out of the constraint of woodwork labor, there are several idle
hours of this labor, i.e. in this inequality the slack variable now is nonzero. The precise sum
remaining can be calculated simply by inserting the coordinates (0, 2000) into the constraint's
left- hand side. When 0 + 2(2000) = 4000, the amount of hours remaining unused is 5000-
4000 = 1000.

Note: These modifications can be analyzed independently, i.e. only one parameter is modified
(the other is fixed), so we are evaluating the effect on the optimal solution and the profit. The
basic aspects of the sensitivity analysis are the lowered costs and the shadow prices along
with the levels of objective function coefficients and the ranges on right-hand hands.

2.4. Special Cases of Linear Programming Models

Only one optimal solution has been attained in the production problem of ABC, Inc. It is a
distinctive in most cases linear programming problems. Figure 2.12 express the feasible area

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together with the objective function z (the arrow specifies the improvement direction’s of the
objective value). Unique optimal solution is the corner point A.

In the previous discussion, the price of the car is 650 (instead of 550), the management of
ABC, Inc. has two basic possibilities how to optimize the profit. Producing 1000 cars (and
2000 boats) or 2000 cars (and 1000 boats) would bring the identical optimal profit
1,650,000.
A linear programming problem with two or more optimal solutions is said to have alternative
(or multiple) optimal solutions.

This condition occurs in graphical depiction of the model when the objective function line is
parallel to the borderline of one constraint, as can be shown in Figure 2.13. Because the
objective function reflects the isoprofit line (in case of maximization) or the isocost line (in

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case of minimization), all the solutions at the edge of the feasible area have the same
objective value (optimal). There are two optimal corner points (B and C) and the infinite
number of optimal points on line segment BC.

Figure 2.14 shows an interesting alternative of just described case. The difference is evident
– the feasible area is unbounded and there is only one optimal corner point D; the other
optimal points lie on the borderline running to infinity.

There is no optimal solution if the feasible

solution area is unbounded and the
objective value is being enhanced in the
direction of unboundedness, therefore, the
optimal solution is endless (see Figure
2.15). Since these instances are
uncommon in reality, this finding typically
indicates mistake in formulation.

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Infeasibility exists when no solution meets any of the constraints. There is no common feasible
area (no feasible solution) in case of two constraints graphed in Figure 2.16. In reality this
scenario sometimes occurs, particularly if the manager wants to be too accurate in model
formulation. In order to remove the infeasibility, the model must be simplify by for example
eliminating any vain restrictions.

While the two-variable model is not popular in practice and is used more for analytical
purposes, for multidimensional problems both theories may be simplified and transformed.

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