Week 6, Discussion 1

What are some business uses of a linear programming model? Provide an example.

Linear programming models have many business uses.  They can be used to determine likely
return on different investments, to maximize profits for a given situation, minimize costs, and
even determine how to obtain maximum market exposure. 

One real world use of a linear programming model is to aid in investment portfolio
selections.  With the correct data, a linear programming model could be developed. 
Necessary data would be amount to be invested, forecasted yields on different funds, risk
ratings on the different funds (determined by an evaluation of risk tolerance), and a
determination of any constraints (such as a minimum dollar amount in a specific type of
fund).  Once you use your gathered data, you can determine the optimum investment
portfolio for your objectives.

References

Taylor, B. W. (2011). Introduction to management science, (2011 custom Ed.). Boston, MA:
Pearson Learning Solutions.

Discussion 2

In the graphical method, how do you know when a problem is infeasible, unbounded, or
when it has multiple optimal solutions?
What are the essential ingredients of an LP model? Why is it helpful to understand the
characteristics of LP models? 

In the graphical method, how do you know when a problem is infeasible, unbounded, or
when it has multiple optimal solutions?

A problem is infeasible when it all solutions violate one or multiple constraints as and it is
unbounded when a feasible solution area is not closed causing a limitless value cycle for the
objective function (Taylor III, 2011, p 54/55). The multiple optimal solutions become
infeasible whenever solution violates one or multiple constraints leaving no feasible solution
area (Taylor III, 2011, p 54).

What are the essential ingredients of an LP model? Why is it helpful to understand the
characteristics of LP models? 

The linear programming model consists of decision variables, objective function and model
constraints (Taylor III, 2011, p 30). You need to understand the characteristics of the model
in order to efficiently apply it as a business tool. This allows you to enter the best or correct
data in order to get the best return of information. The LP model can provide faster solutions
to complex business issues and result in positive revenue for the company.
Discussion 3

Not very many real world examples use only two variables, and those that do can
usually be solved much more easily by guess and check methods rather than LP models.
Why then do we study the graphical method? Be specific.

While linear programming models may not accommodate enough variables to run even a
small business, they can be effective for use as a decision making tool for individual
situations.  For example: say a given department within an organization has been running
over budget for several quarters and two options for reductions in operating expenses for that
department have been proposed.  A linear programming model could be constructed to help
determine the optimal mix between the two measures within a feasible region on a graphical
representation.  Using a graphical representation of an LP model can help decision makers
better visualize the optimal region within a given feasible region. 

References

Taylor, B. W. (2011 custom Ed.). Introduction to management science. Boston, MA: Pearson
Learning Solutions.

Discussion 4

Distinguish between a minimization and maximization LP model. How do you know

which of these to use for any given problem?

Distinguish between a minimization and maximization LP model.

The goal of most companies is to minimize costs and maximize profits in order to obtain a
healthy bottom line. The formulas of constraints are a clear difference between these two
linear programming models. Minimization utilizes greater than or equal to while
maximization utilizes less than or equal to in order to define the limitations that can be
utilized (Taylor III, 2011 p. 33/49).

How do you know which of these to use for any given problem?

The determination for which linear model is simply determined by the goal of your
conclusion.  You are attempting to determine minimum cost or maximum profit scenarios
with the linear programming model. When you determine the desired goal of the process you
utilize the methodology that produces the appropriate results.

Discussion 5

Give examples of both a minimization LP model and a maximization LP model. Every

minimization model has a related maximization model. In what way do you think they
are related?

Give examples of both a minimization LP model and a maximization LP model.

One example of a maximization LP model is in choosing an advertising strategy.  A
maximization model could be utilized to determine the maximum number of potential
customers can be reached for a given advertising budget.  The portions of the advertising
budget that could go toward online advertising and the amount to go toward paper print
media can be determined to maximize customer exposure.

One example of a minimization LP model would be a firm that needs to determine the
minimum optimal costs for shipping and distribution expenses.  A minimization model can be
developed to determine which shipping company will be able to ship the required amount of
a product for the lowest cost to each region.

Every minimization model has a related maximization model. In what way do you think
they are related?

The main difference between minimization maximization LP models is whether it is greater

than or equal to, of if it is less than or equal to.  Both can use the same types of variables, it is
just a matter of whether the objective is to minimize something (such as production costs) or
to maximize something (such as profit or number of end products produced).

References

Taylor, B. W. (2011). Introduction to management science, (2011 custom Ed.). Boston, MA:
Pearson Learning Solutions.