LPP by Simplex Method

A company wants to product two products A and B. In order to produce one

unit of A it requires 6 machine hrs and 2 labour hrs. In order to produce one unit
of B it requires 4 machine hrs and 4 labour hrs. The maximum availability of
machine and labour hrs is 7200 and 4000 respectively.
Profit from A and B is Rs 100 per unit and s 80per unit. Find the optimal
solution by simplex method.

Profit Per O/P I/Ps requirement per unit

Unit Product
Machine Labour
Rs 100 A (X1) 6 hrs 2 Hrs
Rs 80 B (X2) 4 hrs 4 Hrs

Maximum available Machine Hrs = 7200_____

Maximum available Labour Hrs = 4000

Step 1 LPP Formulation

Objective function Max Z = 100 X1 + 80 X2
Subject to constraints,
6 X1 + 4 X2 ≤7200
2X1 + 4X2 ≤4000
X1, X2, ≥ 0

Step 2 Convert the LPP formulation in Standard form:

Max Z = 100 X1 + 80 X2 + 0 S1 +0 S2
Subject to constraints;
For Machine Hrs, 6X1 + 4 X2 + S1+ 0 S2= 7200
For Labors Hrs, 2X1 + 4X2 + 0 S1 + S2 = 4000
X1, X2, S1 , S2 ≥ 0
Slack Variable: A Slack variable represent Unutilized Capacity of
Resource/s. Slack variable is represented by S. i.e S1, S2, S3 etc.

Note that Resource I has capacity of 7200 units. It means Utilized capacity
of Resource + Unutilized capacity of Resource = 7200 units. This means
that out of 7200 units available of resource I, we can use 6X1 + 4 X2 units of
that resource I for production and S1 is the Unutilized capacity of Resource I
if any at all. S1 can take any values between 0 ≤ S1 ≤7200
Hence we can write this constraint as 6X1 + 4 X2 + S1 = 7200
Note that Resource II has capacity of 4000 units. It means Utilized capacity
of Resource + Unutilized capacity of Resource = 4000 units. This means
that out of 4000 units available of resource II, we can use 2X1 + 4 X2 units
of that resource II for production and S2 is the Unutilized capacity of
Resource II. S2 can take any values between 0 ≤ S2 ≤4000
2X1 + 4X2 + S2 = 4000
Note S1 and S2 represent Unutilized capacity of Resource Machine and
Resource Labor respectively. Their profit coefficient is zero.

Initial Basic Feasible Solution / Initial Simplex Table:

Basis Coefficient X1 X2 S1 S2 bi Replacement
Variable value of BV Ratio =
from the bi /
objective corresponding
function row value of
Key column
S1 0 6* 4 1 0 7200 7200 / 6
=1200 _KR-
OV
S2 0 2 4 0 1 4000 4000 / 2
=2000
 Cj 100 80 0 0 K C= X1
zj 0 0 0 0 KR = S1
∆j = Cj – zj 100 80 0 0 KE = 6

KC -
IV

Basic or Basis Variable (variables which are in the basis) = S1, S2

Non Basic or Non Basis Variable (variables which are not in the basis) = X1,
X2
Not in the 1st Simplex table, the basis variables are always slack variables.
It is trial and error method and it is assume that there is no production
activity (X1 =0 and X2 = 0 in the beginning ). Hence all capacity is
unutilized. Hence in the basic column we can see S1 and S2.
Since all capacities are unutilized, hence S1 = 7200 and S2 = 4000 and X1 =
0 and X2 = 0
Hence the b column values are 7200 and 4200 respectively
Profit contribution of S1 and S2 = 0
Row Cj is written as per Objective Function: Max Z = 100 X1 + 80 X2 + 0
S1 +0 S2
calculations for Zj row
For x1, (0* 6) + (0*2) = 0
For x2, (0* 4) + (0*4) = 0
For S1, (0* 1) + (0*0) = 0
For S2, (0* 0) + (0*1) = 0
∆j = Cj – zj
Cj= coefficient value of respective variable in the objective function= in the
profit type objective function, it represents the profit contribution of each
variable in the objective function
Zj = represents the decrease in the value of the objective, if 1 unit of that
variable is included in the solution
∆j = represents the net change in the profit contribution in the objective
function, if 1 unit of that variable is included in the solution
Positive Value of ∆j indicates gain or increase in profit and Negative Value
of ∆j indicates loss or decrease in profit.
Test of Optimality in Simplex:
A simplex solution is Optimal, when there is no Positive ∆j value in the
solution. All ∆j values are either negative or zero.
Key Column:(Incoming Variable): The variable which has maximum
Positive ∆j value is called incoming Variable for the Next table. In the next
table, this variable will enter the basis and it will replace one of the existing
variables.
Key Row:(Outgoing Variable): In the next table, this variable will goes out
of the solution from the basis variable column. it is replaced by incoming
variable in the basis. The Row which has least Non - negative Replacement
ratio is called outgoing Variable for the Next table.
Since one of the ∆j is positive, this is not an Optimal Solution

Formula for New Rows calculation for the 2nd simplex table:
X1 X2 S1 S2 bi
KC
S1 (Key Row) -
Formula For Key Row : New values for Key Row =
old value / KE
old values 6 4 1 0 7200
New values for Key Row = old value / KE 1 2/3 1/6 0 1200

S2 (Non Key Row)

Formula for Non – Key Row/s
New value = old value – (Corresponding KC value *
Corresponding New values of KR value)

old values 2 4 0 1 4000

New value = old value – (Corresponding KC value * 0 8/3 - 1 1600
Corresponding New values of KR value) 1/3

KE = 6
2 – (2*1) = 0
4 – ( 2* 2/3) = 4 – (4/3) = 4 – 4/3 = (12 -4) / 3 = 8/3
0 - ( 2* 1/6) =-1/3
1 - (2*0) = 1
4000 - (2*1200)= 1600

Second Simplex Table:

Basis Coefficient X1 X2 S1 S2 bi Replacement
Variable value of BV Ratio =
from the bi /
objective corresponding
function row value of
Key column
X1 100 1 2/3 1/6 0 1200 1200 / (2/3) =
1800
S2 0 0 8/3* -1/3 1 1600 1600 / (8/3) =
600 --- KR-
OV

Cj 100 80 0 0 KC = X2
zj 100 200/3 50/3 0 KR= S2
∆j = Cj – zj 0 40/3 -50/3 0 KE = 8/3

KC-
IV

BV = X1, S2
Non BV = X2, S1
Zj calculations
For x1, (100* 1) + (0*0) = 100
For x2, (100* 2/3) + (0*8/3) = 200/3
For S1, (100* 1/6) + (0*-1/3) = 50/3
For S2, (100* 0) + (0*1) = 0
Since one of the ∆j is positive, this is not an Optimal Solution

X X2 S1 S2 bi
1 K
C
X1 – old values 1 2/3 1/6 0 120
0
New value = old value – (same row old Value in Key 1 0 1/4 - 800
column * Corresponding New values of KR) 1/4

S2 – KR 0 8/3 - 1 160
1/3 0
0 1 - 3/8 600
New value = old value / KE 1/8

KE = 8/3
1 - (2/3 *0) = 1
2/3 – (2/3*1)=0
1/6 – (2/3*-1/8) =1/4
0- (2/3*3/8) =-2/8=-1/4
1200 – (2/3*600) =800

3rd Simplex Table

Basis Coefficient X1 X2 S1 S2 bi Replacement
Variable value of BV Ratio =
from the bi /
objective corresponding
function row value of
Key column
X1 100 1 0 1/4 -1/4 800
X2 80 0 1 -1/8 3/8 600
 Cj 100 80 0 0
zj 100 80 15 5
∆j = Cj – zj 0 0 -15 -5

No ∆j is + ve. So this in an Optimal Solution.

Optimal Product Mix: it means the solution value. i.e quantity value of
variable in the final solution
For Basis variables (variables which are in the basis), quantity values are X1 =
800 units, X2 = 600 units
For Non basis variables (variables which are not in the basis), quantity values
are S1 = 0, S2 = 0
Optimal Solution:
MAX Z = 100 X1 + 80X2 +0S1 +S2 = (100 * 800) + (80*600) = Rs 128000

• Is this an optimal? If yes ,why and If NO, find the optimal Solution
• Does this problem have an unique or alternate (multiple) optimal solution
• Find the optimal product mix and optimal solution
• Does this problem have degenerate solution
• Does this problem have infeasible solution
• What are the shadow prices of resources?
• Which resources are scarce and which are abundant
• Find out % capacity utilization of resources
• Does this problem have an unbounded solution/ Infinity as a solution