LP Model Formulation

Decision variables
mathematical symbols representing levels of activity of an operation

Objective function
a linear relationship reflecting the objective of an operation most frequent objective of business firms is to maximize profit most frequent objective of individual operational units (such as a production or packaging department) is to minimize cost

Constraint
a linear relationship representing a restriction on decision making

LP Model Formulation (cont.)

Max/min subject to: a11x1 + a12x2 + ... + a1nxn (, =, ) b1 a21x1 + a22x2 + ... + a2nxn (, =, ) b2 : am1x1 + am2x2 + ... + amnxn (, =, ) bm xj = decision variables bi = constraint levels cj = objective function coefficients aij = constraint coefficients z = c1x1 + c2x2 + ... + cnxn

LP Model: Example
RESOURCE REQUIREMENTS PRODUCT Bowl Mug Labor (hr/unit) 1 2 Clay (lb/unit) 4 3 Revenue ($/unit) 40 50

There are 40 hours of labor and 120 pounds of clay available each day Decision variables x1 = number of bowls to produce x2 = number of mugs to produce

LP Formulation: Example
Maximize Z = $40 x1 + 50 x2 Subject to x1 + 4x1 + 2x2 40 hr 3x2 120 lb x1 , x2 0 (labor constraint) (clay constraint)

Solution is x1 = 24 bowls Revenue = $1,360

x2 = 8 mugs

Graphical Solution Method

1. Plot model constraint on a set of coordinates in a plane 2. Identify the feasible solution space on the graph where all constraints are satisfied simultaneously 3. Plot objective function to find the point on boundary of this space that maximizes (or minimizes) value of objective function

Graphical Solution: Example

x2 50 40 30 20 10 0 | 10 | 20 | 30 | 40
Area common to both constraints x1 + 2 x2 40 hr

4 x1 + 3 x2 120 lb

| 50

| 60

x1

Computing Optimal Values

x2 40 4 x + 3 x 120 lb 1 2 30 20 10 8
x1 + 4x1 + 4x1 + -4x1 2x2 = 3x2 = 8x2 = 3x2 = 5x2 = x2 = x1 + 2 x2 40 hr x1 + x1 2(8) = = 40 120 160 -120 40 8 40 24

| 10

24 | | 20 30

x1 | 40
Z = $50(24) + $50(8) = $1,360

Extreme Corner Points

x1 = 0 bowls x2 =20 mugs Z = $1,000

x2
40

30
20 A 10 0 | 10 | 20

x1 = 224 bowls x2 =8 mugs x1 = 30 bowls Z = $1,360 x2 =0 mugs Z = $1,200

B C | | 30 40 x1

Objective Function
x2 40
4x1 + 3x2 120 lb Z = 70x1 + 20x2 Optimal point: x1 = 30 bowls x2 =0 mugs Z = $2,100

30

20 A

10

B
x1 + 2x2 40 hr

| 10

| 20

| C 30

| 40

x1

Example 1: Product Mix Problem

Fertilizer manufacturing company, 2 types of fertilizer

Type A: high phosphorus

Type B: low phosphorus

Tons Required/ ton of Fertilizer Item Urea Potash Rock Phosphate Net profit per ton Type A 2 1 1 15 Type B 1 1 0 10

Maximum amount available per day 1500 1200 500

Product Mix Problem: Modeling

Step 1. The decision variables

Daily production of Type A: x tons Type B: y tons

Step 2. The objective function (maximize profit) z = 15x + 10y

Product Mix Problem: Modeling..

Step 3. The constraints Limited supply of raw materials per day: Urea: Potash: 2x + y 1500 x + y 1200

Rock Phosphate:

x 500

Product Mix Problem: Complete model

Maximize z( x, y) = 15 x + 10y
subject to 2x + y 1500 x + y 1200 x 500

x 0,
y0