CHAPTER ONE

1. INTRODUCTION
1.1. Definitions and scope of operations research
1.1.1. Definition

Operations Research (OR) is a science which deals with problem identification, formulation,
solutions and finally appropriate decision making.
OR is the use of mathematical models, statistics and algorithm to aid in decision-making. It is most
often used to analyze complex real life problems typically with the goal of improving or optimizing
performance.
“OR is concerned with scientifically deciding how to best design and operate man-machine system
usually requiring the allocation of scare resources.”
“OR is essentially a collection of mathematical techniques and tools which in conjunction with
system approach, are applied to solve practical decision problems of an economic or engineering
nature’’.
1.1.2. Scope of operations research

A common misconception held by many is that OR is a collection of mathematical tools. While it is

true that it uses a variety of mathematical techniques, operations research has a much broader scope.
The following are some of the areas operations research has been practiced. These are:

Human resource management

 To appoint the suitable persons on minimum salary
 To determine the best age of retirement
Production
 To find the number and size of the items to be produced
 Optimum product mix
 Select, locate and design product mix
Finance
 To maximize per capita income with minimum resources
 Find out profit plan for the company
 Best replacement policies
Marketing
 Assignment of sales men for the territory
 Travelling sales man problem

1.2. Development of operation research

Since the advent of the industrial revolution, the world has seen a remarkable growth in the size and
complexity of organizations. An integral part of this revolutionary change has been a tremendous
increase in the division of labor and segmentation of management responsibilities in these
organizations. So, this increasing specialization has created new problems, problems that are still
occurring in many organizations. A related problem is that as the complexity and specialization in an
organization increase, it becomes more and more difficult to allocate the available resources to the
various activities in a way that is most effective for the organization as a whole. These kinds of

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problems and the need to find a better way to solve them provided the environment for the
emergence of operations research (commonly referred to as OR).

The roots of OR can be traced back many decades, when early attempts were made to use a
scientific approach in the management of organizations. However, the beginning of the activity
called operations research has generally been attributed to the military services early in World War
II. Because of the war effort, there was an urgent need to allocate scarce resources to the various
military operations and to the activities within each operation in an effective manner. Therefore, the
British and then the U.S. military management called upon a large number of scientists to apply a
scientific approach to dealing with this and other strategic and tactical problems. In effect, they were
asked to do research on (military) operations. These teams of scientists were the first OR teams. By
developing effective methods of using the new tool of radar, these teams were instrumental in
winning the Air Battle of Britain. Through their research on how to better manage group and
antisubmarine operations, they also played a major role in winning the Battle of the North Atlantic.
Similar efforts assisted the Island Campaign in the Pacific.

When the war ended, the success of OR in the war effort spurred interest in applying OR outside
the military as well. As the industrial boom following the war was running its course, the problems
caused by the increasing complexity and specialization in organizations were again coming to the
forefront. It was becoming apparent to a growing number of people, including business consultants
who had served on or with the OR teams during the war, that these were basically the same
problems that had been faced by the military but in a different context. By the early 1950s, these
individuals had introduced the use of OR to a variety of organizations in business, industry, and
government. The rapid spread of OR soon followed.

Operations Research has existed since the beginning of recorded history. As far back as World War
II, operations research techniques have been developed to assist the Military during the war. Today,
many organizations employ a staff of operation researcher or management science personnel or
consultants to apply the principles of operations research to management problems.

Pre-World war II: The roots of OR are as old as science and society. Though the roots of OR
extend to even early 1800s, it was in 1885 when Ferderick W. Taylor emphasized the application of
scientific analysis to methods of production, that the real start took place. Another man of early
scientific management era was Henry L. Gantt. Most job scheduling methods at that time were
rather random. A job, for instance, may be processed on a machine without dilemma but then wait
for days for acceptance by the next machine. Gantt mapped each job from machine to machine,
minimizing every delay. Now with the Gantt procedure, it is possible to plan machine loadings
months in advance and still quote delivery dates accurately.
However, it was the First Industrial Revolution which contributed mainly towards the development
of OR. Before this revolution, most of the industries were small scale, employing only a handful of
men. The advent of machine tools-the replacement of man by machine as a source of power and
improved means of transportation and communication resulted in fast flourishing industry. It
became increasingly difficult for a single man to perform all the managerial functions (of planning,
sale, purchase, production, etc.). Consequently, a division of management function took place.
Managers of production, marketing, finance, personnel, research and development etc., began to
appear. With further industrial growth, further subdivisions of management functions took place.
For example, production department was sub-divided into sections like maintenance, quality control,
procurement, production planning, etc.
Through this science of operation research originated in England, the united states soon took the
lead in united states these OR teams helped in developing strategies from mining operations,
inventing new flight patterns and planning of sea mines.

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Post-world war II: immediately after the war, the success of military teams attracted the attention
of industrial managers who were seeking solutions to their problems. Industrial operation research
in U.K. and U.S.A. developed along different lines. In U.K., the critical economic situation required
drastic increase in production efficiency and creation of new markets. Nationalization of a few key
industries further increased the potential field for OR. Consequently, OR soon spread from military
to government, industrial, social and economic planning.

The progress of operational research in U.S.A. was due to advent of second industrial revolution
which resulted in automation-the replacement of man by machine as a source of control. The new
revolution began around 1940s when electronic computers became commercially available. In 1950,
OR was introduced as a subject for academic study in American universities since then this subject
has been gaining ever increasing importance for the students of Mathematics, Statistics, Commerce,
Economics, Management and Engineering.

1.3 Overview of the operations research modeling approach

Modeling approach for problem solving in operation research needs the following steps:

Defining the problem and gathering data

This procedure is crucial. It is difficult to extract a “right” answer from the “wrong” problem.
Most practical problems encountered by OR teams are initially described in a vague and imprecise
way. This step should answer the following questions: Who are the decision makers? , What are the
objectives? , What are the constraints (relationships)? and how to collect relevant data.

Formulating a mathematical model

After the decision maker’s problem is defined, the next phase is to reformulate this problem in a
form that is convenient for analysis. The conventional OR approach for doing this is to construct a
mathematical model that represents the essence of the problem. Before discussing how to formulate
such a model, we first explore the nature of models in general and of mathematical models in
particular. Mathematical models are also idealized representations, but they are expressed in terms of
mathematical symbols and expressions. Construct a mathematical model that represents the essence
of the problem. This step needs to define decision variables, define the objective function, and
define the constraints (relations among decision variables).

A crucial step in formulating an OR model is the construction of the objective function. This
requires developing a quantitative measure of performance relative to each of the decision maker’s
ultimate objectives that were identified while the problem was being defined. If there are multiple
objectives, their respective measures commonly are then transformed and combined into a
composite measure, called the overall measure of performance. This overall measure might be
something tangible (e.g., profit) corresponding to a higher goal of the organization, or it might be
abstract (e.g., utility). In the latter case, the task of developing this measure tends to be a complex
one requiring a careful comparison of the objectives and their relative importance. After the overall
measure of performance is developed, the objective function is then obtained by expressing this
measure as a mathematical function of the decision variables.

Deriving solutions from the model

After a mathematical model is formulated for the problem under consideration, the next phase in an
OR study is to develop a procedure (usually a computer-based procedure) for deriving solutions to
the problem from this model. Sometimes, in fact, it is a relatively simple step, in which one of the
standard algorithms (systematic solution procedures) of OR is applied on a computer by using one
of a number of readily available software packages. For experienced OR practitioners, finding a
solution is the fun part, whereas the real work comes in the preceding and following steps, including
the post optimality analysis (sensitivity analysis).

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A common theme in OR is the search for an optimal, or best, solution. Indeed, many procedures
have been developed for finding such solutions for certain kinds of problems. However, it needs to
be recognized that these solutions are optimal only with respect to the model being used. Since the
model necessarily is an idealized rather than an exact representation of the real problem. This step
needs an algorithm (systematic solution procedures) and post-optimality analysis (what would
happen to the optimal solution if different assumptions are made?)

Implementation

Install a well-documented system for applying the model. Include the model, solution procedure,
and operating procedures for implementation. This system is usually computer-based. A
considerable number of computer programs often need to be used and integrated. Databases and
management information systems may provide up-to-date input for the model. The assumptions of
the model continue to be satisfied. Need to revise or re-build models when significant deviations
occur.
1.4. Applications of operations research
 It provides a tool for scientific analysis and provides solution for various business problems.
 It enables optimum allocation of scarce resources.
 It helps in minimizing waiting and servicing costs.
 It enables the management to decide when to buy and how much to buy through the
technique of inventory planning.
 It helps in evaluating situations involving uncertainty.
 It enables experimentation with models, thus eliminating the cost of making errors while
experimenting with reality.
 It allows quick and inexpensive examination of large numbers of alternatives.
 In general, OR facilitates and improves the decision making process.

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 CHAPTER TWO
LINEAR PROGRAMMING

2.1. Basic Concepts in Linear Programming

Linear programming has as its purpose the optimal allocation of scarce resources among
competing products or activities. It is singularly helpful in business and economics where it is often
necessary to optimize a profit or cost function subject to several inequality constraints. If the
constraints are limited to two variables, the easiest solution is through the use of graphs.
Linear programming is a mathematical technique for finding optimal solutions to problems that can
be expressed using linear equations and inequalities. If a real-world problem can be represented
accurately by the mathematical equations of a linear program, the method will find the best solution
to the problem. Of course, few complex real-world problems can be expressed perfectly in terms of
a set of linear functions. Nevertheless, linear programs can provide reasonably realistic
representations of many real-world problems — especially if a little creativity is applied in the
mathematical formulation of the problem.
A linear program consists of a set of variables, a linear objective function indicating the contribution
of each variable to the desired outcome, and a set of linear constraints describing the limits on the
values of the variables.

2.2. Formulation of Linear Programming Problems

Similarly, the mathematical model of a business problem is the system of equations and related
mathematical expressions that describe the essence of the problem. Thus, if there are n related
quantifiable decisions to be made, they are represented as decision variables (say, x1, x2, . . . , xn)
whose respective values are to be determined. The appropriate measure of performance (e.g., profit)
is then expressed as a mathematical function of these decision variables (for example, P = 3x1 + 2x2
+….+5xn). This function is called the objective function. Any restrictions on the values that can
be assigned to these decision variables are also expressed mathematically, typically by means of
inequalities or equations. Such mathematical expressions for the restrictions often are called
constraints. The constants (namely, the coefficients and right-hand sides) in the constraints and the
objective function are called the parameters of the model. The mathematical model might then say
that the problem is to choose the values of the decision variables so as to maximize the objective
function, subject to the specified constraints. Such a model, and minor variations of it, typifies the
models used in OR. The objective of a linear programming problem will be to maximize or to
minimize some numerical value.

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Objective Function: Objective function is the goal or objective of a management, stated as intent
to maximize or to minimize some important quantity such as profits or costs.
The objective function takes the following general form:
n
z   ci xi
i 1

Where:
Ci = the objective function coefficient corresponding to the ith variable, and
Xi = the ith decision variable
The coefficients of the objective function indicate the contribution to the value of the objective
function of one unit of the corresponding variable.

Decision Variables: The Variables in a linear program are a set of quantities that need to be
determined in order to solve the problem; i.e., the problem is solved when the best values of the
variables have been identified. Typically, the variables represent the amount of a resource to use or
the level of some activity. Simply, things which produced sold or consumed.

Constraints define the possible values that the variables of a linear programming problem may take.
Factors that affect the production, sale and consumption of goods and services. They typically
represent resource constraints, or the minimum or maximum level of some activity or condition.
They take the following general form:
n
Subject to a x
i 1
i i  bi

xi = the ith decision variable

ai = the coefficient on Xi in constraint and
bi = the right-hand-side coefficient on constraint

Non-negativity Constraints: the variables of linear programs must always take non-negative values
(i.e., they must be greater than or equal to zero).
Finally LPP model is represented as follows:
n
Z  c x
i 1
i i

n
Subject to a x
i 1
i i  bi

Xi > 0

In formulating the LPP as a mathematical model, we shall follow the following four steps

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 1. Identify the decision variables and assign symbols to them (eg x, y, z,. . .or x1, x2, x3, . . .
2. Identify the set if constraints and express them in terms of inequalities involving the decision
variables.
3. Identify the objective function and express it in terms of the decision variables.
4. Add the non-negativity constraints

2.3. Assumptions of linear programming

Before we get too focused on solving linear programs, it is important to review some theory For
instance, several assumptions are implicit in linear programming problems. These assumptions are:
1. Proportionality: deals with the contribution per unit of each decision variable to the
objective function
2. Optimization: Objective function to maximize or minimize
3. Finiteness: A finite number of activities and constraints to consider
4. Determinism: All parameters are assumed to be known constants
5. Continuity: All decision variables should be continuous variables.
6. Homogeneity: All units of the same resource or activity are identical
7. Additivity: When two or more activities are used, the total product is equal to the sum of
the individual products (no interaction effects between activities)

2.4. Methods of Solving LP

2.4.1. The Graphic Method

To sole LPP graphically, the following steps are necessary:

1. Formulate mathematical model of Linear programming

2. Convert constraint inequalities into equalities
3. Draw the graph by intercept
4. Identify the feasible area of the solution which satisfies all constrains.
5. Identify the corner points in the feasible region
6. Identify the optimal point
7. Interpret the result

 Graphical LP is a two-dimensional model.

Maximization Problem

==>Maximize Z with inequalities of constraints in < form

Example: Consider two models of color TV sets; Model A and B, are produced by a company to
maximize profit. The profit realized is $300 from A and $250 from set B. The limitations are

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 a. Availability of only 40hrs of labor each day in the production department.
b. a daily availability of only 45 hrs on machine time
c. Ability to sale 12 set of model A.

How many sets of each model will be produced each day so that the total profit will be as large as
possible?
Resources used per unit

Constraints Model A Model B Maximum Available hrs.

(X1) (X2)

Labor hr. 2 1 40
Machine hr. 1 3 45
Marketing hr. 1 0 12
Profit $300 $250
Solution
1. Formulation of mathematical modeling of LPP

Max Z=300X1+250X2

St: 2X1+X2< 40

X1+3X2< 45 LPP Model

X1 < 12

X1,X2 >0

2. Convert constraints inequalities into equalities

2X1+X2 = 40
X1+3X2= 45
X1 = 12
3. Draw the graph by intercepts
2X1+X2 = 40 ==> (0, 40) and (20, 0)
X1+3X2= 45==> (0, 15) and (45, 0)
X1 = 12==> (12, 0)
X1 X2 = 0

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 2X1+X2 = 40
X2
X1=0
40 X1=12

15
B

X1+X2 = 45
Feasible C (12, 11)
Region X2=0
X1
D
A 12 20 45

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 4. Identify the feasible area of the solution which satisfies all constrains.
5. Identify the corner points in the feasible region
A (0, 0), B (0, 15), C (12, 11) and D (12, 0)
6. Identify the optimal point
7. Interpret the result

Corners Coordinates Max Z=300 X1 +250X2

A (0, 0) $0
B (0, 15) $3750
C (12, 11) $6350
D (12, 0) $3600

Interpretation: 12 units of model A and 11 units of model B should be produced so that the total
profit will be $6350.

B. Minimization Problem
==>Minimize Z with inequalities of constraints in> form
Example: Suppose that a machine shop has two different types of machines; machine 1 and
machine 2, which can be used to make a single product .These machines vary in the amount of
product produced per hr., in the amount of labor used and in the cost of operation.

Assume that at least a certain amount of product must be produced and that we would like to utilize
at least the regular labor force. How much should we utilize each machine in order to utilize total
costs and still meets the requirement?

_____________________________________________________________
Resource used
Constraints Machine 1 (X1) Machine (X2) Minimum required hours
_____________________________________________________________________
Product produced/hr 20 15 100
Labor/hr 2 3 15________
Operation Cost $25 $30_____________________________

Solution

Min.Z  25 X 130 X 2
St :
20 X 115 X 2 100 LPP Model

2 X 13 X 2 15
X1, X 2  0
Constraint equation:

20X1 +15X2=100 ==> (0, 20/3) and (5, 0)

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 2X1+3X2=15 ==> (0, 5) and (7.5, 0)

X1 X2 = 0

X2
X1 =0
A (0, 20/3)

Feasible Region

B (2.5, 3.33)
X2 =0

X1
5 C (7.5, 0)

______________________________________________________________________________
Corners Coordinates MinZ=25 X1 + 30X2
A (0, 20/3) 200

B (2.5, 3.33) 162.5

C (7.5, 0) 187.5
____________________________________________________________

X1 =2.5unit

X2=3.33unit and

MinZ= $162.5

SPECIAL CASES IN GRAPHICS METHODS

1. Redundant Constraint

If a constraint when plotted on a graph doesn’t form part of the boundary making the feasible
region of the problem that constraint is said to be redundant constraint.

Example: A firm is engaged in producing two products A and B .Each unit of product A
requires 2Kg of raw material and 4 labor-hours for processing; whereas each unit of product B
requires 3Kg of raw materials and 3hrs of labor. Every unit of product A needs 4hrs to
packaging and every unit of product B needs 3.5hrs for packaging. Every week the firm has
availability of 60Kg of raw material, 96 labor-hours and 105 hrs. I the packaging department.1
unit of product A sold yields $40 profit and 1 unit of B sod yields $35 profit.

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 Required:

a. Formulate this problem as a LPP

b. Find the optimal solution

Solution
_______________________________________________________________
Products Resource available Resources
A B per week
__________________________________________________________________

Raw materials (Kg) 2 3 60

Labor (hr) 4 3 96

Packaging (hr) 4 3.5 105

Profit per unit $40 $35

Let X1 =The Noof units of product A produced per week

X2 =The Noof units of product B produced per week

a. LPP Model
Max.Z  40 X 135 X 2
St :
2 X 13 X 2 60
4 X 13 X 2 96
4 X 1  3.5 X 2  105
X1, X 2  0

X2

(0, 32)

Labor: 4X1+3X2= 96
Packaging: 4X1+3.5X2= 105
(0, 30)
Raw material: 2X1+3X2= 60
(0, 20) FR C (18,8)
X1
D (24, 0) (26, 0) (30, 0)
A (0, 0)

 The packaging hr is redundant.

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Corners Coordinates MinZ=40 X1 + 35X2

A (0, 0) 0

B (0, 20) 700

C (18, 8) 1000

D (24, 0) 960

X1 =18

X2=8 and

MinZ= 1000

Interpretation:

The company should produce and sale 18 units of product A and 8 units of product B per week
so as to get a maximum profit of 1000.

Note:
The packaging hour’s constraint does not form part of the boundary making the feasible region.
Thus, this constraint is of no consequence and is therefore, redundant. The inclusion or exclusion
of a redundant constraint does not affect the optimal solution of the problem.

2. Multiple optimal Solutions

==>We have unlimited number of optimal solution without increasing or decreasing the
objective function.

Example:
Max.Z  8 X 116 X 2
St :
3 X 16 X 2 900
X 1 X 2 200
X 2  125
X1, X 2  0

==>Multiple optimal solutions provide more choices for management to reach their objectives.

3. Infeasible Solution

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A solution is called feasible if it satisfies all the constraints and the constraints and non-
negativity condition. However, it is sometimes possible that the constraints may be inconsistent
so that there is no feasible solution to the problem. Such a situation is called infeasibility.

Example:

MaxZ=20X1+30X2

St:2X1+X2< 40

4X1+X2< 60

X1 > 30

X1, X2 > 0

4. Unbounded Solution It is a solution whose objective function is infinite. If the feasible region
is unbounded then one or more decision variables will increase indefinitely without violating
feasibility, and the value of the objective function can be made arbitrarily large. Consider the
following model:
Example: Minz = 40x1 + 60x2
St: 2x1 + x2 ≥ 70
x1 + x2 ≥ 40
x1 + 3x2 ≥ 90

x1, x2 ≥ 0

SIMPLEX METHOD
The graphical method is useful only for problems involving two decision variables and relatively
few problem constraints. What happens when we need more decision variables and more
constraints? We use an algebraic method called the simplex method, which was developed by
George B. DANTZIG (1914-2005) in 1947 while on assignment with the U.S. Department of the
air force.

The simplex method is an ITERATIVE or “step by step” method or repetitive algebraic

approach that moves automatically from one basic feasible solution to another basic feasible
solution improving the situation each time until the optimal solution is reached at.

MAXIMIZATION PROBLEMS

 Maximize Z with inequalities of constraints in “< “form

Example: Solve the problem using the simplex approach

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 Max.Z=300x1 +250x2

Subject to: 2x1 + x2 < 40 (Labor)

x1+3x2 < 45 (Machine)

x1< 12 (Marketing)

x1, x2> 0

Solution

Step 1: Formulate LPP Model

Step 2: Standardize the problem

I.e. convert constraint inequality into equality form by introducing a variable called Slack variable.

Slack Variables: Slack variables represent the unused resources between the left-hand side and
right-hand side of each inequality. A slack variable(s) is added to the left hand side of a < constraint
to covert the constraint inequality in to equality. The value of the slack variable shows unused
resource.

A slake variable emerges when the LPP is a maximization problem. Slack variables represent unused
resource or idle capacity. Thus, they don’t produce any product and their contribution to profit is
zero. Slack variables are added to the objective function with zero coefficients.

Let that s1, s2, and s3 are unused labor, machine and marketing hrs respectively.

Max.Z=300x1 +250x2 + 0 s1 +0 s2+ 0 s3

St:2x1+x2+ s1 +0 s2+ 0 s3= 40 Standard form

x1+3x2+0s1 + s2+ 0 s3= 45

x1+ 0s1 + 0s2+ s3=12

x1,x2 , s1 , s2, s3 > 0

Step 3: Obtain the initial simplex tableau

To represent the data, the simplex method uses a table called the simplex table or the simplex
matrix.

==> In constructing the initial simplex tableau, the search for of the optimal solution begins at the
origin. Indicating that nothing can be produced;

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Thus, first assumption, No production implies that x1 =0 and x2=0

==>2x1+x2+ s1 +0 s2+ 0 s3= 40 ==>x1+3x2+0 s1 + s2+ 0 s3= 45

2(0) +0+ s1 +0 s2+ 0 s3= 40 0 +3(0)+0s1 + s2+ 0 s3= 45

s1= 40 – Unused labor hrs. s2= 45 – Unused machine hrs.

==>x1+0s1 +0s2+ s3= 12

0 +0s1 +0 s2+ s3= 12

s3= 12 – Unused Marketing hrs.

Therefore, Max.Z=300x1 +250x2 + 0 s1 +0 s2+ 0 s3

=300(0) +250(0) + 0(40) +0(45) + 0(12) =0

Note:In general, whenever there are n variables and m constraints (excluding the non-negativity),
where m is less than n (m<n), n-m variables must be set equal to zero
before the solution can be solved algebraically.

a. Basic variables are variables with non-zero solution values.

Or: basic variables are variables that are in the basic solution. Basic variables have 0 values in
the Cj - Zj row.
b. Non-basic variables are variables with zero solution values.
Or: non-basic variables are variables that are out of the solution.
==>n=5 variables (x1, x2, s1, s2, and s3) and M=3 constraints (Labor, machine and marketing
constraints), excluding non-negativity.

Therefore, n-m=5-3=2 variables(x1 and x2) are set equal to zero in the 1st simplex tableau. These are
non-basic variables. 3 Variables (s1, s2, and s3) are basic variables (in the 1st simplex tableau) because
they have non-zero solution values.

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Step 4: Construct the initial simplex tableau

Initial simplex tableau

Cj 300 250 0 0 0

SV X1 X2 S1 S2 S3 Q

0 S1 2 1 1 0 0 40 R1

0 S2 1 3 0 1 0 45 R2

0 S3 1 0 0 0 1 12 R3

Zj 0 0 0 0 0 0

Cj - Zj 300 250 0 0 0

Step 5: Choose the “incoming” or “entering” variables

Note: The entering variable is the variable that has the most positive value in the Cj – Zj row also
called as indicator row. Or the entering variable is the variable that has the highest contribution to
profit per unit. X1 in our case is the entering variable. The column associated with the entering
variable is called key or pivot column ( X1columnin our case )

Pivot Column: The column of the tableau representing the variable to be entered into the solution
mix.

Step 6: Choose the “leaving “or “outgoing” variable

==> In this step, we determine the variable that will leave the solution for X1 (or entering variable)

Note: The row with the minimum or lowest positive (non-negative) replacement ratio shows the
variable to leave the solution. Pivot Row: The row of the tableau representing the variable to be
replaced in the solution mix.

Replacment Ratio (RR) =

Note: RR>0

The variable leaving the solution is called leaving variable or outgoing variable.

The row associated with the leaving variable is called key or pivot row (s3 columnin our case)

The element that lies at the intersection of the pivot column and pivot row is called pivot
element(No 1 in our case). Pivot Number: The element in both the pivot column and the pivot row.

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Step 7: Repeat step 4-6 till optimum basic feasible solution is obtained.

Or: repeat step 3-5 till no positive value occurs in the Cj - Zj row.

2nd simplex tableau

Cj 300 250 0 0 0

SV X1 X2 S1 S2 S3 Q

0 S1 0 1 1 0 -2 16 R’1=R1-2R3

0 S2 0 3 0 1 -1 33 R’2=R2-R3

300 X1 1 0 0 0 1 12 R’3=R3

Zj 300 0 0 0 300 3600 1

Cj - Zj 0 250 0 0 -300

3rd simplex tableau

Cj 300 250 0 0 0

SV X1 X2 S1 S2 S3 Q

0 S1 0 0 1 -1/3 -5/3 5

250 X2 0 1 0 1/3 -1/3 11

300 X1 1 0 0 0 1 12
Zj 300 250 0 250/3 650/3 6350
Cj - Zj 0 0 0 -250/3 - 650/3

Since all the Cj - Zj< 0 optimal solution is reached at.

Therefore, X1=12, X2=11, S1=5 and Max Z=6350

MINIMIZATION PROBLEMS

 Minimize Z with inequalities of constraints in “> “form

There are two methods to solve minimization LP problems:

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 1. Direct method/Big M-method/

 Using artificial variables

2. Conversion method

 Minimization by maximizing the dual

 Surplus Variable (-s):
 A variable inserted in a greater than or equal to constraint to create equality. It
represents the amount of resource usage above the minimum required usage.
 Surplus variable is subtracted from a > constraint in the process of converting the
constraint to standard form.
 Neither the slack nor the surplus is negative value. They must be positive or zero.
Thus, in order to avoid the mathematical contradiction, we have to add artificial variable (A)

 Artificial variable (A):

Artificial variable is a variable that has no meaning in a physical sense but acts as a tool to create an
initial feasible LP solution.

1. Big M-method /Charnes Penalty Method/

In this method; we assign coefficients to artificial variables, undesirable from the objective function
point of view. If objective function Z is to be minimized, then a very large positive price (called
penalty) is assigned to each artificial variable. Similarly, if Z is to be maximized, then a very large
negative price (also called penalty) is assigned to each of these variables.

Following are the characteristics of Big-M Method:

a. High penalty cost (or profit) is assumed as M

b. M is assigned to artificial variable A in the objective function Z.
c. Big-M method can be applied to minimization as well as maximization problems with the
following distinctions:
i. Minimization problems
 Assign +M as coefficient of artificial variable A in the objective
function Z

ii. Maximization problems:

 Here– M is assigned as coefficient of artificial variable A in the
objective function Z

d. Coefficient of S (slack/surplus) takes zero values in the objective function Z

e. For minimization problem, the incoming variable corresponds to the highest negative value of
Cj - Zj.
f. Solution is optimal when there is no negative value of Cj-Zj.(For minimization case)

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 Example: Min Z=25x1 +30x2

Subject to: 20x1+15x2 > 100

2x1+ 3x2 > 15

x1, x 2> 0

Solution

Step 1 Standardize the problem

Minimize Z=25x1 +30x2 +0s1+0s2 +MA1+MA2

Subject to:

20x1+15x2- s1+A1 = 100

2x1+ 3x2 –s2+A2 = 15

x1, x2 , s1, s2 ,A1 ,A2 > 0

Step 2: Initial simplex tableau

The initial basic feasible solution is obtained by setting x1= x2= s1= s2=0

No production, x1= x2= s1=0==>20(0) +15(0) - 0+A1 = 100 ==> A1 = 100

x1= x2= s2=0==>0(0)+3(0) - 0+A2 =15==> A2 = 15

Initial simplex tableau

Cj 25 30 0 0 M M

SV X1 X2 S1 S2 A1 A2 Q

M A1 20 15 -1 0 1 0 100

M A2 2 3 0 -1 0 1 15

Zj 22M 18M -M -M M M 115 M

Cj - Zj 25 -22M 30- 18 M M 0 0

Note: Once an artificial variable has left the basis, it has served its purpose and can therefore be
removed from the simplex tableau. An artificial variable is never considered for re-entry into the
basis. 2nd Simplex Tableau

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 Cj 25 30 0 0 M

SV X1 X2 S1 S2 A2 Q

25 X1 1 3/4 -1/20 0 0 5

M A2 0 3/2 1/10 -1 1 5 R’1=R1/20

Zj 25 75/4+3/2M -5/4+1/10M -M M 125+5 M

Cj - Zj 0 45/4-3/2M 5/4-1/10 M M 0
R’2=R2-2 R’

3rd Simplex Tableau

Cj - Zj> 0==>Optimal solution is reached

X1=5/2

X2=10/3 and MinZ=162.5

Note: As long as an “A” variable is available in the solution variable column, the solution is
infeasible.
R’’1=R’1-3/4R’’2

Cj 25 30 0 0

SV X1 X2 S1 S2 Q 2/3/2
R’’2=R’

25 X1 1 0 -1/10 1/2 5/2

30 X2 0 1 1/15 -2/3 10/3

Zj 25 30 -1/2 -15/2 162.5
Cj - Zj 0 0 1/2 15/2

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SPECIAL CASES IN SIMPLEX METHOD

1. Mixed constraints
Example
Max Z=6x1 +8x2
Subject to: x2< 4
6x1+ 2x2 >24
x1, x2> 0

 Standard form
Max.Z=6x1 +8x2 + 0 s1 +0 s2+ 0 s3-M A2- M A3

St: x2+ s1 =4

6x1+2x2 - s3 + A3 =24

All Variables > 0

2. Two incoming variables

In order to break this tie, the selection for the key column (entering variable) can be made
arbitrary. However; the number of solution can be minimized by adopting the following rules:

1. If there is a tie between two decision variables, then the selection can be made arbitrary.

2. If there is a tie between a decision variable and a slack (or surplus) variable, then select the
decision variable to enter into basis first.

3. If there is a tie between slack or surplus variable, then selection can be made arbitrary.

3. Infeasibility

In the simplex method, an infeasible solution is indicated by looking at the final tableau .In it, all
Cj - Zj row entries will be the proper sign to imply optimality, but an artificial variable (A) will
still be in the solution mix.

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Example: Minimization case

Cj 5 8 0 0 M

SV X1 X2 S1 S2 A2 Q

5 X1 1 1 -2 3 0 200

8 X2 0 1 1 2 0 100

M A2 0 0 0 -1 1 20

Zj 5 8 -2 31-M M 1,800+200M

Cj - Zj 0 0 2 M-31 0

Even though all Cj - Zj are positive or 0(i.e the criterion for an optimal solution in a
minimization case), no feasible solution is possible because an artificial variable (A2) remains
in the solution mix.

4. Unbounded Solutions

No finite solution may exist in problems that are not bounded .This means that a variable can be
infinitely large without violating a constraint. In the simplex method, the condition of
unboundedness will be discovered prior to reaching the final tableau. We will note the problem
when trying to decide which variable to remove from the solution mix. The procedure in
unbounded solution is to divide each quantity column number by the corresponding pivot
column number. The row with the smallest positive ratio is replaced. But if the entire ratios turn
out to be negative or undefined, it indicates that the problem is unbounded. Example:
Maximization case

Cj 6 9 0 0

SV X1 X2 S1 S2 Q

9 X2 -1 1 2 0 30

0 S2 -2 0 -1 1 10

Zj -9 9 18 0 270

Cj - Zj 15 0 -18 0

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The solution in the above case is not optimal because not all Cj - Zj entries are 0 or negative, as
required in a maximization problem. The next variable to enter the solution should be X1.To
determine which variable will leave the solution, we examine the ratios of the quantity column
numbers to their corresponding numbers in the X1or pivot column. Since both pivot column
numbers are negative, an unbounded solution is indicated.
 No unbounded solutions, no outgoing variable will exist.
5. Degeneracy

5 8 2 0 0 0
Cj

SV X1 X2 X3 S1 S2 S3 Q

8 X2 1/4 1 1 -2 0 0 10

0 S2 4 0 1/3 -1 1 0 20

0 S3 2 0 2 2/5 0 1 10

Zj 2 8 8 16 0 0 80

Cj - Zj 3 0 -6 -16 0 0

If there is a tie for the smallest ratio, this is a signal that degeneracy exists. Degeneracy can occur
right in the first (initial tableau). This normally happens when the number of constraints is less
than the number of variables in the objective function. Problem can be overcome by trial and
error method. Degeneracy is shown in the simplex algorithm alternatives back and forth
between the same non-optimal solutions, i.e., it puts a new variable in, then takes it out in the
next tableau, puts it back in ,and so on.

One simple way of dealing with the issue is to select either row (S2 or S3 in this case) arbitrary. If
we are unlucky and cycling does occur, we simply go back and select the other row.

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6. Multiple Optimal Solutions

Multiple optimal solutions exist when non-basic variable contains zero on its Cj - Zj row.

Example: Maximization problem

Cj 3 2 0 0 Max Z=3X1+2X2

SV X1 X2 S1 S2 Q X1=0, X2=6, S2=3 and Max Z=12 or:

X1=3, X2=3/2 and Max Z=12
2 X2 3/2 1 1 0 6
The Cj - Zj value of the Non-basic
0 S2 1 0 1/2 1 3 variable (X1) is 0.Thus, there is
alternative optimal solution.
Zj 3 2 2 0 12

Cj - Zj 0 0 -2 0

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