1 Intro LP Formulation

LINEAR PROGRAMMING
Quiz: 10
End Term: 40
Sonia
6629
Sonia@iiml.ac.in
History of Operations Research
During World War II, the
military managements in
the U.K and the USA
engaged a team of
scientists to study strategic
and tactical problems
related to air and land
defense of the country.
They wanted to allocate the limited military resources and

form a plan of action to utilize them in the most effective
manner. This was done under the name 'Operation Research'
(OR) because the team was dealing with research on military
operation.
Research designed to determine most efficient way
to do something
Science of decision making: Mathematical or
scientific analysis of a process or operation, used in
making decisions.
Scientific base for management to take effective and
timely decisions to their problems.
Avoids danger from taking decisions by guess or
using thumb rules.
Operations Research: Summary
Research into operations
Allocating limited resources (funds, manpower,
time, raw material) among competing activities
in the best possible manner.
Search of optimal solution strategy in a given
situation.
Applicable to business operations
Operations Research at Taco Bell
Operational Cost Control at Kellogg
Optimization Problem
What is an Optimization Problem all about??

Minimizing or Maximizing some Objective subject to certain
restrictions.
Why is an Optimization Problem required??

All problems seek to maximize or minimize some quantity
(the objective function).
The presence of restrictions or constraints, limits the degree
to which we can pursue our objective.
There must be alternative courses of action to choose from.
Linear Programming Problem
Optimization Problem: (Mathematically)
Return Function (Objective Function)
Constraint Functions
Linear Program
All functions are linear = linear relationship
What do we mean by linear?
Linear:
Things are proportional
Double the production:
Profit gets doubled
Raw material consumption is doubled
An Example
Two Products (Bulbs and Batteries)

Each requires two raw materials (P and Q)
One batch of bulbs needs
2 units of P, 4 units of Q
One batch of batteries needs
An Example
Raw material availability is limited
Each product yields different profit/unit
bulb: $4 per unit
battery: $5 per unit
Problem:
How much of each
product should be
produced so that total
Profit is maximized
Elements of a Linear Programming Model
Decision Variables
Quantities whose values the management wants to
decide
x1: batches of bulbs to produce
x2: batches of batteries to produce
Parameters (Problem Data)

Quantities that cannot be changed by management
Profit per unit
Raw material availability
Qty. of raw material needed per unit of product
Objective Function
A mathematical function of decision variables, whose value
the management wishes to minimize or maximize by controlling
the values of decision variables
Maximize 4x1 + 5x2
Constraints
Restrictions under which the decision must be
taken
a) Requirement Availability (for each raw material)
2x1 + 3x2 6 (availability of P)
4x1 + 2x2 9 (availability of Q)
b) Production Quantities cannot be negative
x1 0, x2 0
Complete Model
Maximize 4x1 + 5x2
Subject to: 2x1 + 3x2 6
4x1 + 2x2 9
x1 , x2 0
The above is an LP Formulation of the problem.

Study and Explore the mathematical structure.
Learn techniques for solving it.
Learn how to formulate real life problems as LPs
Linear Programming Assumptions
Problem data is known exactly (deterministic)

All variables can assume any real value
(continuous variables)
All variables are non-negative
All relationship between variables are linear
Formulation of a Linear Program
Formulation:
To translate a given real world situation into a mathematical
statement.
Identify Decision variables

Identify objective function
Identify constraints
More of an Art than a Science
Takes practice and experience to formulate correctly and

efficiently
New Venture Finance
Summary of the problem:
Need to raise 50 lakhs

Three options:
Upto 20 lakhs in bonds @ 12%
Fin. Corp A : 30 lakhs @ 18%
Condition: Bond debt + loan from B loan from A
Fin. Corp. B : (@ 16% )
Condition: loan amt. not to exceed the loan from A
To minimize the annual interest rate!
New Venture Finance
Decision variables:
x1: bond debt, x2: loan from A, x3: loan from B
Objective:
Minimize 12x1 + 18x2 + 16x3
Constraints:
x1 + x2 + x3 50 (Required Amount)
x1 20 (Bond Debt)
x2 30 (Loan from A)
x1 + x3 x2 (Condition of Fin. Inst. A)
x3 x2 (Condition of Fin. Inst. B)
x1, x2, x3 0 (Non-negativity constraints)
Advertising Media Selection
Decision Variables:
x1: Number of television commercials
x2: Number of radio commercials
x3: Number of newspaper ads
Objective:
Maximize 20,000 x1 + 12,000 x2 + 9,000 x3
Constraints:
15,000 x1 + 6,000 x2 + 4,000 x3 100,000
x1 4
x2 10
x3 7
x1 + x2 + x3 15
x1, x2, x3 0
Diet Problem
Decision Variables:
x1: Food Type 1, x2: Food Type 2
Objective:
Minimize x1 + 3x2 + 4x3 + 2x4 + 1.5x5 + 3x6
Constraints:
8x1 + 18x2 + 16x3 + 4x4 + 5x5 + 2.5x6 75 (Proteins)
1.5x1 + 15x2 + 4x3 + 20x4 + 8x5 85 (Fats)
35x1 + 7x3 + 2.5x4 + 40x5 + 25x6 300 (Carbo.)
x1, x2, x3, x4, x5, x6 0

A Job-Training Problem
Each Trained Machinist: 3 options
Work a machine Stay idle
Teach
A Job-Training Problem
Decision Variables:
x1: trained machinist teaching in January

x2: trained machinist idle in January
x3: trained machinist teaching in February
x4: trained machinist idle in February
x5: trained machinist teaching in March
x6: trained machinist idle in March
Constraints:
Machining + Teaching + Idle = Trained machinists available

Constraints:
100 + x1 + x2 = 130 (Jan)
150 + x3 + x4 = 130 + 7x1 (Feb)
200 + x5 + x6 = 130 + 7x1 + 7x3 (Mar)
130 + 7x1 + 7x3 + 7x5 = 250 (Apr)
Objective:
Minimize
400(10x1 + 10x3 + 10x5) + 700 (x1 + x3 + x5) +
500(x2 + x4 + x6) + 700(100 +150 +200)
Non-Negativity:
x1, x2, x3, x4, x5, x6 0
Investment Planning
$1.4
$1.4
$1.4
$1.4
$1.7
$1.7
$1.7
$1.9
$1.3
Investment Planning
Constraints:
x1 + x 5 60000 Year 1
x2 + x 6 + x8 60000 - (x1 + x5) Year 2
x3 + x 7 60000 - (x1 + x5 + x2 + x6 + x8)
+ 1.4x1 Year 3
x4 60000 - (x1 + x5 + x2 + x6 + x8 + x3 + x7)
+ 1.4x1 + 1.4x2 + 1.7 x5 Year 4
x9 60000 - (x1 + x5 + x2 + x6 + x8 + x3 + x7 + x4)
+ 1.4x1 + 1.4x2 + 1.4x3 + 1.7x5 + 1.7x6
Year 5
x1 . x9 0
Objective function:
Maximize 1.4x4 + 1.7x7 + 1.9x8 + 1.3x9
Roster planning

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LINEAR PROGRAMMING

They wanted to allocate the limited military resources and

What is an Optimization Problem all about??

Why is an Optimization Problem required??

Two Products (Bulbs and Batteries)

Parameters (Problem Data)

The above is an LP Formulation of the problem.

Problem data is known exactly (deterministic)

Identify Decision variables

More of an Art than a Science

Takes practice and experience to formulate correctly and

Summary of the problem:

Need to raise 50 lakhs

x1, x2, x3, x4, x5, x6 0

Work a machine Stay idle

x1: trained machinist teaching in January

Machining + Teaching + Idle = Trained machinists available

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