1. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury MANAGEMENT AND COST ACCOUNTING SIXTH EDITION COLIN DRURY

2. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury © 2000 Colin Drury Part Six: The application of quantitative methods to management accounting Chapter Twenty-six: The application of linear programming to management accounting

3. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.1a © 2000 Colin Drury Linear programming

4. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.1b © 2000 Colin Drury Example contd.

5. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.2 © 2000 Colin Drury Materials constraint (8Y + 4Z  3,440 (When Y= 0, Z = 860; when Z= 0, Y = 430

6. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.3 © 2000 Colin Drury Labour constraint 6Y + 8Z  2,880 (When Z = 0, Y = 480; When Y = 0, Z =360)

7. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.4 © 2000 Colin Drury Machine capacity constraint 4Y + 6Z  2,760 (When Z = 0, Y = 690; when y = 0, Z = 460)

8. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.5 © 2000 Colin Drury Sales limitation Y  420

9. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.6 © 2000 Colin Drury Optimum solution Feasible production combination = Area ABCDE

10. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.7 © 2000 Colin Drury Optimum solution

11. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.8a © 2000 Colin Drury Simplex method

12. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.8b © 2000 Colin Drury Simplex method contd.

13. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.9 © 2000 Colin Drury Simplex method contd.

14. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.10 © 2000 Colin Drury Simplex method contd.

15. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.11a © 2000 Colin Drury Simplex method contd.

16. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.11b © 2000 Colin Drury Simplex method contd.

17. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.12a © 2000 Colin Drury Capital rationing

18. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.12b © 2000 Colin Drury Capital rationing contd.

19. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.13 © 2000 Colin Drury Capital rationing contd.

20. Management and Cost Accounting, 6 th edition, ISBN 1-84480-028-8 © 2004 Colin Drury 26.14 © 2000 Colin Drury Assumptions underlying LP 1.Linearity 2.Divisibility of products 3.Divisibility of resources 4.All of the available opportunities can be included in the model 5.Assumed fixed costs are constant for the period