1. Stevenson and Ozgur First Edition Introduction to Management Science with Spreadsheets McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 3 Linear Programming: Basic Concepts and Graphical Solution Part 2 Introduction to Management Science and Forecasting

2. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–2 Learning Objectives 1.Explain what is meant by the terms constrained optimization and linear programming. 2.List the components and the assumptions of linear programming and briefly explain each. 3.Name and describe at least three successful applications of linear programming. 4.Identify the type of problems that can be solved using linear programming. 5.Formulate simple linear programming models. 6.Identify LP problems that are amenable to graphical solutions. After completing this chapter, you should be able to:

3. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–3 Learning Objectives (cont’d) 7.Explain these terms: optimal solution, feasible solution space, corner point, redundant constraint slack, and surplus. 8.Solve two-variable LP problems graphically and interpret your answers. 9.Identify problems that have multiple solutions, problems that have no feasible solutions, unbounded problems, and problems with redundant constraints. After completing this chapter, you should be able to:

4. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–4 Decisions and Linear Programming Constrained optimization –Finding the optimal solution to a problem given that certain constraints must be satisfied by the solution. –A form of decision making that involves situations in which the set of acceptable solutions is somehow restricted. –Recognizes scarcity—the limitations on the availability of physical and human resources. –Seeks solutions that are both efficient and feasible in the allocation of resources.

5. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–5 Linear Programming Linear Programming (LP) –A family of mathematical techniques (algorithms) that can be used for constrained optimization problems with linear relationships. Graphical method Simplex method Karmakar’s method –The problems must involve a single objective, a linear objective function, and linear constraints and have known and constant numerical values.

6. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–6 Example 3–1

7. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–7 Table 3–1Successful Applications of Linear Programming Published in Interfaces

8. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–8 Table 3–2Characteristics of LP Models

9. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–9 Formulating LP Models Formulating linear programming models involves the following steps: 1.Define the decision variables. 2.Determine the objective function. 3.Identify the constraints. 4.Determine appropriate values for parameters and determine whether an upper limit, lower limit, or equality is called for. 5.Use this information to build a model. 6.Validate the model.

10. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–10 Example 3–2 x 1 = quantity of server model 1 to produce x 2 = quantity of server model 2 to produce maximize Z = 60x 1 +50x 2 Subject to:

11. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–11 Graphing the Model This method can be used only to solve problems that involve two decision variables. The graphical approach: 1.Plot each of the constraints. 2.Determine the region or area that contains all of the points that satisfy the entire set of constraints. 3.Determine the optimal solution.

12. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–12 Key Terms in Graphing Optimal solution Feasible solution space Corner point Redundant constraint Slack Surplus

13. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–13 Figure 3–1A Graph Showing the Nonnegativity Constraints

14. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–14 Figure 3–2Feasible Region Based on a Plot of the First Constraint (assembly time) and the Nonnegativity Constraint

15. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–15 Figure 3–3A Completed Graph of the Server Problem Showing the Assembly and Inspection Constraints and the Feasible Solution Space

16. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–16 Figure 3–4Completed Graph of the Server Problem Showing All of the Constraints and the Feasible Solution Space

17. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–17 Finding the Optimal Solution The extreme point approach –Involves finding the coordinates of each corner point that borders the feasible solution space and then determining which corner point provides the best value of the objective function. –The extreme point theorem –If a problem has an optimal solution at least one optimal solution will occur at a corner point of the feasible solution space.

18. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–18 The Extreme Point Approach 1.Graph the problem and identify the feasible solution space. 2.Determine the values of the decision variables at each corner point of the feasible solution space. 3.Substitute the values of the decision variables at each corner point into the objective function to obtain its value at each corner point. 4.After all corner points have been evaluated in a similar fashion, select the one with the highest value of the objective function (for a maximization problem) or lowest value (for a minimization problem) as the optimal solution.

19. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–19 Figure 3–5Graph of Server Problem with Extreme Points of the Feasible Solution Space Indicated

20. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–20 Table 3–3Extreme Point Solutions for the Server Problem

21. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–21 The Objective Function (Iso-Profit Line) Approach This approach directly identifies the optimal corner point, so only the coordinates of the optimal point need to be determined. –Accomplishes this by adding the objective function to the graph and then using it to determine which point is optimal. –Avoids the need to determine the coordinates of all of the corner points of the feasible solution space.

22. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–22 Figure 3–6The Server Problem with Profit Lines of $300, $600, and $900

23. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–23 Figure 3–7Finding the Optimal Solution to the Server Problem

24. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–24 Graphing—Objective Function Approach 1.Graph the constraints. 2.Identify the feasible solution space. 3.Set the objective function equal to some amount that is divisible by each of the objective function coefficients. 4.After identifying the optimal point, determine which two constraints intersect there. 5.Substitute the values obtained in the previous step into the objective function to determine the value of the objective function at the optimum.

25. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–25 Figure 3–8A Comparison of Maximization and Minimization Problems

26. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–26 Example 3-3Minimization Determine the values of decision variables x 1 and x 2 that will yield the minimum cost in the following problem. Solve using the objective function approach.

27. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–27 Figure 3–9Graphing the Feasible Region and Using the Objective Function to Find the Optimum for Example 3-3

28. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–28 Example 3-4

29. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–29 Table 3–3Summary of Extreme Point Analysis for Example 3-4

30. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–30 Table 3–5Computing the Amount of Slack for the Optimal Solution to the Server Problem

31. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–31 Some Special Issues No Feasible Solutions –Occurs in problems where to satisfy one of the constraints, another constraint must be violated. Unbounded Problems –Exists when the value of the objective function can be increased without limit. Redundant Constraints –A constraint that does not form a unique boundary of the feasible solution space; its removal would not alter the feasible solution space. Multiple Optimal Solutions –Problems in which different combinations of values of the decision variables yield the same optimal value.

32. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–32 Figure 3–10Infeasible Solution: No Combination of x1 and x2, Can Simultaneously Satisfy Both Constraints

33. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–33 Figure 3–11An Unbounded Solution Space

34. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–34 Figure 3–12Examples of Redundant Constraints

35. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–35 Figure 3–13Multiple Optimal Solutions

36. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–36 Figure 3–14Constraints and Feasible Solution Space for Solved Problem 2

37. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–37 Figure 3–15A Graph for Solved Problem 3

38. Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–38 Figure 3–16Graph for Solved Problem 4