Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
LINEAR PROGRAMMING
USING GRAPHICAL METHOD
INTRODUCTION
In a business organization, management has to make decisions on how to allocate
their resources to achieve its organizations goal. A bank would like to allocate its funds
to achieve the highest possible return. It must operate within liquidity limits set by
regulatory agencies and it must maintain sufficient flexibility to meet the loan demands of
its customers.
Each organization wants to achieve some objective (maximize rate of return,
maximize profits, minimize costs) with constrained resources (deposits, available
machine time). To be able to find the best uses of an organizations resources, a
mathematical technique called Linear Programming can be used. The adjective linear is
used to describe a relationship between two or more variables, a relationship which is
directly and precisely proportional. In a linear relationship between work hours and
output, for example, a 10 percent change in the number of productive hours used in the
operation will cause a 10 percent change in output.
COURSE OBJECTIVES
SUGGESTED TIMEFRAME:
6 hours
Integer programming
Dynamic programming
Quadratic programming
X1
X1
X1
x2 = 0
R = 30 (0) + 50 (0) = 0
(2) x1 = 50
x2 = 0
(3) x1 = 0
x2 = 60
(4) x1 = 20
x2 = 60
(5) x1 = 50
x2 = 15
X1
60 x1 + 20 x2
20 x1 + 20 x2
30 x2 + 120 x2
x1
x2
x1 , x2
0 (non-negativity requirement)
7
x2 = 365
(2) x1 = 365
x2 = 108.75
(3) x1 = 78.33333
x2 = 365
(4) x1 = 100
x2 = 300
(5) x1 = 266.66667
YOUR ACTIVITY
1. Luzon Timber Corporation
The Luzon Timber Corporation cuts raw timber, lauan, and tanguile, into standard
size planks. Two steps are required to produce these planks from raw timber:
debarking and cutting. Each hundred meters of lauan takes 1.0 hour to debark 1.2
hours to cut. Each hundred meters of tanguile takes 1.5 hours to debark and 0.6 hour
to cut. The bark removing machines can operate up to 600 hours per week but the
cutting machines are limited to 480 hours per week.
Luzon Timber can buy a maximum of 36,000 meters of raw lauan and 32,000 meters
of raw tanguile. If the profit per hundred meters of processed logs is P1,800 for lauan
and P2,000 for tanguile, how much lauan and tanguile should be bought and
processed by the corporation in order to maximize total profits?
Suppose next that the finished planks must go through kiln-drying as well and the kiln
can only process a combined total of 45,000 meters of planks. What product
combinations are now feasible? Which combination will maximize combined profits
under the new conditions?
2. Small Refinery
A small refinery produces only two products: lubricants and sealants. These are
produced by processing crude oil through 3 processors: a cracker, a splitter, and a
separator. These processors have limited capacities. For the cracker, at most 1000
hours; for the splitter, at most 4200 hours; and for the separator, at most 2400 hours
per week. Similarly, there is a limit on the supply of crude oil: at most 700 barrels per
week.
To produce one barrel of lubricant, we need one hour at the cracker, 6 hours at the
splitter, and 4 hours at the separator. To produce a barrel of sealant, we need 2 hours
at the cracker, 7 hours at the splitter, and 3 hours at the separator.
Under these conditions, what product combinations of lubricants and sealants are
feasible? If a barrel of lubricant nets P2000 and a barrel of sealant nets P2500, which
product combination will maximize combined profits?
Next, suppose it were now possible to expand the splitter capacity from 4200 hours
up to 4374 hours per week. If this expansion will mean added costs (along with more
production), what is the most money the small refinery should pay to finance the
expansion? Assume all other conditions of the problem remain the same except for
the added capacity on the splitter.
REFERENCES
Andersen, D.R., D.J. Sweeney, & T.A. Williams, An Introduction to Management
Science: Quantitative Approaches to Decision Making
Andersen, D. R., Dennis J. Sweeny, and Thomas A. Williams. 2001. Quantitative
Methods for Business. Eighth edition. Cincinnati, Ohio: South-Western College
Publishing.
Anderson, Michael Q. 1982. Quantitative Management Decision Making, Belmont,
California: Brooks/ Cole Publishing Co.,
Dunn, Robert A. and K. D. Ramsing. 1981. Management Science: A Practical Approach
to Decision Making. New York, New York: MacMillan Publishing Co.,
Krajewski, Lee C. and H. E. Thompson. 1981. Management Science: Quantitative
Methods in Context, New York: John Wiley & Sons,
Levin, R.I.., C.A. Kirkpatrich & D.S. Rubin. 1982. Quantitative Approaches to
Management. 5th ed. McGraw-Hill, Inc.
Zamora, Elvira A. 2004. Basic Quantitative Methods for Business Decisions. UP College
of Business Administration.
10