FORMULATING A MATHEMATICAL MODEL

Models, or idealized representations, are an integral part of everyday life.

Mathematical models are idealized representations, but they are expressed in terms of mathematical
symbols and expressions.

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.

For example, the appropriate measure of business 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 (for example, x1+3x1x2+2x2 ≤ 10). Such
mathematical expressions for the restrictions often 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.

Mathematical models have many advantages over a verbal description of the problem. One obvious
advantage is that a mathematical model describes a problem much more concisely. This tends to make
the overall structure of the problem more comprehensible, and it helps to reveal important cause-and-
effect relationships.

Example Mathematical Model in the Optimization of Chemical Production at Monsanto

The goal is to minimize the cost of meeting the target for the amount of a certain chemical product to be
produced in a given month. The decisions to be made are the dial setting for each of the catalytic reactors
used to produce the product, where the setting determines both the amount produced and the cost of
operating the reactor.

The form of the resulting mathematical model is as follows:

Choose the values of the decision variables Rij (i=1,2,…,r), (j=1,2,…,s)

so as to
r s
Minimize ∑ ∑ Cij Rij
i=1 j=1

subject to r s
∑ ∑ pij Rij ≥ T
i=1 j=1

s
∑ Rij = 1, for i=1, 2, …,r
j=1
Rij = 0 or 1

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where Rij = 1 if reactor i is operated at setting j
0 otherwise

Cij = cost for reactor i at setting j

pij = production of reactor i at setting j
T= production target
r = number of reactors
s = number of settings (including off position)

The objective function for this model is ∑ ∑ Cij Rij

The constraints are given in the three lines below the objective function.
The parameters are Cij, pij, T

Deriving Solutions from the Model

After a mathematical model is formulated for the problem under consideration, the next phase in an
Operations Research (Management Science/Quantitative Analysis) study is to develop a procedure for
deriving solutions to the problem.

A common theme in OR is the search for an optimal or best solution.

Finding the optimal solution requires algorithms (iterative solution procedures) which also includes post-
optimality analysis.

OR teams attempt to bring as much of the ‘science of the ultimate’ as possible to the decision-making
process.

In some instances, OR teams occasionally use only heuristic procedures (i.e., intuitively designed
procedures that do not guarantee an optimal solution) to find a good suboptimal solution.

Post-optimality analysis involves conducting sensitivity analysis to determine which parameters of the
model are most critical (the sensitive parameters).

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 THE LINEAR PROGRAMMING MODEL

The most common type of application of linear programming involves allocating resources to activities.

The amount available of each resource is limited , so careful allocation of resources to activities must be
made. Determining this allocation involves choosing the levels of the activities that achieves the best
possible value of the overall measure of performance.

Common Terminology for Linear Programming

Prototype Example General Problem

Production capacities of plants resources
3 plants (number of resources) m resources
Production of products activities
2 products (number of products) n activities
Production rate of product j (xj) Level of activity j (xj)
Profit Z Overall measure of performance Z

Symbols Commonly Used

Z= value of overall measure of performance

xj = level of activity j (for j=1,2,…,n)
Cj = increase in Z that would result from each unit increase in level of activity j
bi= amount of resource i that is available for allocation to activities (for i=1,2,…,n)
aij= amount of resource i consumed by each unit of activity j