Linear Programming:

Modeling Examples
BJQP 2023
MANAGEMENT SCIENCE

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

 Chapter Topics

 A Product Mix Example

 An Investment Example
 A Marketing Example
 A Transportation Example
 A Blend Example
 A Product Mix Example
Problem Definition (1 of 3)
Four-product T-shirt/sweatshirt manufacturing company.
■ Must complete production within 72 hours
■ Truck capacity = 1,200 standard sized boxes.
■ Standard size box holds12 T-shirts.
■ One-dozen sweatshirts box is three times size of standard box.
■ $25,000 available for a production run.
■ 500 dozen blank T-shirts and sweatshirts in stock.
■ How many dozens (boxes) of each type of shirt to produce?
 A Product Mix Example
Data (2 of 3)

Processing Cost Profit

Time (hr) ($) ($)
Per dozen per dozen per dozen
Sweatshirt - F 0.10 $36 $90
Sweatshirt – B/ F 0.25 48 125
T-shirt - F 0.08 25 45
T-shirt - B/ F 0.21 35 65
 A Product Mix Example
Model Construction (3 of 3)
Decision Variables:
x1 = sweatshirts, front printing
x2 = sweatshirts, back and front printing
x3 = T-shirts, front printing
x4 = T-shirts, back and front printing
Objective Function:
Maximize Z = $90x1 + $125x2 + $45x3 + $65x4
Model Constraints:
0.10x1 + 0.25x2+ 0.08x3 + 0.21x4  72 hr
3x1 + 3x2 + x3 + x4  1,200 boxes
$36x1 + $48x2 + $25x3 + $35x4  $25,000
x1 + x2  500 dozen sweatshirts
x3 + x4  500 dozen T-shirts
An Investment Example
Model Summary
First American Bank issues five types of loans. In addition, to diversify its
portfolio, and to minimize risk, the bank invests in risk-free securities. The loans
and the risk-free securities with their annual rate of return are given in Table
below.

Rates of Return for Financial Planning Problem

Type of Loan or Security Annual Rate of Return (%)
Home mortgage (first) 6
Home mortgage (second) 8
Commercial loan 11
Automobile loan 9
Home improvement loan 10
Risk-free securities 4
An Investment Example
Model Summary (1 of 2)
The bank’s objective is to maximize the annual rate of return on
investments subject to the following policies, restrictions, and
regulations:
1. The bank has $90 million in available funds.
2. Risk-free securities must contain at least 10 percent of the total funds
available for investments.
3. Home improvement loans cannot exceed $8,000,000.
4. The investment in mortgage loans must be at least 60 percent of all the funds
invested in loans.
5. The investment in first mortgage loans must be at least twice as much as the
investment in second mortgage loans.
6. Home improvement loans cannot exceed 40 percent of the funds invested in
first mortgage loans.
7. Automobile loans and home improvement loans together may not exceed the
commercial loans.
8. Commercial loans cannot exceed 50 percent of the total funds invested in
mortgage loans.
A Marketing Example
Data and Problem Definition
Exposure
(people/ad or Cost
commercial)
Television Commercial 20,000 $15,000

Radio Commercial 2,000 6,000

Newspaper Ad 9,000 4,000

 Budget limit $100,000

 Television time for four commercials
 Radio time for 10 commercials
 Newspaper space for 7 ads
 Resources for no more than 15 commercials and/or ads
A Transportation Example
Problem Definition and Data
Warehouse supply of Retail store demand
Television Sets: for television sets:
1 - Cincinnati 300 A - New York 150
2 - Atlanta 200 B - Dallas 250
3 - Pittsburgh 200 C - Detroit 200
Total 700 Total 600
Unit Shipping Costs:

To Store
From Warehouse
A B C
1 $16 $18 $11
2 14 12 13
3 13 15 17
A Transportation Example
Model Summary
Minimize Z = $16x1A + 18x1B + 11x1C + 14x2A + 12x2B + 13x2C +
13x3A + 15x3B + 17x3C
subject to:
x1A + x1B+ x1C  300
x2A+ x2B + x2C  200
x3A+ x3B + x3C  200
x1A + x2A + x3A = 150
x1B + x2B + x3B = 250
x1C + x2C + x3C = 200
All xij  0
A Blend Example
Problem Definition and Data (1 of 3)

Maximum Barrels
Component Cost/barrel
Available/day
1 4,500 $12
2 2,700 10
3 3,500 14

Grade Component Specifications Selling Price ($/bbl)

At least 50% of 1
Super $23
Not more than 30% of 2
At least 40% of 1
Premium
Not more than 25% of 3 20
At least 60% of 1
Extra 18
At least 10% of 2
A Blend Example
Problem Statement and Variables (2 of 3)

■ Determine the optimal mix of the three components in each grade

of motor oil that will maximize profit. Company wants to
produce at least 3,000 barrels of each grade of motor oil.

■ Decision variables: The quantity of each of the three components

used in each grade of gasoline (9 decision variables); xij = barrels
of component i used in motor oil grade j per day, where i = 1, 2, 3
and j = s (super), p (premium), and e (extra).
A Blend Example
Model Summary (3 of 3)
Maximize Z = 11x1s + 13x2s + 9x3s + 8x1p + 10x2p + 6x3p + 6x1e
+ 8x2e + 4x3e
subject to:
x1s + x1p + x1e  4,500 bbl.
x2s + x2p + x2e  2,700 bbl.
x3s + x3p + x3e  3,500 bbl.
0.50x1s - 0.50x2s - 0.50x3s  0
0.70x2s - 0.30x1s - 0.30x3s  0
0.60x1p - 0.40x2p - 0.40x3p  0
0.75x3p - 0.25x1p - 0.25x2p  0
0.40x1e- 0.60x2e- - 0.60x3e  0
0.90x2e - 0.10x1e - 0.10x3e  0
x1s + x2s + x3s  3,000 bbl.
x1p+ x2p + x3p  3,000 bbl. all xij  0
x1e+ x2e + x3e  3,000 bbl.
 DATA ENVELOPMENT ANALYSIS
 Data envelopment analysis (DEA)
 The use linear programming to measure the relative
efficiency of the departments within an organization or
relative efficiencies of two different organizations.
 Fast food restaurants, hospitals, schools, and
banks.
 Measuring the efficiency of departments within the same
organization is difficult because departments have multiple
input measures (number of workers, cost of labor, cost of
machine operations, pay scale for employees, and cost of
advertising) and multiple output measures (profit, sales,
and market share).
 OTHER APPLICATIONS
 Transportation problems
 Developing distribution plans that will minimize total
distribution costs given the capacities of the various
factories and the needs of the warehouses.
 Assignment problems
 Assigning jobs to machines in such a way that the total cost
of performing the jobs is minimized.
 Project management problems
 Finding the minimum project duration for project
competition to shorten various project tasks and minimize
total project costs.