Supplement 6

Linear Programming

McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Supplement 6: Learning Objectives

You should be able to:
Describe the type of problem that would be appropriately solved
using linear programming
Formulate a linear programming model
Solve simple linear programming problems using the graphical
method
Interpret computer solutions of linear programming problems
Do sensitivity analysis on the solution of a linear programming
problem

6S-2

Linear Programming (LP)

LP
A powerful quantitative tool used by operations and
other manages to obtain optimal solutions to
problems that involve restrictions or limitations
Applications include:
Establishing locations for emergency equipment and
personnel to minimize response time
Developing optimal production schedules
Developing financial plans
Determining optimal diet plans

6S-3

Model Formulation
1. List and define the decision variables (D.V.)
These typically represent quantities

2. State the objective function (O.F.)

It includes every D.V. in the model and its contribution to profit
(or cost)

3. List the constraints

Right hand side value
Relationship symbol (, , or =)
Left Hand Side
The variables subject to the constraint, and their
coefficients that indicate how much of the RHS quantity one
unit of the D.V. represents

4. Non-negativity constraints

6S-4

Computer Solutions
MS Excel can be used to solve LP problems
using its Solver routine
Enter the problem into a worksheet
You must designate the cells where you want the
optimal values for the decision variables

6S-5

Computer Solutions
Click on Tools on the top of the worksheet, and in the
drop-down menu, click on Solver
Begin by setting the Target Cell
This is where you want the optimal objective function value to be
recorded
Highlight Max (if the objective is to maximize)
The changing cells are the cells where the optimal values of the
decision variables will appear

6S-6

Computer Solutions
Add the constraint, by clicking add
For each constraint, enter the cell that contains the left-hand side
for the constraint
Select the appropriate relationship sign (, , or =)
Enter the RHS value or click on the cell containing the value

Repeat the process for each system constraint

6S-7

Computer Solutions
For the nonnegativity constraints, enter the range of
cells designated for the optimal values of the decision
variables
Click OK, rather than add
You will be returned to the Solver menu

Click on Options
In the Options menu, Click on Assume Linear Model
Click OK; you will be returned to the solver menu

Click Solve

6S-8

Solver Results
The Solver Results menu will appear
You will have one of two results
A Solution
In the Solver Results menu Reports box
Highlight both Answer and Sensitivity
Click OK

An Error message
Make corrections and click solve

6S-9

Solver Results
Solver will incorporate the optimal values of the decision variables
and the objective function into your original layout on your
worksheets

6S-10

Sensitivity Analysis
Sensitivity Analysis
Assessing the impact of potential changes to the
numerical values of an LP model
Three types of changes
Objective function coefficients
Right-hand values of constraints
Constraint coefficients

6S-11

O.F. Coefficient Changes

A change in the value of an O.F. coefficient can cause a
change in the optimal solution of a problem
Not every change will result in a changed solution
Range of Optimality
The range of O.F. coefficient values for which the
optimal values of the decision variables will not change

6S-12

Basic and Non-Basic Variables

Basic variables
Decision variables whose optimal values are non-zero

Non-basic variables
Decision variables whose optimal values are zero
Reduced cost
Unless the non-basic variables coefficient increases by
more than its reduced cost, it will continue to be nonbasic

6S-13

RHS Value Changes

Shadow price
Amount by which the value of the objective function
would change with a one-unit change in the RHS
value of a constraint
Range of feasibility
Range of values for the RHS of a constraint over which
the shadow price remains the same

6S-14

Binding vs. Non-binding Constraints

Non-binding constraints
have shadow price values that are equal to zero
have slack ( constraint) or surplus ( constraint)
Changing the RHS value of a non-binding constraint (over its
range of feasibility) will have no effect on the optimal solution

Binding constraint
have shadow price values that are non-zero
have no slack ( constraint) or surplus ( constraint)
Changing the RHS value of a binding constraint will lead to a
change in the optimal decision values and to a change in the
value of the objective function

6S-15