Dec isi on Sci enc e for
Management
Lecture notes are available at:
http://Arash-
management.blogspot.com
Arash 1
Dec isi on sci ence for
Management
Arash Najmaei
Arash.unity@gmail
[email protected]
H/P : 0172116875
Arash 2
Text Books…
• David R. Anderson, Dennis J. Sweeney, & Thomas
A. Williams, (2003), Introduction to Management
Science, Quantitative Approaches to Decision
Making, 10th Edition West Publishing Company.
• Hiller F. Hiller M (2003), Introduction to
Management Science: a Modeling & Case Studies
approach with spreadsheets, 2nd Edition.
• Stevenson, Introduction To Management Science
With Spreadsheet, Mcgraw Hill
Assess ment
Assignments 30% ( 3* 10%)
Midterm Examination 20%
Final Exam 50%
Attendance and participation are
warmly welcomed
Lecture One ( 9th June 2008)
Session Synopsis:
Linear Programming
Requirements of a linear
programming problem
Formulating linear programming
problems
Graphical solution to linear
programming :
maximization problems
Linear Programming
• Linear Programming (LP) is a
mathematical procedure for
determining optimal allocation of
scarce resources.
• LP is a procedure that has found
practical application in almost all
facets of business, from advertising
to production planning.
Linear Programming
Any linear program consists of four
parts:
3.a set of decision variables,
4.the parameters,
5.the objective function, and
6.a set of constraints.
Formulation of Problem
In formulating a given decision problem,
you should practice understanding the
problem. While trying to understand the
problem, ask yourself the following
general questions:
3.What are the resources?
4.What is the objective?
5.What are the constraints?
Requirements of a linear programming
Must seek to maximize or minimize
some quantity
Presence of restrictions or constraints –
Must be alternative courses of action to
choose from
Objectives and constraints must be
expressible as linear equations or
inequalities
Objective Function
Maximize (or Minimize) Z = C1X1 + C2X2 + ... + CnXn
• Cj is a constant that describes the rate
of contribution to costs or profit of
units being produced (Xj).
Z: is the total cost or profit from the
given number of units being
produced.
Constraints
A11X1 + A12X2 + ... + A1nXn≤B1
A21X1 + A22X2 + ... + A2nXn ≥B2
:
AM1
AX 1 + Aresource
are AMnXn=BM
M2X2 + ... +requirements for each of the
ij
related (Xj) decision variables.
Bi are the available resource requirements.
Note that the direction of the inequalities
can be all or a combination of ≤, ≥, or =
Non-Negativity
Requirement
X1,X2, …, Xn ≥ 0
• All linear programming model
formulations require their decision
variables to be non-negative.
• While these non-negativity
requirements take the form of a
constraint, they are considered a
mathematical requirement to
complete the formulation of an LP
model.
Graphical Solution
Method
2 Variables
Step 1 - Draw graph with vertical & horizontal
axes
(1st quadrant only)
Step 2 - Plot constraints as lines
Use (X1,0), (0,X2) for line
Step 3 - Plot constraints as planes
Use < or > signs
Step 4 - Find feasible region
Step 5 - Find optimal solution
Objective function plotted
Step 6 – Calculate optimized value
ELECTRONIC COMPANY
PROBLEM
Hours Required to
Produce 1 Unit
X1 X2 Available Hours
Departments Walkmans Watch-TV’s This Week
Electronics 4 3 240
Assembly 2 1 100
Profit/unit $7 $5
4x1 + 3x2 ≤ 240 (Hours of Electronic Time)
Constraints: 2x1 + 1x2 ≤ 100 (Hours of Assembly Time)
Objective: Maximize: 7x1 + 5x2
120
Step 1 – Draw Graph
100
Number of Watch-TVs (X2)
80
60
40
20
0 10 20 30 40 50 60 70 80
Number of Walkmans (X1)
Step 5 - Find optimal
solution
• Plot function line
Maximize : 7x1 + 5x 2
First,
Just plot the function using any number to
get the line on the graph
Say : 7x1 + 5x 2 = 350
(just choose any # that is divisible by each)
Now, Plot
7x1 + 5x 2 = 350
Find optimal solution (Cont’d)
In This Case:
Calculate the point where
both constraint lines intersect
For X 2 set to zero :
4X1 + 3X 2 = 240
2X1 +1X 2 =100
Now Multiply by - 3 to get rid of X 2
4X1 + 3X 2 = 240
- 6X1 −3X 2 = −300
X1 =30
Step 5 - Find optimal
solution (Cont’d)
For X1 set to zero :
4X1 + 3X 2 = 240
2X1 +1X 2 =100
Now Multiply by - 2 to get rid of X1
4X1 + 3X 2 = 240
- 4X1 − 2X 2 = −200
X 2 = 40
Therefore, (30,40)
Step 5 - Find optimal solution
(Cont’d)
Number of Watch-TVs (X2)
120 Electronics
Department
100
Assembly
80
Department
60
40
20
0
0 10 20 30 40 50 60 70 80
Number of Walkmans (X1)
Step 6 – Calculate optimized
value
Plug in values for X1 and X2
7x1 + 5x 2 = Maximized profit
7(30) + 5(40) = 210 + 200 = 410
Therefore: the best profit scenario is
$410.00
LP Model Formulation
• Decision variables
– mathematical symbols representing levels of activity of
an operation
• Objective function
– a linear relationship reflecting the objective of an
operation
– most frequent objective of business firms is to maximize
profit
– most frequent objective of individual operational units
(such as a production or packaging department) is to
minimize cost
• Constraint
– a linear relationship representing a restriction on
decision making
Copyright 2006 John
Wiley & Sons, Inc.
LP Model Formulation (cont.)
Max/min z = c1x1 + c2x2 + ... + cnxn
subject to:
a11x1 + a12x2 + ... + a1nxn (≤, =, ≥) b1
a21x1 + a22x2 + ... + a2nxn (≤, =, ≥) b2
:
am1x1 + am2x2 + ... + amnxn (≤, =, ≥) bm
xj = decision variables
bi = constraint levels
cj = objective function coefficients
aij = constraint coefficients
Copyright 2006 John
Wiley & Sons, Inc.
LP Model: Example
RESOURCE REQUIREMENTS
Labor Clay Revenue
PRODUCT (hr/unit) (lb/unit) ($/unit)
Bowl 1 4 40
Mug 2 3 50
There are 40 hours of labor and 120 pounds of clay
available each day
Decision variables
x1 = number of bowls to produce
x2 = number of mugs to produce
Copyright 2006 John
Wiley & Sons, Inc.
LP Formulation: Example
Maximize Z = $40 x1 + 50 x2
Subject to
x1 + 2x2 ≤ 40 hr (labor constraint)
4x1 + 3x2 ≤ 120 lb (clay constraint)
x1 , x2 ≥ 0
Solution is x1 = 24 bowls x2 = 8 mugs
Revenue = $1,360
Copyright 2006 John
Wiley & Sons, Inc.
Graphical Solution Method
1. Plot model constraint on a set of coordinates
in a plane
2. Identify the feasible solution space on the
graph where all constraints are satisfied
simultaneously
3. Plot objective function to find the point on
boundary of this space that maximizes (or
minimizes) value of objective function
Copyright 2006 John
Wiley & Sons, Inc.
Graphical Solution:
x2
Example
50 –
40 –
4 x1 + 3 x2 ≤ 120 lb
30 –
20 –
Area common to
both constraints
10 –
0– x1 + 2 x2 ≤ 40 hr
| | | | | |
10 20 30 40 50 60 x1
Copyright 2006 John
Wiley & Sons, Inc.
Computing Optimal Values
x1 + 2x2 = 40
x2
4x1 + 3x2 = 120
40 –
4 x1 + 3 x2 ≤ 120 lb 4x1 + 8x2 = 160
30 – -4x1 - 3x2 = -120
5x2 = 40
20 –
x2 = 8
10 – x1 + 2 x2 ≤ 40 hr
x1 + 2(8) = 40
0– x1 = 24
8
| | 24 | | x1
10 20 30 40
Z = $50(24) + $50(8) = $1,360
Copyright 2006 John
Wiley & Sons, Inc.
Extreme Corner Points
x1 = 0 bowls
x2 x2 = 20 mugs
x1 = 224 bowls
Z = $1,000
x2 = 8 mugs
40 –
x1 = 30 bowls
Z = $1,360
30 – x2 = 0 mugs
20 – A Z = $1,200
10 – B
| | | C|
0–
10 20 30 40 x1
Copyright 2006 John
Wiley & Sons, Inc.
Objective Function
x2
40 –
4x1 + 3x2 ≤ 120 lb
30 – Z = 70x1 + 20x2
Optimal point:
x1 = 30 bowls
20 –
A x2 = 0 mugs
Z = $2,100
10 –
B
0–
x1 + 2x2 ≤ 40 hr
| | | C |
10 20 30 40 x1
Copyright 2006 John
Supplement 13-30
Wiley & Sons, Inc.
Minimization Problem
CHEMICAL CONTRIBUTION
Brand Nitrogen (lb/bag) Phosphate (lb/bag)
Gro-plus 2 4
Crop-fast 4 3
Minimize Z = $6x1 + $3x2
subject to
2x1 + 4x2 ≥ 16 lb of nitrogen
4x1 + 3x2 ≥ 24 lb of phosphate
x1, x2 ≥ 0
Copyright 2006 John
Wiley & Sons, Inc.
Graphical Solution
x2
14 – x1 = 0 bags of Gro-plus
x2 = 8 bags of Crop-fast
12 –
Z = $24
10 –
A
8– Z = 6x1 + 3x2
6–
4–
B
2–
C
| | | | | | |
0–
2 4 6 8 10 12 14 x1
Copyright 2006 John
Supplement 13-32
Wiley & Sons, Inc.
Example 1: Maximization Problem
Wyndor Glass
Company
Questions….
