Linear Programming
Linear Programming
Linear Programming (LP) is a quantitative technique used to determine the most efficient way to
allocate limited resources to achieve a desired objective, such as maximizing profit or minimizing
cost, subject to certain constraints (Taha, 2017). It involves the formulation of a mathematical
model where both the objective function and constraints are expressed as linear equations or
inequalities. Essentially, LP helps decision-makers find the “best possible” outcome within a
feasible set of options, assuming linear relationships among variables (Hillier & Lieberman, 2020).
Linear programming plays a vital role in economics, especially in production theory and resource
management. It enables firms and industries to make rational decisions regarding the optimal
combination of inputs and outputs given limited resources (Varian, 2019). In production
economics, LP assists in determining the optimal production mix, minimizing production costs,
maximizing returns, and efficiently utilizing labor, capital, and raw materials. It also aids
policymakers and managers in evaluating trade-offs between competing activities and
understanding how constraints—such as budget, labor hours, or raw material supply—impact
productivity (Chiang & Wainwright, 2005).
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ng & Wainwright, 2005).
By addressing these objectives, the paper aims to illustrate how LP serves as an indispensable
analytical tool in optimizing production processes and achieving economic efficiency.
Basic Concepts
The core elements of LP include the objective function, decision variables, constraints, and the
feasible region.
1. Objective Function:
The objective function represents the ultimate goal of the decision-maker, which could be
to maximize profit, maximize output, or minimize cost or waste. In production
economics, for instance, a firm may want to determine the level of output for different
products that will yield the highest total profit, given limited labor and material resources.
Mathematically, it is expressed as a linear equation such as:
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𝑍 = 𝑐1 𝑥1 + 𝑐2 𝑥2 + ⋯ + 𝑐𝑛 𝑥𝑛
where 𝑍is the total profit (or cost), 𝑐𝑖 is the contribution per unit of product 𝑖, and 𝑥𝑖 represents the
quantity produced of that product (Render et al., 2018).
2. Decision Variables:
These are the unknown quantities or choices that decision-makers must determine in
order to achieve the objective. In production settings, decision variables could represent
the number of units of each product to produce, the amount of raw material to allocate to
different departments, or the level of labor hours to assign (Taha, 2017).
3. Constraints:
Constraints are the limitations that restrict the feasible solutions to a problem. They
reflect the scarcity of resources such as raw materials, labor, time, or machinery capacity.
For example, a manufacturing firm cannot produce beyond the available labor hours or
material supply. These constraints are expressed as linear inequalities or equalities in LP
models (Hillier & Lieberman, 2021).
4. Feasible Region:
The feasible region represents the set of all possible combinations of decision variables
that satisfy the constraints. Graphically, it is the area (or region) within which all
restrictions are met. The optimal solution lies within this region—usually at one of its
corner points—where the objective function achieves either its maximum or minimum
value (Snyder & Shen, 2019).
Together, these components provide a framework through which economic decisions can be
modeled mathematically and solved systematically.
For LP models to yield meaningful and applicable results, several key assumptions are made:
1. Linearity:
All relationships in the model (both objective function and constraints) must be linear.
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This implies proportionality—doubling input results in doubling output. Nonlinear
relationships are not captured by LP models (Taha, 2017).
2. Divisibility:
Decision variables are continuous and can take fractional values. This means that
resources can be divided into any quantity rather than whole numbers. In production, this
could mean producing 2.5 units of a product, which is theoretically acceptable in the
model (Hillier & Lieberman, 2021).
3. Certainty:
All parameters, such as profit coefficients and resource availability, are known with
certainty and do not change during the analysis period. This assumption simplifies real-
world uncertainty into a deterministic model.
4. Non-negativity:
Decision variables cannot be negative, since negative production levels or resource
allocations are not physically meaningful. Thus, 𝑥𝑖 ≥ 0for all 𝑖.
5. Additivity:
The total effect of decision variables on the objective function or constraints is the sum of
their individual effects. For example, if two products contribute independently to profit,
their total contribution is simply the sum of both (Render et al., 2018).
Although these assumptions make LP models more manageable, they also limit their realism. In
practice, economic and production systems often violate some of these assumptions, but LP still
provides valuable approximations for decision-making.
Maximize or Minimize 𝑍 = 𝑐1 𝑥1 + 𝑐2 𝑥2 + ⋯ + 𝑐𝑛 𝑥𝑛
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Subject to resource constraints:
Here:
For example, a production firm might want to determine how many units of Product A and
Product B to produce to maximize profit given labor and raw material constraints. LP allows
managers to formulate and solve this problem systematically (Snyder & Shen, 2019).
There are several techniques for solving LP models depending on their size and complexity:
1. Graphical Method:
This method is used when there are only two decision variables, making it possible to
plot the constraints and objective function on a two-dimensional graph. The feasible
region is identified as the intersection of all constraint lines. The optimal solution occurs
at one of the corner points of this region. Although the graphical method is simple and
illustrative, it becomes impractical for problems with more than two variables (Taha,
2017).
2. Simplex Method:
The simplex method, developed by George Dantzig in 1947, is an iterative algebraic
technique used for solving LP problems involving multiple variables. It systematically
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examines the corner points of the feasible region using matrix operations to determine the
optimal solution. The method is widely used in production planning, transportation, and
inventory control because of its efficiency in handling large-scale problems (Hillier &
Lieberman, 2021).
For example, a manufacturing firm may produce multiple products using shared resources such
as labor, machinery, and raw materials. Using LP, the firm can determine the optimal production
quantities of each product to achieve the highest possible profit without exceeding resource
limits (Ahuja & Orlin, 2018). Similarly, LP helps in product mix optimization, resource
scheduling, transportation planning, and supply chain management.
Beyond economics, LP models are also applied in agriculture to determine the best cropping
pattern, in logistics to minimize transportation costs, and in finance to optimize investment
portfolios (Snyder & Shen, 2019).
Thus, Linear Programming bridges the gap between theory and practical decision-making by
providing a clear, structured, and quantitative basis for optimizing production processes and
improving overall economic efficiency.
Linear Programming (LP) is a mathematical tool used in economics to achieve the best possible
outcome—such as maximum profit or minimum cost—given limited resources. It helps
producers, managers, and policymakers make rational decisions about how to allocate scarce
resources like labor, capital, materials, and time efficiently.
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1. Use of LP in Production Planning:
Linear Programming assists producers in determining the best product combination (or “product
mix”) that will maximize profits or minimize costs under existing constraints such as labor
hours, raw materials, or machine capacity.
Example: A textile factory in Lagos can use Linear Programming to decide how many shirts,
trousers, and jackets to produce each week based on limited fabric and worker hours to maximize
total profit.
Linear Programming analyzes the relationship between inputs (like labor and capital) and outputs
(goods produced). By identifying inefficiencies, it suggests ways to improve productivity and
output levels.
Example: A cassava processing plant in Ogun State can use Linear Programming to balance
inputs such as tubers, water, and energy to produce starch and Garri efficiently with minimal
waste.
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Example: The Nigerian Agricultural Development Program (ADP) could use Linear
Programming to plan the most profitable mix of crops to cultivate in different regions based on
soil type, rainfall, and labor availability.
This scenario reflects a typical resource allocation problem, where LP can be used to determine
the optimal combination of outputs that yields the highest possible profit within the constraints of
available resources (Taha, 2017).
Decision Variables
Let:
Objective Function
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Maximize 𝑍 = 250,000𝑋1 + 200,000𝑋2
Constraints
𝑋1 + 𝑋2 ≤ 10
2. Labor availability: Each hectare of maize requires 5 units of labor, while rice requires
10 units of labor, and only 60 labor units are available.
5𝑋1 + 10𝑋2 ≤ 60
3. Capital availability: The cost of cultivating one hectare of maize is ₦100,000, and rice
is ₦150,000, while the available capital is ₦900,000.
𝑋1 , 𝑋2 ≥ 0
Complete LP Model
Subject to:
𝑋1 + 𝑋2 ≤ 10
5𝑋1 + 10𝑋2 ≤ 60
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100,000𝑋1 + 150,000𝑋2 ≤ 900,000
𝑋1 , 𝑋2 ≥ 0
This model can be solved graphically or using the simplex method, but even without numerical
computation, it can be conceptually interpreted.
1. Feasible Region:
The feasible region consists of all non-negative combinations of maize and rice that
satisfy land, labor, and capital constraints.
2. Binding Constraints:
The optimal solution will lie at a corner (vertex) of the feasible region—usually where
two constraints intersect.
3. Economic Interpretation:
o If the farmer produces only maize, the maximum land and capital can allow
production up to the limits of resources, but it may underutilize some labor.
o If the farmer produces only rice, the labor constraint (10 units per hectare)
becomes binding, limiting expansion.
o The best solution is typically a combination of both crops, where resources are
fully and efficiently utilized.
Assuming the model is solved (by graphical method or simplex computation), the result might
show an optimal allocation such as:
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Hence, the maximum total profit is ₦2,300,000, achieved by cultivating 6 hectares of maize
and 4 hectares of rice.
Identify which constraints are most restrictive (in this case, possibly labor or capital),
Evaluate the marginal value of resources—how much an additional hectare or labor hour
would increase total profit.
In practical production settings, LP models help firms decide what products to produce, in what
quantities, and with what combination of inputs to achieve the best economic outcomes (Hillier
& Lieberman, 2021).
For example, manufacturing firms use LP to schedule production lines, minimize waste, and
optimize machine time, while agricultural enterprises use it for land-use planning, fertilizer
allocation, and crop rotation (Snyder & Shen, 2019).
Overall, the case study illustrates that LP provides a systematic and quantitative framework for
production optimization, enabling firms to make rational, data-driven decisions in resource-
constrained environments.
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In production economics, Linear Programming (LP) has emerged as a powerful quantitative
tool used to optimize the allocation of scarce resources such as labor, capital, and raw materials.
The primary objective of LP is to achieve the most efficient outcome—typically cost
minimization or profit maximization—subject to given constraints. Its applications span various
production sectors including manufacturing, agriculture, energy, and transportation.
However, while LP offers a systematic and mathematical approach to decision-making, its use in
real-world production environments is often constrained by several limitations. These challenges
arise from the assumptions underlying LP, the complexities of real-world production processes,
computational difficulties, and data-related issues. Understanding these limitations is essential
for economists and managers to ensure that LP is applied appropriately and its results are
interpreted realistically.
For example, in a manufacturing firm, doubling the labor and raw material inputs may not
necessarily double production output due to machine capacity limits, bottlenecks, or
inefficiencies. Similarly, in agriculture, crop yields do not always increase proportionally with
fertilizer or land usage because of ecological constraints and diminishing productivity.
In such cases, LP models may provide mathematically optimal solutions that are economically
unrealistic. Non-linear programming (NLP) techniques or quadratic programming are often more
appropriate when marginal returns vary with scale.
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Another critical limitation of LP in production economics is the assumption of certainty in all
coefficients and parameters. LP assumes that the values of costs, resource availability, demand,
and production coefficients are known with precision and remain constant over time. In reality,
these parameters are subject to uncertainty due to fluctuating market conditions, changes in
input prices, exchange rates, or technological disruptions.
This challenge is particularly significant in developing economies such as Nigeria, where reliable
production and cost data are often scarce or outdated. Poor data collection and record-keeping
can distort model outputs, leading to misleading conclusions and inefficient policy or managerial
decisions.
For instance, an agricultural planning model designed to optimize land use under uncertain
rainfall patterns may generate infeasible recommendations if rainfall and yield data are
inaccurate. As the saying goes, “garbage in, garbage out”—if the input data is flawed, the
resulting LP solution will be unreliable.
To address this, some researchers recommend the use of stochastic programming or robust
optimization, which explicitly account for uncertainty in parameters.
LP models assume that all decision variables are divisible, meaning they can take any fractional
value. However, in many production systems, resources and activities are indivisible. For
instance, it is impossible to employ 4.5 workers or purchase half a machine.
This issue makes LP unsuitable for decisions that require discrete choices. The use of integer
linear programming (ILP) or mixed-integer linear programming (MILP) models becomes
necessary to handle such cases. Although these models provide more realistic results, they are
more computationally demanding and complex to formulate.
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unavailable. The absence of adequate information limits the ability of analysts to define realistic
constraints and objective functions.
For instance, in a multi-plant production system, an LP model must consider transportation costs,
inventory levels, and regional demand differences. Oversimplifying these factors to fit a linear
model may distort the optimal solution.
Computational Limitations
Although modern computer algorithms like the Simplex Method and Interior-Point Method
have significantly improved LP’s computational efficiency, large-scale industrial problems
involving thousands of variables can still be computationally expensive. In production planning
where time-sensitive decisions are required, solving complex LP models can be impractical.
Furthermore, numerical instability or degeneracy may occur when there are redundant
constraints or when the model has multiple optimal solutions. These computational issues can
make the interpretation of LP results challenging, especially for policymakers and practitioners
without technical training.
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Static Nature of LP Models
LP is based on several simplifying assumptions that rarely hold true in production economics:
1. Linearity Assumption:
Both the objective function and constraints are assumed to be linear, implying constant
marginal productivity and no economies or diseconomies of scale. Real production
processes are often non-linear due to technological interdependencies, input substitution,
and capacity limits.
2. Certainty Assumption:
All coefficients in the objective and constraints are assumed to be known and constant. In
reality, prices, input availability, and demand fluctuate.
3. Divisibility Assumption:
LP assumes continuous variables, but many resources—such as workers, machines, or
land plots are discrete and cannot be divided.
4. Additivity Assumption:
The total output or cost is assumed to be the sum of individual contributions. In practice,
inputs often interact, creating joint effects that violate this assumption.
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5. Single Objective Optimization:
LP typically optimizes a single criterion, such as profit maximization or cost
minimization. However, production economics often involves multiple objectives,
including sustainability, employment generation, and social welfare.
6. Perfect Information:
LP presumes that all relevant information is available to decision-makers, an assumption
rarely satisfied in real production environments.
These assumptions simplify mathematical modeling but significantly reduce the realism and
generalizability of LP results in practical applications.
For example, in a manufacturing firm, LP can help identify the most efficient allocation of
resources given known constraints. Yet, the manager must still rely on judgment and experience
to adjust for uncertainty, market volatility, or human factors not captured in the model.
Similarly, in agricultural production, LP models may optimize crop allocation under land and
labor constraints, but unpredictable weather patterns or pest infestations can render the “optimal”
solution impractical.
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Stochastic Programming: Incorporates uncertainty by modeling random variables.
Linear Programming (LP) offers a structured approach for producers to make rational and data-
driven decisions. It helps minimize waste, cut down production costs, and increase profitability
by ensuring that limited resources are used in the most efficient way possible.
Example: A Nigerian manufacturing company like Dangote Cement can apply Linear
Programming to determine the most efficient mix of raw materials (limestone, clay, and gypsum)
to minimize cost while maintaining quality output.
Linear Programming can guide Nigerian producers in optimizing scarce resources such as labor,
land, and capital, especially in agriculture and small-scale industries. Policymakers can also
adopt Linear Programming models for national budgeting, transportation scheduling, and
agricultural production planning to ensure equitable and efficient resource use.
Example: The Nigerian Ministry of Agriculture could use Linear Programming to determine the
best allocation of fertilizer and seeds across states to maximize national food output.
Modern technologies such as Artificial Intelligence (AI), optimization software (e.g., LINGO,
Excel Solver, MATLAB), and big data analytics are enhancing the Linear Programming’s speed,
precision, and accessibility. These tools enable real-time decision-making and can revolutionize
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efficiency in Nigeria’s industrial, agricultural, and public sectors.
Example: Nigerian Breweries could integrate Linear Programming with AI-based forecasting
tools to optimize production schedules based on demand trends and raw material availability.
Conclusion
This paper has examined the concept, evolution, and application of Linear Programming in
production economics. It established that LP provides a structured approach to decision-making
by optimizing an objective function—such as profit maximization or cost minimization—within
given constraints. Historical developments, from Dantzig’s Simplex method to modern
computational models, have enhanced LP’s relevance across various sectors. Through examples
and theoretical discussion, it is evident that LP is a cornerstone in quantitative economic analysis
and production management.
Linear programming contributes significantly to enhancing production efficiency by enabling
firms to make data-driven decisions about resource utilization. It allows producers to determine
the most cost-effective combination of inputs while achieving the desired level of output.
Additionally, LP supports the optimal allocation of scarce resources, reduces wastage, and
improves productivity by ensuring that every decision aligns with an overarching objective
(Taha, 2017; Varian, 2019). Beyond individual firms, LP models are also applied in national
planning, logistics, transportation, and agricultural optimization, demonstrating their wide-
ranging impact on economic systems.
In conclusion, Linear Programming remains a crucial analytical and operational tool in
production economics. Its systematic and mathematical approach bridges the gap between
theoretical economics and practical production management. Although real-world conditions
sometimes involve uncertainties and nonlinearities that challenge LP assumptions, ongoing
advancements in computational techniques and model extensions (such as Integer and Nonlinear
Programming) continue to enhance its applicability. Therefore, understanding and applying LP is
essential for economists, managers, and policymakers striving for efficiency, sustainability, and
economic growth in today’s competitive global economy.
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