Linear Programming Study Notes for Mechanical

Engineering
 57 upvotes
 13 comments

Linear Programming: A linear programming is defined as it is the

optimization of a linear function of variables subject to constraint of linear
inequalities.
A Linear Programming Problem (LPP) consists of three components
namely

1. Decision Variables (Activities)

2. The Objective (Goal)
3. The Constraints (Restrictions)

Decision Variables (Activities): The decision variables refer to the

economic or physical quantities, which are competing with one another
for sharing the given limited resources. The relationship among these
variables must be linear under linear programming. The numerical values
of decision variables indicate the solution of the linear programming
problem
Objective (Goal): The objective function of a linear programming
problem is a linear function of the decision variable expressing the
objective of the decision maker. For example, maximisation of profit or
contribution, minimization of cost/time
The Constraints (Restriction):The constraints indicate limitations on the
resources, which are to be allocated among various decision variables.
These resources may be production capacity, manpower, time, space or
machinery.
These must be capable of being expressed as linear equation (i.e. =) on
inequalities (i.e. > or<; type) in terms of decision variables. Thus,
constraints of a linear programming problem are linear equalities or
inequalities arising out of practical limitations.
Non-negativity Restriction Non-negativity restriction indicates that all
decision variables must take on values equal to or greater than zero.
Basic Assumptions of LPP

 Certainty: All parameters, availability of resources, profit

consumption of resources must be fixed.
 Divisibility (or continuity): Non-negative values of decision variable
can positive frictional value.
 Proportionality: Decision variable directly proportional to value of
variable.
 Additivity: The value of objective function for a given value of
decision variables and the total sum of resources used by each
decision respectively.

LPP-Graphical Solutions: LPP involving two decision variables can

easily solved by graphical method.
Basic Solutions: Given a system of m simultaneous linear equations in
n unknowns (m < n). A is an m× n matrix of rank m, let B be any m× n
submatrix formed by m linearly independent columns of A. Then a
solution is obtained by setting (n – m) variables not associated with the
columns of B equal to zero and solving the resulting system is called a
basic solution to the given system of equations.
A x = b, x TE R n
The m variables, which may be all different from zero are called basic
variables. The m × m non-singular submatrix B is called a basis matrix
with the columns of B as basis vectors.
n – m → Non-basic variable
m → Basic variable
Degenerate Solution: A basic solution to the system is called
degenerate if one or more of basic variable vanish (zero).
Basic Feasible Solution: A feasible solution an LPP which is also a
basic solution to the problem is called a basic feasible solution to the
LPP.
Simplex Method: When the decision variables are more than two,
graphical method becomes inadequate and linear programming problem
is solved by simplex method. Simplex method is defined as an algebraic
procedure that through a series of repetitive operations progressively
approaches an optimal solution.
Conditions in Simplex Method: The two fundamental conditions on
which the simplex method is based are
Conditions of Feasibility: It assumes that if the initial solution is basic
feasible, and then during computation only basic feasible solutions will be
obtained.
Condition of Optimality: It guarantees that only better solutions will be
encountered.
Steps in the Simplex Algorithm: Let us assume that the existence of an
initial basic feasible solution
Let x=(x1 x2 ...x n) be a feasible solution so that x j ≥ 0 and m < n

 z = c 1 x1+c 2 x1+a n x1+aj2 x2 +..

 Check whether the objective function the given LPP is to be

maximized or minimized. If it is to be minimized, then we convert it
into a problem of maximizing it by using the results.
 Minimum z = -Maximum (-z)
 Check whether all b i (j=1,2,…,m) are non-negative if one of bj is
negative, and then multiply the corresponding inequation of the
constraint by –1, so as to get all b i (j=1,2,..,m) non-negative.
 Convert all inequation of constraint into equation by introducing
stack and for surplus variables.
  Obtain an initial basic feasible solution to the problem in form of
xB=B -1 b and put it in the first column of simple table.
 Compute the net evaluation zj -c j(j=1,2,...n) by using the relation. zj -
c j=c By j-c j Where Yj=B-1 a

Examining the Sign z j -cj

If there are more than one negative zj -c j then close the most negative of them.

 Compute the ratios and choose minimum of them.

Let the minimum of these ratio be then the vector y R will level the basis
yB. The column element y kr , which is in the kth row and the rth column is
known as the leading element of the table.
 Convert the leading element to unity by dividing its row by the leading
element itself and all other elements in its column to zeros by making use
of the relations

 Repeat the procedure until get an optimum solution.

Key Points

 Infinite Solutions: When a non-basic variable in an optimum

solution has a zero value for ∆j row, then the solution is not unique.
 Unbounded Solution: When all replacement ratios are either
infinite (or) negative, then the solution terminate. This indicates the
problem has unbound solution.
 Infeasible Solution: It is identified in the simplex table when
optimality condition is satisfied and there is a positive value of
artificial variable in the basic solution.
 Duality in Linear Programming: Associated with every linear
programming problem there always exist another linear programming
problem which is based upon the same data and having the same
solution. The original problem is called the primal problem while the
associated one is called its dual problem.
Standard Primal Problem
Maximize z=c 1 x 1=c 2x 2...+c nx n
Subject to constraints

Minimize z* = b 1 w 1 =b2w 2...+b mw m

Subject to constraints
a1j, w 1+a2jw 2+ ...+ a mj w m ≥ c j (j=1,2..n)
w j = (i=1,2...m) Unrestricted
Minimization and Maximization Conditions in Dual Problem

Forecasting Study Notes for Mechanical Engineering

 58 upvotes
 11 comments
Forecasting is the first major activity in the planning. It involves careful
study of past data and present scenario. Forecasting is the projection of
past into future while prediction is the judgement in management after
taking all available information into account.
We can define forecasting based on time duration as

 Short term forecasting for 1 to 3 month

 Intermediate term forecasting for 3 to 12 months
 Long term forecasting for more than 1 year

Classification of Forecasting Method

Forecasting method can be divided into two parts

 Quantitative method
 Qualitative method

Quantitative Method

 It is objective in nature and employs numerical information as the

basis of making the forecast.
Quantitative method can be further classified in Time series and Casual
method

Time Series Method

 It identifies the historical pattern of demand for the product and

project.

It has four components

1. Trend (Gradual shift)-a gradual, long-term up or down movement of

demand
 2. Cyclic (Recurrent upward or downward in time series)-an up-and-
down repetitive movement in demand
3. Seasonal (Periodic fluctuation)-an up-and-down repetitive
movement in demand occurring periodically
4. Irregular-movements in demand that do not follow a pattern.

Time series method further divided into Smoothing and Projection

methods

Smoothing Method

Smoothing method is used to smooth out the random fluctuation caused

by the irregular component of time series.
  Simple Moving Average Method
o A Moving average is obtained by summing and averaging the
values from a given number of periods respectively, each
time, deleting the oldest value and adding a new value.
o The forecast for (t+1) th period is given by

where

D i = Actual demand for the ith period.

n = Number of periods included in each average.

 Weighted Moving Average

o This approach is based on the principle that more weight age
should be given to relatively newer data.
o Forecast for (t + 1) period

where W 1 = Relative weight of data for the i m period

 Exponential Smoothing
o In this method, the weightage of the data diminishes
exponentially as the data become older.

Ft is also given by

where,

 Ft = One period ahead forecast made at time t D r = Actual demand

for period t
 α = Smoothing constant
 (N = Number of time periods)

 Key Points
o Large value α of is selected for fluctuating demand while a
lower value of α is selected for smooth demand.
o In exponential smoothing method of forecasting, the forecast
for higher values of the smoothing constant will be more
sensitive to changing patterns in demand.
o In exponential smoothing method of demand forecasting,
demand for the more recent data is given more weightage.

 Double Exponential Smoothing:

o Double exponential method is used when there is a trend in
data, the raw data sequence of observations is represented
by x r beginning at time t = 0 We use St to represent the
smooth value for time t and bt is our best estimate of the trend
at time t.

where, α = Data smoothing factor (0 < α < 1)

β = Trend smoothing factor
Trend Projection in Forecasting

 In the trend projection method of forecasting, the value of time

series exhibits a long term linear trend.

Where, y 1 = The trend value,

a = Intercept of the trend line
b = Slope of the trend line.
x = Independent variable
Alternatively,

Casual Forecasting Method

 In the casual method, we try to establish a cause and effect

relationship between changes in the series level for the product and
set up relevant explanatory variable.
 It can be divided into simple regression analysis and multiple
regression analysis

Forecasting using Simple Regression Analysis

 y e = a+bx

where, y e = Estimated value of the dependent variable

a = y intercept of regression line

b = slope of the regression line
x = Independent variable
Forecasting using Multiple Regression Analysis

Qualitative Method

 Qualitative forecasting is based on person judgement and involves

qualities like intuition and experience.

It can be divided into following types:

Delphi Method

 The Delphi method is a process of gaining consensus from a group

of experts While maintaining their anonymity.
 It is forecasting techniques applied to subjective nature demand
values.
 It is useful when there is no historical data from which to develop
statistical models and when managers inside the firm have no
experience.
 Several knowledgeable persons are asked to provide estimates of
demand or forecasts of possible advances of technology.
Sales Force Forecast

 It is combined estimation at the district, regional and national level

to obtain over all forecast by all members comprising sales force of
a company.
 It is closest to consumer.

Consumer Panel Survey (Marketing Research)

 It is a systematic approach to determine external consumer interest

in a service or product by creating and testing the hypothesis
through data-gathering surveys.
 It includes all research activities in marketing problem:
o Gathering, recording and analyzing the utility and
marketability of the product
o The nature of the demand
o The nature of competition
o The methods of marketing
o Other aspects of movements of product from the stage of to
the point where they get consumed.
 Market research gathers records and analysis all facts about
problems relating to the transfer and sale of goods and services
from producer to consumer.

Scenario Writing

 It consists of developing a conceptual scenario of the future based

on a well-defined set of assumptions.

Forecast Error

 A forecast error is a difference between the actual or real and the

predicted or forecast value of time series or any other phenomenon
of interest. There are two methods which are given below.

Mean Absolute Deviation (MAD)

 In this method, we calculate as the average of the absolute value of

the difference between actual and forecasted values.
 The negative sign in this difference is ignored as overestimating as
well as underestimate are both off-target and thus desirable.
Where

 D t = Actual value of demand for period t

 Ft = Forecasted demand for period t
 n = Number of periods considered for calculating error

Mean absolute percent deviation (MAPE)

Mean Sum of Square Error (MSE)

 Average of all squares of all errors in the forecast is termed as the

mean sum of square method. It is written as

Bias

 It is a measure of over estimation or under estimation. If the bias

value is positive, then it is under estimation and if bias is negative,
then it is over estimation.

Tracking Signal

 It is ratio of bias till n periods to mean absolute deviation

till nperiods.
  It is used to identify those items which do not keep pace with either
positive or negative bias or trend.

Responsiveness and Stability in Forecasting

 Responsiveness indicates that forecast, as calculated, have a

fluctuating and swinging pattern whereas the stability means that
the forecast show a labeled or flat character.
 As value of N increases the forecast become stable and lower value
of Nresult in forecast being more responsive.

Inventory Control Study Notes for Mechanical

Engineering
 67 upvotes
 5 comments
Inventory is defined as the list of movable goods which helps directly or
indirectly in the production of goods for sale. We can also be defined
inventory as a comprehensive list of movable items which are required
for manufacturing the products and to maintain the plant facilities in
working conditions.
It can be divided into two parts
Direct Inventories
The inventories which play a direct role in the manufacturing of a product
and become an integral part of the finished product are called direct
inventories, e.g., raw materials, purchases part and finished goods.

 Raw material inventories are provided

o for economical bulk purchasing
o to enable production rate changes
o to provide production buffer against delays in transportation
o for seasonal fluctuations.
 Work-in-process inventories are provided:
o to enable economical lot production
o to cater to the variety of products
o for replacement of wastages
o to maintain uniform production even if a number of sales may
vary.
  Finished-goods inventories are provided
o for maintaining off-self delivery
o to allow stabilization of the production level
o for sales promotion
 Spare parts

Indirect Inventories

 Indirect inventories include those items, which are necessarily

required for manufacturing but do not become the component of
finished production, like: oil, grease, lubricants, petrol, and office-
material maintenance material, etc.

Inventory Control

 It means making the desired item of required quality and in required

quantity available to various departments when needed.

Inventory Costs
Holding Cost (C1 or Ch)

 The cost associated with carrying or holding the goods in stock is

known as holding or carrying cost which is usually denoted by C1.
or Ch per unit of goods for a unit of time.
 Holding cost is assumed to vary directly with the size of inventory
as well as the time for which the item is held in stock. The following
components constitute the holding cost
o Invested Capital Cost
o Record Keeping and Administrative Cost
o Handling Costs
o Storage Costs.
o Depreciation, Deterioration and Obsolescence Costs
o Taxes and Insurance Costs

Shortage Costs or Stock-out Costs (C2 or C s).

The penalty costs that are incurred as a result of unning out of stock (i.e.,
shortage) are known as shortage or stock-out costs. These are denoted
by C2 or Cs per unit of goods (or a specified period.
Set-up Costs (C3 or Co), these include the fixed cost associated with
obtaining goods through placing
these include the fixed cost associated with obtaining goods through
placing of an order or purchasing or manufacturing or setting up a
machinery before starting production. So they include costs of purchase,
requisition, follow-up, receiving the goods, quality control, etc. These are
also called order costs or replenishment costs, usually denoted by C3 or
Co per production run (cycle). They are assumed to be independent of
the quantity ordered or produced.
Determining Inventory Control: The amount of inventory, a company
should carry is determined by five basic variables: (a) Order quantity, (b)
Reorder point, (c) Lead time, (d) Safety stock, (e) Buffer stock.
Order Quantity: It is the volume of stock at which order is placed or total
quantity of buy or sell order.
Reorder Point: It is time between initiating the order and receiving the
required quantity, Recorder point = Minimum inventory + Procurement
time × Consumption rate
Demand: It is the no. of items (products) required per unit of time. The
demand may be either deterministic or probabilistic in nature.
Order cycle: The time period between two successive orders is called
order cycle.
Lead Time: The time gap between placing of an order and its actual
arrival in the, inventory is known as lead time. It consists of requisition
time and procurement time.
It has two components:

 Administrative Lead Time: From initiation of procurement action

until the placing of an order.
 Delivery Lead Time: From placing of an order until the delivery of
the ordered material.

EOQ, Economic Order Quantity

Let,
Q = Economic Order Quantity
C = Unit cost of Part
Ic = Inventory carrying costs per unit
U = Annual Usage i.e. Annual Demand.
R = Ordering, set up, procurement cost per order.
T = Total cost
 Deterministic Demand-Uniform demand Rate, Infinite production Rate
Total Cost (T) = (Ordering Cost) × (Number of order placed in a year)+
(Carrying cost per unit) × (Average inventory level during year)Number of
order placed = U/Q
Average inventory carried during the year = (B + Q/2)
If Buffer stock is zero then, Ordering cost = carrying cost

Note: As EOQ ∞√ U and T ∞ √U

Total cost and number of orders per year are proportional to square root
of demand. Therefore unless the demand is highly uncertain the EOQ
model gives fairly satisfactory decision values. That so why EOQ model
is very useful.
Gradual Replacement Model
Let, Q = Economic Batch quantity
P = Production Rate per day
C = consumption Rate per day
Tp= Production Time: U = Annual Demand
Tc= Consumption Time: R = Set up cost
Safety Stock: If the maximum inventory would be equal to the order
quantity Qand minimum inventory would be zero.

Average inventory in this case

k = A factor based on acceptable frequency of stock out in a given number of
years.

In order to determine the economic order quantity, we must first determine the
total cost of carrying inventories and ordering inventories.

Total Cost Equation

 When the order quantity (Q) is received, the maximum inventory level is
equal to Q.
 When it is depleted, the inventory level is 0 (zero).

Therefore, the average inventory is (Q + 0)/2 = Q/2.

If Q/2 units are carried on the average, and if the annual carrying cost per unit is
H, then the annual inventory holding cost is: (Q/2)H. On the other hand, the
number of orders annually is D/Q.
If the number of orders is D/Q and cost per order is C o , then the annual ordering
cost is:

(D/Q)C o

Hence, the total of inventory and ordering costs would be:

TC = (Q/2)H + (D/Q)C o

Economic Production Quantity (EPQ)

If an item is manufactured the question becomes "How much should we produce
each time?" and the answer is given Economic Production Quantity (EPQ).

The equation for EPQ is:

where

D = annual demand

Cs = machine set up cost for production

H = holding cost
P = annual production

Reorder Point (ROP) Model

 The ROP model determines when to order.

 When the quantity on hand drops to a predetermined amount, it is time to
reorder.
 This amount includes expected demand during lead time and usually some
safety stock to reduce the probability of a stock-out.

Suppose the daily demand is d and the lead time is LT.

ROP = dLT

 The amount of safety stock depends on σ which is the standard deviation of

the lead-time demand.
 The safety stock is a multiple of σ or zσ where z is the multiple determined
from the standard normal table.

Hence, ROP is established above the average lead-time demand (dLT) by

incorporating safety stocks. Actually, the complete ROP equation becomes

ROP = dLT + zσ