AGEC 689 Cheat Sheet #1 Assumptions of Linear Programming A Assumptions dealing with mathematical relationships within the model-implicit in earlier discussion - some caused by linear equation. 1 Broportionality - two components a. Contribution per unit of each decision variable (activity) to the objective function. . Use of each resource per unit of each decision variable must be constant and independent of its level. Additivity - deals with the decision variable/activities - two components a. Total value of the objective function equals the sum of the contributions of each activity. . Total resource use is the sum of the resource use of each activity. Divisibility - decision variables can take on any non-negative value including fractional ones. Certainty - all the parameters of the model (a,,b,, and c) are known constants. Einiteness - the number of resources restrictions and the number of alternative activities is finite, Assumptions on appropriateness of the formulation - not just LP but in general all model formulations Objective Function Appropriateness - objective function is the sole criterion by which the values of the decision variable should be chosen. Decision Variable Appropriateness - decision variables are appropriately defined, ‘manipulatable within the feasible region, and necessary ones are included in the model. Constraint Appropriateness - constraints are appropriate, resources available and no way a constraint can be violated.Comer Point Item ° P Q R s Astro 0 0 20 60 60 Astro profit 0 0 400 1200 1200 Cosmo 0 50 50 30 0 Cosmo profit 0 1500 1500 900 0 Total Profit 0 1500 1900 2100 1200 ‘Unused resources Astro Capacity 60 60 40 0 0 ‘Cosmo Capacity 50 0 0 20 50 Labor 120 20 0 0 60 Positive Variables 3 3 ej 3 3 (includes Astro, Cosmo and unused resources) ‘Number of, 2 3 3 3 3 constraints94 Ghpler3 lotro tinea Programing 3.9 Production Process Models We now explain how to formulate an LP model of a simple production process.’ The key step is to determine how the outputs from a later stage of the process are related to the ‘outputs from an earlier stage. EXAMPLE n Rylon Corporation manufactures Brute and Chanelle perfumes. The raw material needed to manufacture each type of perfume can be purchased for $3 per pound. Processing 1 Ib of raw material requires 1 hour of laboratory time. Each pound of processed raw material yields 3 oz of Regular Brute Perfume and 4 oz of Regular Chanelle Perfume. Regular Brute can be sold for $7/oz and Regular Chanelle for $6/0z. Rylon also has the option of further processing Regular Brute and Regular Chanelle to produce Luxury Brute. sold at $18/07, and Luxury Chanelle, sold at $14/oz. Each ounce of Regular Brute processed furthei requires an additional 3 hours of laboratory time and $4 processing cost and yields | 02 01 Luxury Brute. Each ounce 6f Regular Chanelle processed further requires an additional 7 hours of laboratory time and $4 processing cost and yields 1 oz of Luxury Chanelle. Eact year, Rylon has 6000 hours of laboratory time available and can purchase up to 4000 It of raw material. Formulate an LP that can be used to determine how Rylon can maximizs profits. Assume that the cost of the laboratory hours is a fixed cost. Rylon must determine how much raw material to purchase and how much of each type 0 perfume should be produced. We therefore define our decision variables to be x, = number of ounces of Regular Brute sold annually x, = number of ounces of Luxury Brute sold annually x, = number of ounces of Regular Chanelle sold annually x, = number of ounces of Luxury Chanelle sold annually x ‘5 = number of pounds of raw material purchased annually Rylon wants to maximize Contribution to profit = revenues from perfume sales — processing costs ~ costs of purchasing raw material = Ta, + 18x, + 6x, + 14x, — (xy + 4x,) — 3x, = Tx, + 14x, + 6x, + 10x, — 3x, Thus, Rylon’s objective function may be written as, max z= 7x, + 14x, + 6x, + 10x, — 3x, Rylon faces the following constraints: Constraint 1 No more than 4000 Ib of raw material can be purchased annually. Constraint 2 No more than 6000 hours of laboratory time can be used each year. ‘This section is based on Hartley (1971).39 Potion Pes Maes 95 Constraint 1 is expressed by 69) “To express Constraint 2, note that “Total lab time used annually = time used annually to process raw material + time used annually to process Luxury Brute + time used annually to process Luxury Chanelle Hx 438, +20, “Then Constraint 2 becomes Bayt Dey +45 < 6000 6) ‘After adding the sign restrictions x, > 0( = 1, 2.3, 4.5), many students claim that Rylon should solve the following LP: maxz = Taj+ Ix, + 6x + 10x, — 3x5 st x5 = 4000 Bxy + 2ey bts <= 6000 420 @=1,23.49) ‘This formulation is incorrect. Observe thatthe variables x, and x, do not appear in any of the constraints. This means that any point with x, =x, =x, =Oand x, and x, very large isin the feasible region. Points with x, and x, large can yield arbitrarily large profits. Thus. this LP is unbounded. Our mistake is that the current formulation does not indicate that the amount of raw material purchased determines the amount of Brute and Chanelle that is available for sale or further processing. More specifically, from Figure 8 (and the fact that 1 oz of processed Brite yields exactly 1 oz of Luxury Brute), it follows that Ounces of Regular Brute Sold __/ ounces of Brute produced ) pounds of raw + ounces of Luxury Brute sold ~ \ “pound of raw material) (material purchased, =3x, ‘This relation is reflected in the constraint tat or ty by 3=0 on 02 Re. Brute sold Bet KC yor Reg. Bre processed into Lu. Brote Pry Raw materia! 507 Rep, Chanelle sold $52. KC soe Ree. Chaneteimto Lux. Chante96 Capleton nr Pogriog imilarly, from Figure 8 itis clear that Ounces of Regular Chanelle sold + ounces of Luxury Chanelle sold = 4x, This relation yields the constraint ytyaax, or tx, dey 6a Constraints (57) and (58) relate several decision variables. Students often omit con- strains ofthis type. As this problem shows, leaving out even one constraint may very well lead to an unacceptable answer (such as an unbounded 1). If we combine (53)-(58) with the usual sign restrictions, we obtain the correct LP formulation, max z = Tx, + 14x, + 64, + Oxy — 35 st x5 = 4000 3x, + et 4, = 6000 ate =34,50 yt x4 =0 x, 200 = 1,234.5) ‘The optimal solution is z = 172,666.667, x, = 11,333.33 oz, x, = 666.667 oz, x 16,000 oz, x, = 0. and x, = 4000 Ib. Thus, Rylon should purchase all 4000 Ib of available aw material and produce 11,333.33 oz of Regular Brute, 666.667 oz of Luxury Brute, and 16,000 oz of Regular Chanelle. This production plan will contribute $172,666.667 to Rylon’s profits. In this problem, a fractional number of ounces seems reasonable, so the Divisibility Assumption holds. We close our discussion of the Rylon problem by discussing an crror that is made by ‘many students. They reason that | tb raw material = 3.07 Brute + 4.07 Chanelle Since x, + x, = total ounces of Brute produced, and x, + x, = total ounces of Chanelle produced, students conclude that Be ta) Hay +) co) ‘This equation might make sense as a statement for a computer program; in a sense, the variable x, is replaced by the right side of (59). As an LP constraint, however, (59) makes no sense. To see this, note thatthe left side has the units “pounds of raw material,” and the term 3x, on the right side has the units Ounces of Brute (ream) (ounces of Be ince some of the terms do not have the same units, (59) cannot be correct. If there are foubrs about a constraint, make sure that all terms in the constraint have the same units. ‘This will avoid many formulation errors. (Of course, even if the units on both sides of a ‘constraint are the Same, the constraint may still be wrone.)Tableau for Rylon Corporation Example Regular | Luxury | Regular | Luxury | Purchase Constraint | Brute | Brute | Chanelle | Channelle | Raw mat. | Inequality | RHS z 1 4 6 10 3 Raw Mat. Purchase 1 < 4000 Lab 3 2 1 <= | 6000 Brute Transfer 1 1 3 < ° Channelie Transfer 1 1 4 <= 0 Note, vertical and horizontal lines included for explanatory purposes. Tableaus may or may not have the lines. In addition, the inequality column may be omitted7 —_ i — al 2 — — 3 Rylon Corporation Example a 4 — I {| = | _ —_ Decision Variables as __ i: é T regular brite ~ [loan brute [regular chanelle [tury chanelle [raw materia — 8 11333.33333| 666.666667| rr) 0 4000 ___|OBJ FN] 8 7 14] é 10 3| | t7666.7| Constraints |Right Hand Side | [Constraints | = raw material t|___ 4000] 4000) laboratory time 7 : zl 1 5000} 6000) brute transfer —F a = of | chanelle transfer 4 1 4 0 0Microsoft Excel 8.0a Answer Report Worksheet: [rylon.xis]Sheett Report Created: 1/13/2000 2:17:27 PM Target Cell (Max) Cell Name Original Value Final Value "S89_Objective Functon OBJ FN 0172666 6667 Adjustable Cells Cell Name ‘Original Value Final Value 3DS8_Decision Levels regular brute 0 _11335.33333 'SES8_Decision Levels luxury brute (0 666.6666667 '$F$8_Decision Levels regular chanelle 0 16000 '$G$8_Decision Levels luxury chanelle 0 'SHSB_Decision Levels raw material 0 7000 Constraints Cell Name Cell Value Formula Status Slack ‘31S13 raw material Constraints 4000 SIS 13<=SIS15 Binding 0 ‘$1814 laboratory time Constraints (6000 SIS14<=$/514 Binding 0 ‘$1815. brute transfer Constraints 0 $1815<=$$15 Binding 0 ‘31816 chanelle transfer Constraints 0'S1816<=$1S16 Binding _0Microsoft Excel 8.0a Sensitivity Report Worksheet: [rylon.xis]Sheett Report Created: 1/13/2000 2:17: Adjustable Cells Reduced Objective Allowable Allowable ce Name Cost___ Coefficient _Increase__ Decrease 'SD$6_Decision Levels regular brute 11399,39003, ov 7 7 7 'SES8_Decision Levels luxury brute 666.6666667 0 14 19 1 '$FSB_Decision Levels regular chanelle 16000 0 6 7E+30_0,666666667 '$G$B_Decision Levels luxury chanelle (0 -0,666666667 70 _0,666666667 TE+30 'SHS8_Decision Levels raw material 4000 0 3 TE +30 30 66666667 Constraints ee “Final Shadow Constraint Allowable Allowable Celt Name Value Price RH.Side Increase Decrease ‘Sista raw material Constraints 4000 30 66866667 ‘4000-2000 3400 'SIS14 laboratory time Constraints (6000_2.333333333, ‘6000 34000 72000 ‘SIS15 brute transfer Constraints oO 7 0 4E+30_11933.33333 ‘$IS16 chanelle transfer Constraints o 6 0 1E#30, “T6000Product Product 2__ Product 3 Decision Level 0 150 0 Obj. Fn. Objective Function 23 2 32 1800 Constraints Constraint RHS fand 4 1 2 150 <= 200 labor 4 2 6 300 <= 300 capital 2 3 6 450 <= 1200 Adjustable Cells Final Reduced Objective Allowable Allowable Celt Name Value Cost Coefficient Increase Decrease 'SC$5_Decision Level Product 1 0 a 23 7__16+30 SD$5_ Decision Level Product2 160 0 12 16+30 Os 'SES5_ Decision Level Product 3 o 4 32 4 __16+30 Constraints ~ ~ Final Shadow Gonstraint Allowable Allowable Celt Name Value Price RH.Side Increase Decrease ‘$G$9_land Constraint 150 o 2001630. 30, ‘$GS10_ labor Constraint ‘300 6 300 700 ‘300 ‘$GS11_capital Constraint 450 o 7200 16+30 750 Target Cell (Max) Celt ‘Name, Griginal Value Final Value live Function Ob). Fh. T 7 Adjustable Cells Cell ‘Name ‘Original Value Final Value Decision Level Product 7 o o ‘SD$5_ Decision Level Product 2 0 750 ‘SES5_ Decision Level Product 3 0 0 Constraints, Celt ‘Name Celi Value Formula Status Slack "$GS9~Tand Constraint “at i<=$i$0 Not Binding 50 ‘$GS10_labor Constraint 0 300 $GS10<=S1510_Bindi 5G$11_capital Constraint 450 $GS11<=S1S11_ Not Binding 750TABLET \ & Sto Cas, Sai nd end oe | and fom | Gy} Gy G3 Gy (aloe) Matt | S886 SIDS Met? | 39 S12 SIX 7S Mrs | SS) Se SS ceed | 2s ww (naib) | tysevaph no Aaa Raph 991 Fi GURE 1 Gopbial Resection a Powsca Pui ol Opa Sols ‘Supply points Demand points General Description of a Transportation Problem al, transportation problem is specified by the follewing informationi re r mi ‘ ‘ & Ap] ' ‘ . 2n0) ‘ ' L 1A] pueweg ‘ ‘ ‘ . ewed ziwed rd yes1sU09 dang| sturenssuog| ug a0) wer) eax ze, tee ex ge zew, exw) zit Hen uorstoa0) ojdwerg wonewodsuestMicrosoft Excel 9.0 Answer Report Worksheet: [Bookt}Sheet3 Report Created: 4/14/2003 2:25:43 PM Target Cell (Min) EST Gijecive Function ‘Aajstable Cols Wane ‘355 _—Dession Levels at oo 090 os oo os oo o 5 er oe ‘Decision Levis 3? a) Decsion Levels G2 o Constants 2 x : « 3 SP516 ely 1 Constant 45 SPS16>08 Bing ° 59517 ely 2 Gonatant 20 SPSt7>=5' Bing ° ‘P51 ai $ Contact 30 SP 10505: Being = SPS19 ety 4 Constant P5055: Bneing @ Microsoft Excel 9.0 Sensitivity Report Worksheet: [Bookt}Sheet3 Report Created: 4/14/2003 2:28:43 PM ‘Adjustable Cells Final Raduead Objective Value "Cost Coefficient Constraints SPSTt pant t Constant SP512__ plant 2 Consiain "3 plan 3 Conran. ~y 1 Constraint ‘aly 2 Constraint ‘ay 3 Constant — ety 4 ConstantSSoee5 ooo qujeaysuog) zex Lex! sex e2x sejqeuen uo}s}99q) ajdwexg uopeyodsuess {7 Kup] vy Aig] € Aig] z Av L Ag} puewsg| © weld] zquerd| 1 weld Aiding squyensuog| uonoung eanoalqo| ‘819407 woIsi0g |‘call ‘Sess Syeaiee ajusssoie Cais Cal “Decision Levels a3 '5PS5___Decssion Leveis 36 $3085 Decision Levers 33 ey ety? 20 $5816>=$ Sindng enya 20 881728 Binding cya : 40 s5S16>=8 Binding ‘aummy cy ‘SSSS19>=5 Binding lMicroson Excel 9.0 Sensitivity Report |Workshest: [Bookt}Sheeti |Report Created: 41472003 2:18:28 PM . Final Rede Sijacive Ata ~Ailoaie | Cost Coeficien” Increase “S85 Deession Levels 23 SxSS___Decison Levels x24 SUS evel S185 Deesion Levels 31 Decrease