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FORMULATION OF LINEAR PROGRAMMING PROBLEM

Q1. The Apex Television Company has to decide on the number of 27inch and 20 inch set to be produced at one
of its factories. Market research indicates that at most 40 of the 27-inch sets and 10 of the 20-inch sets can be sold
per month. A maximum number of work hours available is 500 per month. A 27-inch set requires 20 work-hours
and 20-inch set requires 10 work hours. Each 27-inch set sold produces a profit of Rs. 1200 and each 20-inch set
produces a profit of Rs. 800. A wholesaler has agreed to purchase all television sets produced if the numbers do
not exceed the maxima indicated by the market research.
Formulate this problem.

Q2. This is your lucky day. You have just won a Rs. 10000 prize. You are setting aside Rs. 4000 for taxes and
partying expenses but have decided to invest other Rs. 6000. Upon hearing this news, two different friends have
offered you an opportunity to become a partner in two different entrepreneurial ventures, one planned by each
friend. In both cases, this investment would involve expending some of your time next summer as well as putting
up cash. Becoming a full partner in the first friend’s venture would require an investment of Rs. 5000 and 400
hours and your estimated profit( ignoring your value of time ) would be Rs. 45000. The corresponding figure for
the second friend’s venture are Rs. 4000 and 500 hours, with an estimated profit of Rs. 45000. However both
friends are flexible and would allow you to come in at any fraction of a full partnership, you would like. If you
choose a fraction of a full partnership, all the above figures given for a full partnership ( money intestment, time
investment and your profit) would be multiplied by the same fraction.
Because you are looking for an interesting opportunity summer job anyway ( maximum of 600 hours ) you have
decided to participate in one or both friends ventures in whichever combination would maximize your total
estimated profit.
Formulate this problem.

Q3. Sangeeta loves Paneer and Potatoes. She has therefore decided to go on a steady diet of only these two foods (
plus some liquids ) for her meals. Sangeeta realizes that this is not the healthiest diet, so she wants to make sure
that she eats the right quantities of the two foods to satisfy some key nutritional requirements. She has obtained
the following nutritional and cost information.

Ingredient Grams of Ingredient per Serving Daily requirements


Paneer Potatoes ( grams )
Carbohydrates 5 15 ≥ 50
Protein 20 5 ≥ 40
Fat 15 2 ≥ 60
Cost per serving Rs. 4 Rs. 2

Q4.Taramani an employee with a multinational company has an investment portfolio of stocks, bonds and other
investment alternatives. Currently he has Rs. 2,00,000 of funds available and must be considered for new
investment opportunities. He is considering four stock options and the relevant financial data are as follows:
STOCK
A B C D
Price per share Rs.100 Rs. 50 Rs. 80 Rs.40
Annual rate of return 0.12 0.08 0.06 0.10
Risk measure per Re invested 0.1 0.07 0.05 0.08
The risk measure indicates the relative uncertainty associated with the stock in terms of its realizing the projected
annual return; higher value indicates higher risk. The risk measures are provided to Taramani by his Chartered
Accountant. Taramani has stipulated for himself the following guidelines: the annual rate of return for the
portfolio must be at least 9% and no one stock can account for more than 50% of the total Rupee investment.
You are required to develop an investment portfolio from among the different stock so that he minimizes risk.

Q5 Georgia Cabinets manufactures kitchen cabinets that are sold to local dealers throughout the country. The
company has a large back log of orders for oak and cherry cabinets and has decided to contract with three smaller
cabinetmakers to do the final finishing operation. For the cabinetmakers, the number of hours required to
complete all the oak cabinets, the number of hours required to complete all the cherry cabinets, the number of
hours available for the final finishing operations, and the cost per hour to perform the work are shown here:
Cabinet Cabinet Cabinet
maker 1 maker 2 maker 3
Hours required to complete all the oak cabinets 50 42 30
Hours required to complete all the cherry cabinets 60 48 35
Hours available 40 30 35
Cost per hour Rs. 36 Rs.42 Rs. 55
For example, Cabinet maker 1 estimates it will take 50 hours to complete all the oak cabinets and 60 hours to
complete all the cherry cabinets. However, Cabinet maker 1 has only 40 hours available for final finishing
operation. Thus cabinet maker 1 can only complete 40/50 =0.8 or 80% of the oak cabinets if it worked on oak
cabinets. Similarly cabinet maker 1 can only complete 40/60 or 67% of the cherry cabinets if worked on cherry
cabinets alone.
You are required to formulate the problem using Linear Programming to determine the percentage of the oak
cabinets and the percentage of cherry cabinets that should be given to each of the three cabinet makers in order to
minimize the total cost of completing both products.

Q6.An investment company is currently managing Rs. 15 crores for their clients. For each client the firm chooses
a mix of three investment vehicles: a growth stock fund, an income fund, and a money market fund. Each client
has different investment objectives and different tolerances for risk. To accommodate these differences, the firm
places limits on the percentage of each portfolio that may be invested in the three funds and assigns a portfolio
risk index to each client. Here is how the system works for Sunder Singh, one of the firms client. Based on the
evaluation of Sunder Singh’s risk tolerance, the firm has assigned Sunder Singh’s portfolio a risk index of 0.05.
Further more to maintain diversity, the fraction of Sunder Singh’s portfolio invested in growth and income funds
must be at least 10% for each and at least 20% must be in the money market fund.
The risk ratings for the growth, income, and money market funds are 0.10 , 0.05 and 0.01 respectively. A portolio
risk index is computed as a weighted average of the risk ratings for the three funds where the weights are the
fraction of the portfolio invested in each of the funds. Sunder Singh has given the firm Rs. 3,00,000 to manage.
The firm is currently forecasting a yield of 20% on the growth, 10% on income fund and 6% on the money market
fund. Develop an investment plan for Sunder Singh using Linear Programming techniques.

Q7 Mid Easter Pulp Company produces recycled paperboard for box manufacturers by combining four grades of
recycled paper stock. Each grade of stock has a different strength , color, and texture. The strength, color and
texture of the paperboard are approximately a weighted average of those characteristics of the paper inputs. The
table below gives the characteristics of the paper stocks and their cost per ton. The company has received an order
and as per specifications must have a strength rating of at least 7 , a color of at least 5 and a texture of at least 6.
The firm would like to determine least cost mix required to produce this paperboard. You are required to help the
firm formulate this problem as the firm is then capable of solving it using Solver.

Paper Grade Strength Color Texture Cost / Ton


1 8 9 8 Rs 1500
2 6 7 5 Rs. 1100
3 5 5 6 Rs. 900
4 3 4 5 Rs. 500

Q8. Raman Biswas is regional sales manager for an industrial products company. His region contains four sales
districts. He supervises 10 sales representatives and controls an advertising budget of Rs. 8,00,000 yearly. Mr.
Biswas believes that sales in a district are related to the amount of advertising and the number of sales reps
assigned to the district. Based on historical data, his estimates of incremental annual sales per Rupee of
advertising and sales per sales rep for each district are given in the following table. Mr. Biswas would like to
determine how to allocate sales reps and the advertising budget among the four districts to maximize sales. To
maintain a reasonable presence in the market, however, each district must be assigned at least one sales rep, and
at-least Rs. 50000 must be spent on advertising in each market.

District 1 2 3 4
Re Sales / Re advertising 7 1 1 11
2 0
Re Sales (‘0000)/ sales 3 2 3
41
rep 8 5 6

You have been retained as an advisor to Mr. Biswas to help formulate his problem which he can then use to solve
using Solver.

Q9. C Ltd., produces container cases for sale of toiletry producers. It has four product lines: cases for talcum
powder, shaving foam, hair spray and deodorant. The following are the data.
Talcum Shaving foam Hair spray Deodorant Total process
powder hours available
per week
Contribution 80 70 95 90
per 1000 cases
( Rs. )
Process times
for
manufacture
( hours per
1000 cases )
Production 5.0 5.0 4.0 4.0 450
Finishing 1.0 1.0 1.0 1.0 120
Printing 2.0 2.5 3.5 3.5 280
Packaging 0.5 0.5 0.5 0.5 80
Maximum 30 40 20 25
expected
weekly
demand
(1000 cases)

Formulate the above Linear Programming Problem.

Q10. An Oil refinery can blend 3 grades of crude oil to produce Quality “R” and “S” petrol. Two blending
processes are available for each production run , the older process uses, 5 units of crude A , 7 Units of crude B and
2 units of crude C to produce 9 units of “R” and 7 Units of “S” . The new process uses 3 units of crude A, 9 units
of crude B and 4 units of crude C to produce 5 units of “R” and 9 Units of “S” Because of prior contractual
commitments , the refinery must provide at least 500 units of “R” and 300 Units of “S” . The refinery has 1500
units of A, 1900 units of B and 1000 Units of C. For each unit of “R” the refinery earns a profit of Rs. 60 and for
each unit of “S” it earns Rs. 90.
Formulate this Linear Programming problem to maximize the profits for the refinery.

Q11. Chip Green is the head groundskeeper at Birdie Valley Golf Club. For the mix of grass for the golf course,
Chip has decided that the best fertilizer would be a 10-8-12 mixture. ( Fertilizer is defined by three values--- a, b
and c where a is the percentage of Nitrogen, b is the percentage of phosphorus and c is the percentage of potash, in
the fertilizer. The remaining material is inert matter. ) Chip can buy a 10-8-12 mix of fertilizer for Rs. 21.75 per
100 Kg. But there are other fertilizers in the market at a variety of prices. The chemical content and prices are
given below. Chip would like to determine whether or not he could buy several fertilizers and mix them together
to obtain a 10-8-12 mixture at a lower cost than Rs. 21.75 per 100 Kg. Recognizing that it might be impossible to
obtain an exact 10-8-12 mix from the fertilizers, Chip is willing to accept chemical percentages of at least the
target amounts, but no more than 0.5% above them ( so the nitrogen level should be between 10 and 10.5%.
Formulate the above as Linear Programming problem.

Fertilizer %Ni %Ph % Po Cost (Rs) / 100 Kg


1 10-8-12 21.75
2 8-11-15 23.50
3 12-7-12 22.00
4 10-10-10 19.50
5 15-10-6 18.50