Polytechnic University of the Phils.

College of Business Administration

Human Resource Management

Prof. Marifel i. javier

AGENDA
WEEK 4

Apply the model formulation in a systematic format for complex

example.

Identify and formulate linear programming model in different

application areas in using Excel or QM for Windows in solving Linear
Programming.

Familiarized linear programming thru example in different areas of

the Industry.
Chapter Overview

On this module is a more complex You will also notice that the approach
model formulation are presented for the model formulation is in a
and some examples are selected to systematic format.
illustrate some of the more popular
application areas of linear
programming.

This also provide guidelines for

model formulation for a variety of
problems and computer solutions
with QM for windows.
 Product Mix Sample
Case Problem

For product mix sample using model formulation, notice model formulation being
presented in a systematic away. First, decision variables are identified, then the
objective function is formulated, and finally the model constraints are developed.

Decision Step 1 :
variables Define the decision variables

X1 = sweatshirts, front printing

How many
(dozens of)
X2 = sweatshirts, back and front printing
T-shirts and
sweatshirts of
each type to
X3 = T-shirts, front printing
produce? X4 = T-shirts, back and front printing
Objective
function

Step 2 :
Define the objective function

Z will be the symbol for Total profit.

To
maximize maximize
profit

Z = $90X1 + $125X2 + $45X3 + $65X4

 Step 3 :
Model
Define the The resources
Constraints
Constraints available.
This include processing time, blank shirts, budget and
shipping capacity

The total available processing time is the 72-

hour period between the end of the game and
the truck pickup:

The second constraint is for the available

shipping capacity, which is 1,200 standard-size
boxes.

A box of sweatshirts is three times the size of a

standard-size box. Thus, each box of sweatshirts
is equivalent in size to three boxes of T-shirts.
This relative size differential is expressed in the
following constraint:
 Problem
Illustration

The company wants to know how many

dozen (boxes) of each type of shirt to
produce in order to maximize profit.
 QM for Windows Model Summary

X1 X2 X3 X4 Z

In the event manager

would round off the
$147.22 result, it will have a
$147.22 less than the
optimal profit value of
$45,522.22
The third constraint is for the
cost budget. The total budget
available for production is
$25,000:

The last two constraints reflect

the available blank sweatshirts
and T-shirts the company has in
storage:

Model Summary
Sensitivity Analysis
After formulating and solving this model,
Quick-Screen might decide that it needs to
produce and ship at least some of each type of
shirt.

Management could evaluate this possibility by

adding 4th constraints that establish minimum
levels of production for each type of shirt,
including front and back T-shirts (x4) none of
which are produced in the current solution.

The manager might also like to experiment

with the constraints to see the effect on the
solution of adding resources.
Looking at the Ranging window for QM
for windows in the dual value for Although the 72 hrs. limit
seems strict, it might be
processing time shows profit would
possible to reduce
increase by $233.33 per hour up to individual processing
98.33 hours (upper limit) of the times and achieve the
sensitivity range for this constraint same result.
quality value.
Let us interpret: Our baseline is 72hrs
From the output QM for windows and (original value) from lower
under Ranging window, you will see value $63.33 up to $98.33,
this means anywhere in
under dual value for processing time
between said company still
shows profit would increase by $233.33 have its profit. Considering
per hour and would maximize its profit constraints would not
up to 98.33 hours (upper limit). What change.
does this mean?

This is the same

with other
variables, output
of lower/ upper
bound.

Those values derived serve as guide to the decision maker for

the company to either produce fully one constraints base on
the variable, or not.
 Investment Example
Application of linear programming can also be applied to investment. Let us use
the problem on page 120 of our reference e-book and try to identify and apply
model formulation.
4 decision variables represent the monetary amount
Decision invested in each investment alternative
variables

The objective of the investor is to maximize the total return from the investment
in the 4 alternatives. The total return is the sum of the individual returns from
each alternative. Thus, the objective function is expressed as:

Objective
Function
 From the case problem, the constraints are the guidelines
Model established for diversifying the total investment. Each
Constraints guideline is transformed into a mathematical constraint
separately.
The 1st guideline states that no more than 20% of the total investment should be
in municipal bonds. The total investment is $70,000; 20% of $70,000 is $14,000.
Thus, this constraint is
X1 < $14,000.00
The 2nd guideline indicates that the amount invested in certificates of deposit
should not exceed the amount invested in the other three alternatives. Because
the investment in certificates of deposit is x2 and the amount invested in the
other alternatives is x1 < x1 + x3 + x4 the constraint is
x2 < x1 + x3 + x4

The 3rd guideline specifies that at least 30% of the investment should be in
treasury bills and certificates of deposit. Because 30% of $70,000 is $21,000 and
the amount invested in certificates of deposit and treasury bills is represented
by the constraint is
X2 + X3 > $21,000.00
 Model Constraints The 4th guideline states that the ratio of the
Continuation amount invested in certificates of deposit and
treasury bills to the amount invested in municipal
bonds and the growth stock fund should be at least
1.2 to 1:

This constraint is not in standard linear programming form because of the

fractional relationship of the decision variables, (X2 + X3)/(X1 + X4). It is converted
as follows:

Finally, the investor wants to invest the entire $70,000 in the 4 alternatives. Thus,
the sum of all the investments in the 4 alternatives must equal $70,000:
 Model The complete linear programming model for this
Summary problem can be summarized as

We have used STANDARD

FORM due to fractional
relationship, and as we
define standard form it
requires fractional
relationships between
variables be eliminated

Solution
Analysis
Sensitivity Analysis
Try to use your Excel Solver or your regular excel just make sure it has solver
(for those student who have difficulty in their Excel QM I have attached some
remedy on it)

I have attached a YouTube video that you can enhanced more your knowledge in
the system but most of all the rational thinking behind the figures and output.

[Link]

PROGRAM USED : For excel solver

to be Added in to excel 365 in case
Excel qm have error
 A Marketing Example
From our reference e-book page 126, we will
try to look in a different industry such as
Marketing. How to apply linear programming
using our tools such as QM for windows and
Excel Spreadsheet.

Following our model formulation, let us try

to apply in a different area such as the
problem case.

Decision
variables

Objective
Function
 Model
Constraints

Model
Summary
 For this example, you will notice a non-integer solution can
create difficulties. We have derived an answer of 1.82 which
we cannot round into 2 television commercials, 10 radio
commercials and 3 news ads.

Using the budget constraints from our example shows that such solution will
exceed the $100,000 budget limitation although by only $2,000. Thus, the store
must either increase its advertising or plan for television commercial by 1, 10 for
radio commercials, and 3 newspaper ads.

Solution
Analysis

We will discuss
further integer Please Watch below link:
linear programming
in our next module,
[Link]
[Link]
 Transportation Example
Lets us now try another area which is the transportation. On page 130 of the
reference e-book sample. Following the model formulation try to solve the
following problem using excel spreadsheet. What have you observed?

You will notice a double-subscripted variable The subscript,

whether double
“Xij” or single, simply
gives a “name” to
the variable
(i.e., distinguishes it from other decision variables)
from e-book example:

The decision variable X3A represents the number of

television sets shipped from warehouse 3 in
Pittsburgh to store A in New York.
You will also encounter on this transportation problem the
two model:

1.) Balanced transportation model - in this supply, equals

demand such that all constraints are equalities

2.) Unbalanced transportation model – in this supply, does

not equal to the demand, and one set of constraints is <.

❑ The steps for model formulation described in this section are generally
followed; however, the problem must first be defined (i.e., a problem
statement or some similar descriptive apparatus must be developed).

❑ Developing such a statement can be a formidable task, requiring the

assistance of many individuals and units if within an organization.

❑ Formulating a linear programming model from a written problem

statement is often difficult but formulating a model of a “real”
problem that has no written statement is even more difficult.
Chapter Review Exercises

Bark’s Pet Food Company produces canned cat food called Meow Chow and canned
dog food called Bow Chow. The company produces the pet food from horse meat,
ground fish, and a cereal additive. Each week the company has 600 pounds of
horse meat, 800 pounds of ground fish, and 1,000 pounds of cereal additive
available to produce both kinds of pet food. Meow Chow must be at least half fish,
and Bow Chow must be at least half horse meat. The company has 2,250 16-ounce
cans available each week. A can of Meow Chow earns $0.80 in profit, and a can of
Bow Chow earns $0.96 in profit. The company wants to know how many cans of
Meow Chow and Bow Chow to produce each week in order to maximize profit.

A. Formulate a linear programming model for this problem.

B. Solve the model by using the Computer.
Prof. Marifel i. javier