Chapter Three
Linear Programming Model (LPM)
1. Introduction
Linear programming is quantitative tool which assist in getting done the organization and allocation of
scarce resource in the optimal and maximized manner or the optimal minimization of organizational cost
for the attainment of organizational goal.
2. Components of linear programming Model
Objective function: it expresses the main objective that the organization wants to achieve through linear
programming
Decision variable: production or resource variables up on which decision is going t made
Constraints: production or resource limitation factors on operation or decision making process
Parameters: coefficients of decision variables (product or resource) or constant terms of decision
variable
3. Assumption of linear programming model
Linearity: contribution of each decision variable is constant to its coefficient amount or weight
Divisibility: the result of the unknown variable cannot be approximated
Non negativity; decision unknown variables can’t hold negative values as a result of linear programming
model
Certainty: data/parameters and constraint amounts given on the information are certain and not taken
arbitrarily or randomly
4. Example of Linear programming model:
Z = maximization (Minimization): 10X1 + 5X2
Subject to the following system 3X1 + 4X2 < 100
constraints 2X1 + 4X2 < 20
Non negativity constraints X1, X2 > 0
5. Solution approach to linear programming model
A. Graphics method
B. Simple method
Examples one:
Suppose the firm produce two type of model products (model I and Model II , labour hour and raw
materials are needed to produce the product, a single unit of model requires one unit of raw material and
six labour hour. Two units of raw material and four labour hours is required produce a single unit of
model II product. The firm has only 10 unit of raw material and 36 lbour hour and moreover the selling
price of model I product is 6 birr and selling price of model II product is 10 birr, considering this how
many unit of model I and model II products the firm should produce to maximize its profit.
A. Formulate the linear programming model that maximize the profit of the firm
B. How many unit of model I and Model II should be produced to maximize the profit (Use graphics
method to solve the problem)
Procedure to solve the problem with graphics model:
I. Represent the information with simple and convenient variables
II. Identify the selling price and per unit cost per unit of each material to use as parameter for
variables
III. Decide on the objective of the problem as maximization and minimization
IV. Identify the possible available resource or cost to be incurred and decide on the possible
constraints, then develop the system constraint with proper equality and inequality signs
V. Ensure the existence of non negativity constraint
VI. Formulate and complete and linear programming model
Example two:
The firm has require at two type of ingredients (ingredient A and B) to produce a product and at least 900
unit of ingredient A and 1200 unit of ingredient are required for a firm to continue its operation. These
ingredients are available in two types of bags: bag I and bag II. A single bag I can contain 20 unit of
ingredients A and 40 unit of ingredient B, a single bag II can contain 30 unit of ingredient A and 30 unit
of ingredient B. a single bag I cost the firm 100 birr and a single bag II cost the firm 120 birr, the firm
wants to determine the number of bag I and Bag II and minimize the purchasing cost of the firm.
A. Formulate the linear programming model that minimize the cost of the firm
B. How many unit of bag I and bag II should be purchase to minimize cost (Use graphics method to
solve the problem)