LINEAR PROGRAMMING
APPLICATIONS
Rosalie M. Cabagay, MPA
What is LP Applications
Most successful quantitative approach to
decision making, also have been reported
almost every industry. Application includes
Production Scheduling
Media Selection
Financial Planning
Capital Budgeting
Transportation
Distribution System Design
Staffing
What we’ll Cover
Marketing Applications
Financial Applications
Operations Management Applications
Module Objectives:
Understand the different applications of linear
programming.
Set the importance of linear programming in
marketing.
Comprehend what this linear programming do
with financials and operations management
as well.
What is Marketing
Marketing is
communicating the value
of a product, service or
brand to customers, for
the purpose of
promoting or selling that
product, service, or
brand.
Marketing Applications
Media Selection
Marketing Research
Media Selection
Help marketing managers to allocate a fixed
advertising budget to various advertising media.
Media includes
Newspapers
Magazines
Radio
Television
Direct Mail
Objective
Objective of Media Selections includes
Maximize Reach
Frequency
Quality of Exposure
Restrictions
Company Policy
Contract Requirement s
Media Availability
Marketing Research
A research to learn about
Consumer
Characteristics
Attitudes
Preferences
Marketing Research Firms
Specialized in marketing research for client
organization. Services they offer includes:
Designing the Study
Conducting Market Surveys
Analyzing the Data Collected
Providing Summary Reports &
Recommendations
Financial Application
In finance, linear programming can be applied in
problem situations involving:
Capital Budgeting
Make-or-Buy Decisions
Asset Allocation
Portfolio Selection
Financial Planning, and many more.
Financial Application Problems
Portfolio Selection
Financial Planning
Portfolio Selection
Portfolio selection
problems involve situations
in which a financial
manager must select
specific investments for
example stocks and bonds
from a variety of
investment alternatives.
Objective Function
The objective function for portfolio
selection problems usually is maximization
of expected return or minimization of risk.
Constraints
The constraints usually reflect restrictions on the
type of
Permissible Investments
State Laws
Company Policy
Maximum Permissible Risk, and so on.
Financial Planning
Financial Planning is an ongoing process to help
you make sensible decisions about money that
can help you achieve your goals in life.
Operation Management
Applications
Managing and directing the physical and/or
technical functions of a firm or organization,
particularly those relating to
Development
Production
Manufacturing
What we’ll cover
Make-or-Buy Decision
Production Scheduling
Workforce Assignment
Blending Problems
Make-or-Buy Decision
It determine how much of each of several
component parts a company should
manufacture and how much it should purchase
from an outside supplier.
Production Scheduling
Establish an efficient low-cost production
schedule for one or more products over several
time periods (weeks or months)
Advantages
Can help to smooth the demand signal
Protects lead time and helps book future
deliveries
Acts as a single communication tool to the
business
Helps the Supply chain prioritize requirement
Helps stabilize production
Disadvantages
Complexity
Cost
Can be Skewed
Lack of Flexibility
Workforce Assignment
Workforce assignment problems frequently
occur when production managers must make
decisions involving staffing requirements for a
given planning period.
Blending Problems
Blending problems arise whenever a manager
must decide how to blend two or more resources
to produce one or more products.
Activities/Assessments
Itemized the different applications of linear
programming.
State the importance of linear programming in
marketing.
What this linear programming do with
financials and operations management as
well?