2 Several limiting factors – linear programming When there is only one scarce resource the method above (key factor analysis) can be used to solve the problem. However where there are two or more resources in short supply which limit the organisation’s activities then linear programming is required to find the solution.
In examination questions linear programming is used to:
§ maximise contribution and/or中华考试网
§ minimise costs.
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A surprising number of problems can be solved with this relatively straightforward technique:
§ Mixing problems – a product is composed of several ingredients. The least costly mix of the ingredients that will produce a product of predetermined specification is required.
§ Job assignment problems – a number of jobs or products must be handled by various people and/or machines, and the least costly arrangement of assignments is required.
§ Capacity allocation problems – limited capacity is allocated to products so as to yield maximum profits. This is the most common application in examination questions.
§ Production scheduling – an uneven sales demand is met by a production schedule over a period of time, with given penalties for storage, overtime, and short-time working.
§ Transportation problems – various suppliers (or one company with several plants) throughout the country make the same products, which must be shipped to many outlets that are also widely distributed. This may involve different transportation costs and varying manufacturing costs. Linear programming can determine the best way to ship. It denotes which plant shall service any particular outlet. It can also evaluate whether it pays to open a new plant.
§ Purchasing – multiple and complex bids can be evaluated, in order to ensure that the orders placed with suppliers comply with the lowest cost arrangement.
§ Investment problems – the results of alternative capital investments can be evaluated when finance is in short supply.
§ Location problems – linear programming can help to select an optimum plant or warehouse location where a wide choice is possible.
2.1 Formulating a linear programming problem involving two variables
The steps involved in linear programming are as follows:
Illustration 2 – Formulating the problem |