Linear Programming: The Simplex Method: Learning Objectives

MODULE
7
Linear Programming: The Simplex Method
LEARNING OBJECTIVES
After completing this module, students will be able to:
M7.1 Convert LP constraints to equalities with slack, M7.5 Recognize special cases such as infeasibility,
surplus, and artificial variables. unboundedness and degeneracy.
M7.2 Set up and solve LP maximization problems with M7.6 Use the simplex tables to conduct sensitivity
simplex tableaus. analysis.
M7.3 Interpret the meaning of every number in a M7.7 Construct the dual problem from the primal
simplex tableau. problem.
M7.4 Set up and solve LP minimization problems with M7.8 Understand the importance of Karmarkar’s
simplex tableaus. Algorithm to the field of LP.
I
n Chapter 7, we looked at examples of linear programming (LP) problems that contained
two decision variables. With only two variables, it is possible to use a graphical approach.
We plotted the feasible region and then searched for the optimal corner point and corre-
sponding profit or cost. This approach provides a good way to understand the basic concepts of
LP. Most real-life LP problems, however, have more than two variables and are thus too large for
the simple graphical solution procedure. Problems faced in business and government can have
dozens, hundreds, or even thousands of variables. We need a more powerful method than graph-
ing, so in this module we turn to a procedure called the simplex method.
Recall that the theory of LP How does the simplex method work? The concept is simple, and it is similar to graphical LP
states the optimal solution will lie in one important respect. In graphical LP, we examine each of the corner points; LP theory tells
at a corner point of the feasible us that the optimal solution lies at one of them. In LP problems containing several variables, we
region. In large LP problems, the may not be able to graph the feasible region, but the optimal solution will still lie at a corner point
feasible region cannot be graphed of the many-sided, many-dimensional figure (called an n-dimensional polyhedron) that represents
because it has many dimensions,
the area of feasible solutions. The simplex method examines the corner points in a systematic
but the concept is the same.
fashion, using basic algebraic concepts. It does so in an iterative manner—that is, repeating the
same set of procedures time after time until an optimal solution is reached. Each iteration brings a
higher value for the objective function so that we are always moving closer to the optimal solution.
Why should we study the simplex method? It is important to understand the ideas used to
produce solutions. The simplex approach yields not only the optimal solution to the decision
M7-1
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M7-2 MODULE 7 • LINEAR PROGRAMMING: THE SIMPLEX METHOD
The simplex method variables and the maximum profit (or minimum cost) but valuable economic information as
systematically examines corner well. To be able to use computers successfully and to interpret LP computer printouts, we need
points, using algebraic steps, to know what the simplex method is doing and why.
until an optimal solution is We begin by solving a maximization problem using the simplex method. We then tackle a
found. minimization problem and look at a few technical issues that are faced when employing the sim-
plex procedure. From there, we examine how to conduct sensitivity analysis using the simplex
tables. The module concludes with a discussion of the dual, which is an alternative way of look-
ing at any LP problem.
M7.1 How to Set Up the Initial Simplex Solution

Let us consider the case of the Flair Furniture Company from Chapter 7. Instead of the graphical
solution we used in that chapter, we now demonstrate the simplex method. You may recall that we let
T = number of tables produced

C = number of chairs produced
and that the problem was formulated as
Maximize profit = $70T + $50C 1objective function2

subject to 2T + 1C … 100 1painting hours constraint2
4T + 3C … 240 1carpentry hours constraint2
T, C Ú 0 1nonnegativity constraints2
Converting the Constraints to Equations

Slack variables are added to each The first step of the simplex method requires that we convert each inequality constraint (except
less-than-or-equal-to constraint. nonnegativity constraints) in an LP formulation into an equation.1 Less-than-or-equal-to con-
Each slack variable represents an straints 1… 2 such as in the Flair problem are converted to equations by adding a slack variable
unused resource. to each constraint. Slack variables represent unused resources; these may be in the form of time
on a machine, labor hours, money, warehouse space, or any number of such resources in various
business problems.
In our case at hand, we can let
S1 = slack variable representing unused hours in the painting department

S2 = slack variable representing unused hours in the carpentry department
The constraints to the problem may now be written as
2T + 1C + S1 = 100
and
4T + 3C + S2 = 240
Thus, if the production of tables (T) and chairs (C) uses less than 100 hours of painting time
available, the unused time is the value of the slack variable, S1. For example, if T = 0 and
C = 0 (in other words, if nothing is produced), we have S1 = 100 hours of slack time in the
painting department. If Flair produces T = 40 tables and C = 10 chairs, then
2T + 1C + S1 = 100
21402 + 11102 + S1 = 100
S1 = 10
and there will be 10 hours of slack, or unused, painting time available.
1
This is because the simplex is a matrix algebra method that requires all mathematical relationships to be equations,
with each equation containing all of the variables.

M7.1 How to Set Up the Initial Simplex Solution M7-3
To include all variables in each equation, which is a requirement of the next simplex step,
slack variables not appearing in an equation are added with a coefficient of 0. This means, in
effect, that they have no influence on the equations in which they are inserted; however, this step
does allow us to keep tabs on all variables at all times. The equations now appear as follows:
2T + 1C + 1S1 + 0S2 = 100

4T + 3C + 0S1 + 1S2 = 240
T, C, S1, S2 Ú 0
Because slack variables yield no profit, they are added to the original objective function with 0
profit coefficients. The objective function becomes
Maximize profit = $70T + $50C + $0S1 + $0S2
Finding an Initial Solution Algebraically

Let’s take another look at the new constraint equations. We see that there are two equations
and four variables. Think back to your last algebra course. When you have the same number
of unknown variables as you have equations, it is possible to solve for unique values of the
variables. But when there are four unknowns (T, C, S1, and S2, in this case) and only two equa-
A basic feasible solution to a tions, you can let two of the variables equal 0 and then solve for the other two. For example, if
system of n equations is found by T = C = 0, then S1 = 100 and S2 = 240. A solution found in this manner is called a basic
setting all but n variables equal feasible solution.
to 0 and solving for the other The simplex method begins with an initial feasible solution in which all real variables (such
variables. as T and C) are set equal to 0. This trivial solution always produces a profit of $0, as well as
slack variables equal to the constant (right-hand-side) terms in the constraint equations. It’s not
a very exciting solution in terms of economic returns, but it is one of the original corner point
solutions (see Figure M7.1). As mentioned, the simplex method will start at this corner point
(A) and then move up or over to the corner point that yields the most improved profit (B or D).
Finally, the technique will move to a new corner point (C), which happens to be the optimal
Simplex considers only corner solution to the Flair Furniture problem. The simplex method considers only feasible solutions
points as it seeks the best and hence will touch no possible combinations other than the corner points of the shaded region
solution. in Figure M7.1.
FIGURE M7.1
Corner Points of the C
Flair Furniture Company
Problem
100
B = (0, 80)
80
Number of Chairs
2T + 1C # 100
60
40 C = (30, 40)
4T + 3C # 240
20
D = (50, 0)
(0,0) A
0 20 40 60 80 T
Number of Tables

The First Simplex Tableau

To simplify handling the equations and objective function in an LP problem, we place all of the
coefficients into tabular form. The first simplex tableau is shown in Table M7.1. An explanation
of its parts and how the tableau is derived follows.
CONSTRAINT EQUATIONS We see that Flair Furniture’s two constraint equations can be expressed
as follows:
Here are the constraints in

SOLUTION QUANTITY
tabular form.
MIX T C S1 S2 (RIGHT-HAND SIDE)
S1 2 1 1 0 100
S2 4 3 0 1 240
TABLE M7.1 Flair Furniture’s Initial Simplex Tableau
ns
ns
n
olum
olum
n
lum
lum
s co
les c
ix c
n
it co
lum
e
on m
riab
iabl
r un
t co
k va
l var
t pe
ucti
stan
Slac
Profi
Prod
Rea
Con
Cj SOLUTION $70 $50 $0 $0

MIX T C S1 S2 QUANTITY Profit per unit row
$0 S1 2 1 1 0 100 Constraint equation rows

$0 S2 4 3 0 1 240
Zj $0 $0 $0 $0 $0 Gross profit row
Cj - Zj $70 $50 $0 $0 $0 Net profit row
The numbers 12, 1, 1, 02 in the first row represent the coefficients of the first equation—
namely, 2T + 1C + 1S1 + 0S2. The numbers 14, 3, 0, 12 in the second row are the algebraic
equivalent of the constraint 4T + 3C + 0S1 + 1S2.
The initial solution mix begins As suggested earlier, we begin the initial solution procedure at the origin, where T = 0 and
with real, or decision, variables C = 0. The values of the other two variables must then be nonzero, so S1 = 100 and S2 = 240.
set equal to zero. These two slack variables constitute the initial solution mix; their values are found in the quan-
tity (or right-hand-side [RHS]) column. Because T and C are not in the solution mix, their initial
values are automatically equal to 0.
This initial solution is a basic feasible solution and is described in vector, or column, form as
T 0
Here is the basic feasible solution
C 0
D T = D T
in column form. S1 100
S2 240

M7.1 How to Set Up the Initial Simplex Solution M7-5
Variables in the solution mix are Variables in the solution mix, which is called the basis in LP terminology, are referred to as
called basic. Those not in the basic variables. In this example, the basic variables are S1 and S2. Variables that are not in
solution are called nonbasic. the solution mix or basis and that have been set equal to zero (T and C, in this case) are called
nonbasic variables. Of course, if the optimal solution to this LP problem turned out to be
T = 30, C = 40, S1 = 0, and S2 = 0, or
T 30
C 40
D T = D T 1in vector form2
S1 0
S2 0
then T and C would be the final basic variables, and S1 and S2 would be the nonbasic variables.
Notice that for any corner point, exactly two of the four variables will equal zero.
SUBSTITUTION RATES Many students are unsure as to the actual meaning of the numbers in the
columns under each variable. We know that the entries are the coefficients for that variable.
2 1 1 0
Under T are the coefficients a b , under C are a b , under S1 are a b , and under S2 are a b .
4 3 0 1
Substitution rates are numbers in But what is their interpretation? The numbers in the body of the simplex tableau (see Table
the body of the table. M7.1) can be thought of as substitution rates. For example, suppose we now wish to make T
larger than 0—that is, to produce some tables. For every unit of the T product introduced into
the current solution, 2 units of S1 and 4 units of S2 must be removed from the solution. This is
so because each table requires 2 hours of the currently unused painting department slack time,
S1. It also takes 4 hours of carpentry time; hence, 4 units of variable S2 must be removed from
the solution for every unit of T that enters. Similarly, the substitution rates for each unit of C that
enters the current solution are 1 unit of S1 and 3 units of S2.
Another point that you are reminded of throughout this module is that for any variable ever
to appear in the solution mix column, it must have the number 1 someplace in its column and 0s
1
in every other place in that column. We see that column S1 contains a b , so variable S1 is in the
0
0
solution. Similarly, the S2 column is a b , so S2 is also in the solution.2
1
ADDING THE OBJECTIVE FUNCTION We now continue to the next step in establishing the first simplex
tableau. We add a row to reflect the objective function values for each variable. These contribu-
tion rates, called Cj, appear just above each respective variable, as shown in the following table:
Cj $70 $50 $0 $0
SOLUTION
MIX T C S1 S2 QUANTITY
$0 S1 2 1 1 0 100
$0 S2 4 3 0 1 240
2
If there had been three less-than-or-equal-to constraints in the Flair Furniture problem, there would be three slack vari-
ables, S1, S2, and S3. The 1s and 0s would appear like this:
SOLUTION MIX S1 s2 s3
S1 1 0 0
S2 0 1 0
S3 0 0 1

The unit profit rates are not just found in the top Cj row: in the leftmost column, Cj indicates
the unit profit for each variable currently in the solution mix. If S1 were removed from the solu-
tion and replaced—for example, by C—$50 would appear in the Cj column just to the left of the
term C.
THE Zj AND Cj – Zj ROWS We can complete the initial Flair Furniture simplex tableau by adding two
final rows. These last two rows provide us with important economic information, including the
total profit and the answer as to whether the current solution is optimal.
We compute the Zj row values of the initial solution in Table M7.1 by multiplying the 0
contribution value of each number in the Cj column by each number in that row and the jth
The Zj-row entry in the quantity column and then summing. The Zj value for the quantity column provides the total contribution
column provides the gross profit. (gross profit, in this case) of the given solution:
Zj 1for gross profit2 = 1Profit per unit of S12 * 1Number of units of S12
+ 1Profit per unit of S22 * 1Number of units of S22
= $0 * 100 units + $0 * 240 units
= $0 profit
The Zj values for the other columns (under the variables T, C, S1, and S2) represent the gross
profit given up by adding one unit of this variable into the current solution. Their calculations are
as follows:
Zj = 1Profit per unit of S12 * 1Substitution rate in row 12

+ 1Profit per unit of S22 * 1Substitution rate in row 22
Thus,
Zj 1for column T2 = 1$02122 + 1$02142 = $0

Zj 1for column C2 = 1$02112 + 1$02132 = $0
Zj 1for column S12 = 1$02112 + 1$02102 = $0
Zj 1for column S22 = 1$02102 + 1$02112 = $0
We see that there is no profit lost by adding one unit of T (tables), C (chairs), S1, or S2.
IN ACTION Resource Allocation at Pantex
C ompanies often use optimization techniques such as LP to

allocate limited resources to maximize profits or minimize costs.
Pantex must allocate scarce resources among competing
demands, all of which are important.
The team charged with solving the resource allocation prob-
One of the most important resource allocation problems faced lem at Pantex developed the Pantex Process Model (PPM). PPM
by the United States is dismantling old nuclear weapons and is a sophisticated optimization system capable of analyzing
maintaining the safety, security, and reliability of the remain- nuclear needs over different time horizons. Since its development,
ing systems. This is the problem faced by Pantex, a $300 million PPM has become the primary tool for analyzing, planning, and
corporation. scheduling issues at Pantex. PPM also helps to determine future
Pantex is responsible for disarming, evaluating, and maintain- resources. For example, it was used to gain government support
ing the U.S. nuclear stockpile. The company is also responsible for for $17 million to modify an existing plant with new buildings
storing critical weapon components that relate to U.S.–Russian and $70 million to construct a new plant.
nonproliferation agreements. Pantex constantly makes trade-offs
in meeting the requirements of disarming some nuclear weap-
Source: Based on Edwin Kjeldgaard, et al. “Swords into Plowshares: Nuclear
ons versus maintaining existing nuclear weapon systems, while Weapon Dismantlement, Evaluation, and Maintenance at Pantex,” Interfaces
effectively allocating limited resources. Like many manufacturers, 30, 1 (January–February 2000): 57–82, © Trevor S. Hale.

M7.2 Simplex Solution Procedures M7-7
The Cj − Z j row gives the net The Cj - Zj number in each column represents the net profit—that is, the profit gained
profit from introducing one unit minus the profit given up—that will result from introducing 1 unit of each product or variable
of each variable into the solution. into the solution. It is not calculated for the quantity column. To compute these numbers, simply
subtract the Zj total for each column from the Cj value at the very top of that variable’s column.
The calculations for the net profit per unit (the Cj - Zj row) in this example follow:
COLUMN
T C S1 S2
Cj for column $70 $50 $0 $0

Zj for column 0 0 0 0
Cj - Zj for column $70 $50 $0 $0
We reach an optimal solution It is obvious to us when we compute a profit of $0 that the initial solution is not optimal. By
when the Cj − Z j row has no examining the numbers in the Cj - Zj row of Table M7.1, we see that the total profit can be
positive numbers in it. increased by $70 for each unit of T (tables) and by $50 for each unit of C (chairs) added to the
solution mix. A negative number in the Cj - Zj row would tell us that profits would decrease if
the corresponding variable were added to the solution mix. An optimal solution is reached in the
simplex method when the Cj - Zj row contains no positive numbers. Such is not the case in our
initial tableau.
M7.2 Simplex Solution Procedures

Here are the five simplex steps. After an initial tableau has been completed, we proceed through a series of five steps to compute
all the numbers needed in the next tableau. The calculations are not difficult, but they are com-
plex enough that even the smallest arithmetic error can produce a wrong answer.
We first list the five steps and then carefully explain and apply them in completing the sec-
ond and third tableaus for the Flair Furniture Company data.
Five Steps of the Simplex Method for Maximization Problems

1. Variable entering the solution 1. Determine which variable to enter into the solution mix next. One way of doing this is
has the largest positive Cj − Z j. by identifying the column, and hence the variable, with the largest positive number in the
Cj - Zj row of the preceding tableau. This means that we will now be producing some of
the product contributing the greatest additional profit per unit. The column identified in this
step is called the pivot column.
2. Variable leaving the solution 2. Determine which variable to replace. Because we have just chosen a new variable to enter
is determined by a ratio we must the solution mix, we must decide which basic variable currently in the solution will have to
compute. leave to make room for it. Step 2 is accomplished by dividing each amount in the quantity
column by the corresponding number in the column selected in step 1. The row with the
smallest nonnegative number calculated in this fashion will be replaced in the next tableau.
(This smallest number, by the way, gives the maximum number of units of the variable that
may be placed in the solution.) This row is often referred to as the pivot row. The number
at the intersection of the pivot row and pivot column is referred to as the pivot number.
3. New pivot-row calculations are 3. Compute new values for the pivot row. To do this, we simply divide every number in the
done next. row by the pivot number.
4. Other new rows are calculated 4. Compute the new values for each remaining row. (In our Flair Furniture problem there
with Equation M7-1. are only two rows in the LP tableau, but most larger problems have many more rows.) All
remaining row(s) are calculated as follows:
1New row numbers2 = 1Numbers in old row2
Number above Corresponding number in

- C £ or below ≥ * £ the new row:that is, the ≥ S (M7-1)
pivot number row replaced in step 3

5. Finally, the Zj and Cj − Z j 5. Compute the Zj and Cj - Zj rows, as demonstrated in the initial tableau. If all numbers in
rows are recomputed. the Cj − Zj row are 0 or negative, an optimal solution has been reached. If this is not the
case, return to step 1.
Here we apply the five steps to The Second Simplex Tableau

Flair Furniture.
Now that we have listed the five steps needed to move from an initial solution to an improved
solution, we apply them to the Flair Furniture problem. Our goal is to add a new variable to the
solution mix, or basis, to raise the profit from its current tableau value of $0.
First, T (tables) enters the
Step 1. To decide which of the variables will enter the solution next (it must be either T or C, since
solution mix because its Cj − Z j
value of $70 is largest. they are the only two nonbasic variables at this point), we select the one with the largest positive
Cj - Zj value. Variable T, tables, has a Cj - Zj value of $70, implying that each unit of T added
into the solution mix will contribute $70 to the overall profit. Variable C, chairs, has a Cj - Zj
value of only $50. The other two variables, S1 and S2, have 0 values and can add nothing more to
profit. Hence, we select T as the variable to enter the solution mix and identify its column (with an
arrow) as the pivot column. This is shown in Table M7.2.
Step 2. Since T is about to enter the solution mix, we must decide which variable is to be
r eplaced. There can be only as many basic variables as there are constraints in any LP problem,
so either S1 or S2 will have to leave to make room for the introduction of T, tables, into the basis.
To identify the pivot row, each number in the quantity column is divided by the corresponding
number in the T column.
For the S1 row:

100 1hours of painting time available2
= 50 tables
2 1hours required per table2
For the S2 row:

240 1hours of carpentry time available2
= 60 tables
4 1hours required per table2
The smaller of these two ratios, 50, indicates the maximum number of units of T that can be
produced without violating either of the original constraints. This corresponds to point D in
S1 leaves the solution mix Figure M7.2. The other ratio (60) corresponds to point E on this graph. Thus, the smallest ratio
because the smaller of the two is chosen so that the next solution is feasible. Also, when T = 50, there is no slack in constraint
ratios indicates that the next 1, so S1 = 0. This means that S1 will be the next variable to be replaced at this iteration of the
pivot row will be the first row. simplex method. The row with the smallest ratio (row 1) is the pivot row. The pivot row and the
pivot number (the number at the intersection of the pivot row and pivot column) are identified in
Table M7.3.
Step 3. Now that we have decided which variable is to enter the solution mix (T) and which
is to leave 1S12, we begin to develop the second, improved simplex tableau. Step 3 involves
TABLE M7.2
Pivot Column Identified in Cj $70 $50 $0 $0
the Initial Simplex Tableau SOLUTION QUANTITY
MIX T C S1 S2 (RHS)
$0 S1 2 1 1 0 100

$0 S2 4 3 0 1 240
Zj $0 $0 $0 $0 $0
Cj - Zj $70 $50 $0 $0 Total profit
Pivot column

FIGURE M7.2
Graph of the Flair C
Furniture Company
Problem F = (0, 100)
100
B = (0, 80)
80
Number of Chairs
60
40 C = (30, 40)
20 D = (50, 0)
E = (60, 0)
(0,0) A
0 20 40 60 80 T
Number of Tables
The new pivot row is computed computing a replacement for the pivot row. This is done by dividing every number in the pivot
by dividing every number in the row by the pivot number:
pivot row by the pivot number.
2 1 1 0 100
= 1 = 0.5 = 0.5 = 0 = 50
2 2 2 2 2
The new version of the entire pivot row appears in the accompanying table. Note that T is now
in the solution mix and that 50 units of T are being produced. The Cj value is listed as a $70
contribution per unit of T in the solution. This will definitely provide Flair Furniture with a more
profitable solution than the $0 generated in the initial tableau.
Cj SOLUTION MIX T C S1 S2 QUANTITY

$70 T 1 0.5 0.5 0 50
TABLE M7.3
Cj $70 $50 $0 $0
Pivot Row and Pivot
Number Identified in the SOLUTION
Initial Simplex Tableau MIX T C S1 S2 QUANTITY
$0 S1 2 1 1 0 100 Pivot row

$0 S2 4 3 0 1 240
Pivot number
Zj $0 $0 $0 $0 $0
Cj - Zj $70 $50 $0 $0
Pivot column

Step 4. This step is intended to help us compute new values for the other row in the body of the
tableau—that is, the S2 row. It is slightly more complex than replacing the pivot row and uses the
formula (Equation M7-1) shown earlier. The expression on the right side of the following equa-
tion is used to calculate the left side.
We can now recompute the Number in Number in Number Below Corresponding Number
S2 row. a b = a b − ca b :a bd
New S2 Row Old S2 Row Pivot Number in the New T Row
0 = 4 - 142 * 112

1 = 3 - 142 * 10.52
-2 = 0 - 142 * 10.52
1 = 1 - 142 * 102
40 = 240 - 142 * 1502
This new S2 row will appear in the second tableau in the following format:
$70 T 1 0.5 0.5 0 50

$0 S2 0 1 -2 1 40
Now that T and S2 are in the solution mix, take a look at the values of the coefficients in their
1
We note that the T column respective columns. The T column contains a b , a condition necessary for that variable to be
0
1
contains a b and the S2 column 0
0 in the solution. Similarly, the S2 column has a b ; that is, it contains a 1 and a 0. Basically, the
0 1
contains a b . These 0s and 1s algebraic manipulations we just went through in steps 3 and 4 were simply directed at producing
1
indicate that T and S2 are in the 0s and 1s in the appropriate positions. In step 3, we divided every number in the pivot row by the
basis (the solution mix). pivot number; this guaranteed that there would be a 1 in the T column’s top row. To derive the
new second row, we multiplied the first row (each row is really an equation) by a constant (the
number 4 here) and subtracted it from the second equation. The result was the new S2 row with
a 0 in the T column.
Step 5. The final step of the second iteration is to introduce the effect of the objective func-
tion. This involves computing the Zj and Cj - Zj rows. Recall that the Zj entry for the quantity
column gives us the gross profit for the current solution. The other Zj values represent the gross
We find the new profit in profit given up by adding one unit of each variable into this new solution. The Zj values are cal-
the Z row. culated as follows:
Zj 1for T column2 = 1$702112 + 1$02102 = $70

Zj 1for C column2 = 1$70210.52 + 1$02112 = $35
Zj 1for S1 column2 = 1$70210.52 + 1$021-22 = $35
Zj 1for S2 column2 = 1$702102 + 1$02112 = $0
Zj 1for total profit2 = 1$7021502 + 1$021402 = $3,500
Note that the current profit is $3,500.

TABLE M7.4 Completed

Second-Simplex Tableau Cj $70 $50 $0 $0
for Flair Furniture SOLUTION
$70 T 1 0.5 0.5 0 50

$0 S2 0 1 -2 1 40
Zj $70 $35 $35 $0 $3,500
Cj - Zj $0 $15 -$35 $0
The Cj − Z j row indicates the The Cj - Zj numbers represent the net profit that will result, given our present production
net profit, given the current mix, if we add one unit of each variable into the solution:
solution, of one more unit of
each variable. For example, COLUMN
C has a profit of $15 per unit.
T C S1 S2

Zj for column $70 $35 $35 $0
Cj - Zj for column $0 $15 -$35 $0
The Zj and Cj - Zj rows are inserted into the complete second tableau, as shown in Table M7.4.
Interpreting the Second Tableau

Table M7.4 summarizes all of the information for the Flair Furniture Company’s production mix de-
cision as of the second iteration of the simplex method. Let’s briefly look over a few important items.
We can look at the current CURRENT SOLUTION At this point, the solution point of 50 tables and 0 chairs 1T = 50, C = 02
solution as a corner point in the generates a profit of $3,500. T is a basic variable; C is a nonbasic variable. Using a graphical LP
graphical method. approach, this corresponds to corner point D, as shown earlier in Figure M7.2.
RESOURCE INFORMATION We also see in Table M7.4 that slack variable S2, representing the amount
of unused time in the carpentry department, is in the basis. It has a value of 40, implying that
40 hours of carpentry time remain available. Slack variable S1 is nonbasic and has a value of 0
hours. There is no slack time in the painting department.
SUBSTITUTION RATES We mentioned earlier that the substitution rates are the coefficients in the
heart of the tableau. Look at the C column. If 1 unit of C (1 chair) is added to the current solu-
tion, 0.5 unit of T and 1 unit of S2 must be given up. This is because the solution T = 50 tables
Here is an explanation of the uses up all 100 hours of time in the painting department. (The original constraint, you may
meaning of substitution rates. recall, was 2T + 1C + S1 = 100.) To capture the 1 painting hour needed to make 1 chair, 0.5
of a table less must be produced. This frees up 1 hour to be used in making 1 chair.
But why must 1 unit of S2 (i.e., 1 hour of carpentry time) be given up to produce 1 chair?
The original constraint was 4T + 3C + S2 = 240 hours of carpentry time. Doesn’t this indicate
that 3 hours of carpentry time are required to produce 1 unit of C? The answer is that we are
looking at marginal rates of substitution. Adding 1 chair replaced 0.5 table. Because 0.5 table
required 10.5 * 4 hours per table2 = 2 hours of carpentry time, 2 units of S2 are freed. Thus,
only 1 more unit of S2 is needed to produce 1 chair.
Just to be sure you have this concept down pat, let’s look at one more column, S1, as well.
0.5
The coefficients are a b . These substitution rate values mean that if 1 hour of slack painting
-2
time is added to the current solution, 0.5 of a table (T) less will be produced. However, note that if
1 unit of S1 is added into the solution, 2 hours of carpentry time 1S22 will no longer be used. These
will be added to the current 40 slack hours of carpentry time. Hence, a negative substitution rate
means that if 1 unit of a column variable is added to the solution, the value of the corresponding

solution (or row) variable will be increased. A positive substitution rate tells us that if 1 unit of the
column variable is added to the solution, the row variable will decrease by the rate.
Can you interpret the rates in the T and S2 columns now?
NET PROFIT ROW The Cj - Zj row is important to us for two reasons. First, it indicates whether
the current solution is optimal. When there are no positive numbers in the bottom row, an opti-
mum solution to an LP maximization problem has been reached. In the case of Table M7.4, we
The Cj − Z j row tells us (1) see that Cj - Zj values for columns T, S1, and S2 are 0 or negative. The value for column C (15)
whether the current solution is means that the net profit can be increased by $15 for each chair added into the current solution.
optimal and (2) if it is not, which Because the Cj - Zj value for T is 0, for every unit of T added the total profit will remain
variable should enter the solution unchanged because we are already producing as many tables as possible. A negative number,
mix next. such as the -35 in the S1 column, implies that total profit will decrease by $35 if 1 unit of S1 is
added to the solution. In other words, making one slack hour available in the painting depart-
ment (S1 = 0 currently) means that we would have to produce one-half table less. Since each
table results in a $70 contribution, we would be losing 0.5 * $70 = $35, for a net loss of $35.
Later in this module we discuss in detail the subject of shadow prices. These relate to
Cj - Zj values in the slack variable columns. Shadow prices are simply another way of inter-
preting negative Cj - Zj values; they may be viewed as the potential increase in profit if one
more hour of the scarce resource (such as painting or carpentry time) could be made available.
We mentioned previously that there are two reasons to consider the Cj - Zj row carefully. The
second reason, of course, is that we use the row to determine which variable will enter the solution
next. Since an optimal solution has not yet been reached, let’s proceed to the third simplex tableau.
The Third Simplex Tableau

Since not all numbers in the Cj - Zj row of the latest tableau are 0 or negative, the previous
solution is not optimal, and we must repeat the five simplex steps.
C (chairs) will be the next Step 1. Variable C will enter the solution next by virtue of the fact that its Cj - Zj value of 15 is the
solution mix variable because it largest (and only) positive number in the row. This means that for every unit of C (chairs) we start to
has the only positive value in the produce, the objective function will increase in value by $15. The C column is the new pivot column.
Cj − Z j row.
Step 2. The next step involves identifying the pivot row. The question is, which variable cur-
rently in the solution (T or S2 ) will have to leave to make room for C to enter? Again, each
number in the quantity column is divided by its corresponding substitution rate in the C column:
50
For the T row: = 100 chairs
0.5
We replace the variable S2 40
because it is in the pivot row. For the S2 row: = 40 chairs
1
These ratios correspond to the values of C (the variable entering the solution mix) at points
F and C, seen earlier in Figure M7.2. The S2 row has the smallest ratio, so variable S2 will leave the
basis (and will become a nonbasic variable equal to zero) and will be replaced by C (which will have
a value of 40). The new pivot row, pivot column, and pivot number are all shown in Table M7.5.
TABLE M7.5
Pivot Row, Pivot Column, Cj $70 $50 $0 $0
and Pivot Number SOLUTION
Identified in the Second MIX T C S1 S2 QUANTITY
Simplex Tableau
$70 T 1 0.5 0.5 0 50
$0 S2 0 1 -2 1 40 Pivot row
Pivot number
Zj $70 $35 $35 $0 $3,500
Cj - Zj $0 $15 -$35 $0 (total profit)
Pivot column

The pivot row for the third Step 3. The pivot row is replaced by dividing every number in it by the (circled) pivot number.
tableau is replaced here. Since every number is divided by 1, there is no change:
0 1 -2 1 40
= 0 = 1 = -2 = 1 = 40
1 1 1 1 1
The entire new C row looks like this:

$50 C 0 1 -2 1 40
It will be placed in the new simplex tableau in the same row position that S2 was in before (see
Table M7.5).
Step 4. The new values for the T row may now be computed:
The new T row is computed here. Number Number Number Corresponding

£ in new ≥ = £ in old ≥ - C £ above pivot ≥ * £ number in new ≥ S
T row T row number C row
1 = 1 - 10.52 * 102
0 = 0.5 - 10.52 * 112
1.5 = 0.5 - 10.52 * 1-22
-0.5 = 0 - 10.52 * 112
30 = 50 - 10.52 * 1402
Hence, the new T row will appear in the third tableau in the following position:
SOLUTION
Cj MIX T C S1 S2 QUANTITY
$70 T 1 0 1.5 -0.5 30

$50 C 0 1 -2 1 40
The final step is again computing Step 5. Finally, the Zj and Cj - Zj rows are calculated for the third tableau:
the Zj and Cj − Zj values.
Zj 1for T column2 = 1$702112 + 1$502102 = $70
Zj 1for C column2 = 1$702102 + 1$502112 = $50
Zj 1for S1 column2 = 1$70211.52 + 1$5021-22 = $5
Zj 1for S2 column2 = 1$7021-0.52 + 1$502112 = $15
Zj 1for total profit2 = 1$7021302 + 1$5021402 = $4,100
The net profit per unit row appears as follows:
COLUMN
T C S1 S2

Zj for column $70 $50 $5 $15
Cj - Zj for column $0 $0 -$5 - $15

TABLE M7.6
Final Simplex Tableau for Cj $70 $50 $0 $0
the Flair Furniture Problem SOLUTION
$70 T 1 0 1.5 -0.5 30

$50 C 0 1 -2 1 40
Zj $70 $50 $5 $15 $4,100
Cj - Zj $0 $0 -$5 -$15
An optimal solution is reached All results for the third iteration of the simplex method are summarized in Table M7.6. Note that since
because all Cj − Zj values are every number in the tableau’s Cj - Zj row is 0 or negative, an optimal solution has been reached.
zero or negative. That solution is
The final solution is to make 30 T = 30 tables

tables and 40 chairs at a profit C = 40 chairs
of $4,100. This is the same as
the graphical solution presented S1 = 0 slack hours in the painting department
earlier. S2 = 0 slack hours in the carpentry department
Profit = $4,100 for the optimal solution
T and C are the final basic variables, and S1 and S2 are nonbasic (and thus automatically equal to 0).
This solution corresponds to corner point C in Figure M7.2.
Verifying that the solution does It’s always possible to make an arithmetic error when you are going through the numerous
not violate any of the original simplex steps and iterations, so it is a good idea to verify your final solution. This can be done in
constraints is a good way to part by looking at the original Flair Furniture Company constraints and objective function:
check that no mathematical
errors were made. First constraint: 2T + 1C … 100 painting department hours
21302 + 11402 … 100
100 … 100 ✓
Second constraint: 4T + 3C … 240 carpentry department hours
41302 + 31402 … 240
240 … 240 ✓
Objective function: profit = $70T + $50C
= $701302 + $501402
= $4,100
Review of Procedures for Solving LP Maximization Problems

Before moving on to other issues concerning the simplex method, let’s review briefly what
we’ve learned so far for LP maximization problems.
I. Formulate the LP problem’s objective function and constraints.
II. Add slack variables to each less-than-or-equal-to constraint and to the problem’s objective
function.
III. Develop an initial simplex tableau with slack variables in the basis and the decision
variables set equal to 0. Compute the Zj and Cj - Zj values for this tableau.

Here is a review of the five IV. Follow these five steps until an optimal solution has been reached:
simplex steps. 1. Choose the variable with the greatest positive Cj - Zj to enter the solution. This is the
pivot column.
2. Determine the solution mix variable to be replaced and the pivot row by selecting the
row with the smallest (nonnegative) ratio of quantity to pivot column substitution rate.
This row is the pivot row.

M7.3 Surplus and Artificial Variables M7-15
3. Calculate the new values for the pivot row.

4. Calculate the new values for the other row(s).
5. Calculate the Zj and Cj - Zj values for this tableau. If there are any Cj - Zj numbers
greater than 0, return to step 1. If there are no Cj - Zj numbers that are greater than 0,
an optimal solution has been reached.
M7.3 Surplus and Artificial Variables

To handle # and = constraints, Up to this point in the module, all of the LP constraints you have seen were of the less-than-
the simplex method makes a or-equal-to 1… 2 variety. Just as common in real-life problems—especially in LP minimiza-
conversion like it made to " tion problems—are greater-than-or-equal-to 1Ú 2 constraints and equalities. To use the simplex
constraints. method, each of these must also be converted to a special form. If they are not, the simplex tech-
nique is unable to set up an initial solution in the first tableau.
Before moving on to the next section of this module, which deals with solving LP mini-
mization problems with the simplex method, we take a look at how to convert a few typical
constraints:
Constraint 1: 5X1 + 10X2 + 8X3 Ú 210

Constraint 2: 25X1 + 30X2 = 900
Surplus Variables
We subtract a surplus variable Greater-than-or-equal-to 1Ú 2 constraints, such as constraint 1 as just described, require a dif-
to form an equality when dealing ferent approach than do the less-than-or-equal-to 1… 2 constraints we saw in the Flair Furni-
with a # constraint. ture problem. They involve the subtraction of a surplus variable rather than the addition of
a slack variable. The surplus variable tells us how much the solution exceeds the constraint
amount. Because of its analogy to a slack variable, surplus is sometimes simply called nega-
tive slack. To convert the first constraint, we begin by subtracting a surplus variable, S1, to
create an equality:
Constraint 1 rewritten: 5X1 + 10X2 + 8X3 - S1 = 210
If, for example, a solution to an LP problem involving this constraint is X1 = 20, X2 = 8 and
X3 = 5, the amount of surplus could be computed as follows:
5X1 + 10X2 + 8X3 - S1 = 210

51202 + 10182 + 8152 - S1 = 210
100 + 80 + 40 - S1 = 210
-S1 = 210 - 220
S1 = 10 surplus units
There is one more step, however, in preparing a Ú constraint for the simplex method.
Artificial Variables
There is one small problem in trying to use the first constraint (as it has just been rewritten)
in setting up an initial simplex solution. Since all “real” variables such as X1, X2, and X3 are set
to 0 in the initial tableau, S1 takes on a negative value:
5102 + 10102 + 8102 - S1 = 210
0 - S1 = 210
S1 = -210
All variables in LP problems, be they real, slack, or surplus, must be nonnegative at all times. If
S1 = -210, this important condition is violated.
Artificial variables are needed To resolve the situation, we introduce one last kind of variable, called an artificial variable.
in # and = constraints. We simply add the artificial variable, A1, to the constraint, as follows:
Constraint 1 completed: 5X1 + 10X2 + 8X3 - S1 + A1 = 210

Now, not only the X1, X2, and X3 variables but the S1 surplus variable as well may be set to 0 in
the initial simplex solution. This leaves us with A1 = 210.
Let’s turn our attention to constraint 2 for a moment. This constraint is already an equality,
so why worry about it? To be included in the initial simplex solution, it turns out that even an
equality must have an artificial variable added to it:
Constraint 2 rewritten: 25X1 + 30X2 + A2 = 900
The reason for inserting an artificial variable into an equality constraint deals with the usual
problem of finding an initial LP solution. In a simple constraint such as number 2, it’s easy to
guess that X1 = 0, X2 = 30 would yield an initial feasible solution. But what if our problem
had 10 equality constraints, each containing seven variables? It would be extremely difficult
to sit down and “eyeball” a set of initial solutions. By adding artificial variables, such as A2,
we can provide an automatic initial solution. In this case, when X1 and X2 are set equal to
0, A2 = 900.
Artificial variables have no Artificial variables have no meaning in a physical sense and are nothing more than computa-
physical meaning and drop out of tional tools for generating initial LP solutions. If an artificial variable has a positive (nonzero) value,
the solution mix before the final then the original constraint where this artificial variable was added has not been satisfied. A feasible
tableau. solution has been found when all artificial variables are equal to zero, indicating all constraints have
been met. Before the final simplex solution has been reached, all artificial variables must be gone
from the solution mix. This matter is handled through the problem’s objective function.
Surplus and Artificial Variables in the Objective Function

Whenever an artificial or surplus variable is added to one of the constraints, it must also be in-
cluded in the other equations and in the problem’s objective function, just as was done for slack
variables. Since artificial variables must be forced out of the solution, we can assign a very high
Cj cost to each. In minimization problems, variables with low costs are the most desirable ones
To make sure that an artificial and the first to enter the solution. Variables with high costs leave the solution quickly, or never
variable is forced out before the enter it at all. Rather than set an actual dollar figure of $10,000 or $1 million for each artificial
final solution is reached, it is variable, however, we simply use $M to represent a very large number.3 Surplus variables, like
assigned a very high cost (M). slack variables, carry a zero cost. In maximization problems, we use negative M.
If a problem had an objective function that read
Minimize cost = $5X1 + $9X2 + $7X3
and constraints such as the two mentioned previously, the completed objective function and con-
straints would appear as follows:
Minimize cost = $5X1 + $9X2 + $7X3 + $0S1 + $MA1 + $MA2

subject to 5X1 + 10X2 + 8X3 - 1S1 + 1A1 + 0A2 = 210
25X1 + 30X2 + 0X3 + 0S1 + 0A1 + 1A2 = 900
M7.4 Solving Minimization Problems

Now that we have discussed how to deal with objective functions and constraints associated with
minimization problems, let’s see how to use the simplex method to solve a typical problem.
The Muddy River Chemical Corporation Example

The Muddy River Chemical Corporation must produce exactly 1,000 pounds of a special
mixture of phosphate and potassium for a customer. Phosphate costs $5 per pound and potas-
sium costs $6 per pound. No more than 300 pounds of phosphate can be used, and at least
150 pounds of potassium must be used. The problem is to determine the least-cost blend of the
two ingredients.
3
A technical point: If an artificial variable is ever used in a maximization problem (an occasional event), it is assigned
an objective function value of - $M to force it from the basis.

M7.4 Solving Minimization Problems M7-17
IN ACTION Linear Programming Modeling in the Forests of Chile
F aced with a series of challenges in making short-term harvest-

ing decisions, Forestal Arauco, a Chilean forestry firm, turned to
concepts became the natural language to discuss the operations.
They had to negotiate the parameters, and the model would do
the dirty work. The system had to run in a few minutes to allow
professors at the University of Chile for LP modeling help. One discussion and negotiation; that was a critical feature for the suc-
of the problems in short-term harvesting of trees is to match the cess of this tool,”* he adds.
demand for products—defined by length and diameter—with the The LP program took about 2 years to develop, and the re-
supply of standing timber. searchers were careful to observe two cardinal rules: (1) the solu-
The manual system used at the time by foresters led to a tion approach had to be comfortable and clear to the user, and
significant amount of waste timber, where larger-diameter logs, (2) the system had to provide answers to the user as soon as pos-
suited for export or sawmills, ended up being used for pulp, with sible, so the user could see quick improvements.
a considerable loss in value. An LP model, labeled OPTICORT by
the professors, was the logical way to get better schedules. *From “Chilean Forestry Firm a ‘Model’ of Success” by Jenny Summerour in
“The system not only optimized the operational decisions in OR/MS Today, April 1999 INFORMS.
harvesting, but also changed the way managers looked at the Source: Based on J. Summerour, “Chilean Forestry Firm a ‘Model’ of Success,”
problem,” says Professor Andres Weintraub. “The model and its OR/MS Today (April 1999): 22–23, © Trevor S. Hale.
Here is the mathematical This problem may be restated mathematically as

formulation of the minimization
problem for Muddy River Minimize cost = $5X1 + $6X2
Chemical Corporation. subject to X1 + X2 = 1,000 lb
X1 … 300 lb
X2 Ú 150 lb
X1, X2 Ú 0
where
X1 = number of pounds of phosphate
X2 = number of pounds of potassium
Note that there are three constraints, not counting the nonnegativity constraints: the first is an
equality, the second is a less-than-or-equal-to constraint, and the third is a greater-than-or-equal-
to constraint.
Graphical Analysis
Looking at a graphical solution To have a better understanding of the problem, a brief graphical analysis may prove useful.
first will help us understand the There are only two decision variables, X1 and X2, so we are able to plot the constraints and
steps in the simplex method. feasible region. Because the first constraint, X1 + X2 = 1,000, is an equality, the solution
must lie somewhere on the line ABC (see Figure M7.3). It must also lie between points A and
B because of the constraint X1 … 300. The third constraint, X2 Ú 150, is actually redundant
and nonbinding, since X2 will automatically be greater than 150 pounds if the first two con-
straints are observed. Hence, the feasible region consists of all points on the line segment AB.
As you recall from Chapter 7, however, an optimal solution will always lie at a corner point of
the feasible r egion (even if the region is only a straight line). The solution must therefore be
at either point A or point B. A quick analysis reveals that the least-cost solution lies at corner
B—namely, X1 = 300 pounds of phosphate and X2 = 700 pounds of potassium. The total
cost is $5,700.
You don’t need the simplex method to solve the Muddy River Chemical problem, of course.
But we can guarantee you that few problems will be this simple. In general, you can expect
to see several variables and many constraints. The purpose of this section is to illustrate the
straightforward application of the simplex method to minimization problems. When the simplex
procedure is used to solve this, it will methodically move from corner point to corner point until
the optimal solution is reached. In Figure M7.3, the simplex method will begin at point E, then
move to point F, then to point G, and finally to point B, which is the optimal solution.
Z08_REND3161_13_AIE_M07.indd 17 01/11/16 2:20 PM

FIGURE M7.3
Muddy River Chemical X2
Corporation’s Feasible X1 # 300
Region Graph 1,000 A
800
B
600
X1 + X2 = 1,000
400
X2 $ 150
200 F G H
100
E D C
0 200 400 600 800 1,000 X1
Converting the Constraints and Objective Function

First, insert slack, surplus, and The first step is to apply what we learned in the preceding section to convert the constraints
artificial variables. This makes it and objective function into the proper form for the simplex method. The equality constraint,
easier to set up the initial simplex X1 + X2 = 1,000, just involves adding an artificial variable, A1:
tableau in Table M7.7.
X1 + X2 + A1 = 1,000
The second constraint, X1 … 300, requires the insertion of a slack variable—let’s call it S1:
X1 + S1 = 300
The last constraint is X2 Ú 150, which is converted to an equality by subtracting a surplus vari-
able, S2, and adding an artificial variable, A2:
X2 - S2 + A2 = 150
Finally, the objective function, cost = $5X1 + $6X2, is rewritten as
Minimize cost = $5X1 + $6X2 + $0S1 + $0S2 + $MA1 + $MA2
The complete set of constraints can now be expressed as follows:
1X1 + 1X2 + 0S1 + 0S2 + 1A1 + 0A2 = 1,000

1X1 + 0X2 + 1S1 + 0S2 + 0A1 + 0A2 = 300
0X1 + 1X2 + 0S1 - 1S2 + 0A1 + 1A2 = 150
X1, X2, S1, S2, A1, A2 Ú 0
The minimization simplex rules Rules of the Simplex Method for Minimization Problems
are slightly different. Now, the Minimization problems are quite similar to the maximization problems tackled earlier in this
new variable to enter the solution module. The significant difference involves the Cj - Zj row. Our objective is to minimize cost,
mix will be in the column with
and a negative Cj - Zj value indicates that the total cost will decrease if that variable is selected
the negative Cj − Z j value
to enter the solution. Thus, the new variable to enter the solution in each tableau (the pivot col-
indicating the greatest
improvement. umn variable) will be the one with a negative Cj - Zj that gives the largest improvement. We

choose the variable that decreases costs the most. In minimization problems, an optimal solution
is reached when all the numbers in the Cj - Zj row are 0 or positive—just the opposite from the
maximization case.4 All other simplex steps, as seen in the following, remain the same.
Steps for Simplex Minimization Problems

1. Choose the variable with a negative Cj - Zj that indicates the largest decrease in cost to
enter the solution. The corresponding column is the pivot column.
2. Determine the row to be replaced by selecting the one with the smallest (nonnegative) ratio
of quantity to pivot column substitution rate. This is the pivot row.
3. Calculate new values for the pivot row.
4. Calculate new values for the other rows.
5. Calculate the Zj and Cj - Zj values for this tableau. If there are any Cj - Zj numbers less
than 0, return to step 1.
First Simplex Tableau for the Muddy River Chemical Corporation Problem
Now we solve Muddy River Chemical Corporation’s LP formulation using the simplex method.
The initial tableau is set up just as in the earlier maximization example. Its first three rows are
shown in the accompanying table. We note the presence of the $M costs associated with artificial
variables A1 and A2, but we treat them as if they were any large number. As noted earlier, they
have the effect of forcing the artificial variables out of the solution quickly because of their large
costs.
Cj SOLUTION MIX X1 X2 S1 S2 A1 A2 QUANTITY
$M A1 1 1 0 0 1 0 1,000
$0 S1 1 0 1 0 0 0 300
$M A2 0 1 0 -1 0 1 150
The numbers in the Zj row are computed by multiplying the Cj column on the far left of
the tableau times the corresponding numbers in the other columns. They are then entered in
Table M7.7:
Zj 1for X1 column2 = $ M112 + $ 0112 + M 102 = $M

Zj 1for X2 column2 = $ M112 + $ 0102 + $ M112 = $ 2M
Zj 1for S1 column2 = $ M102 + $ 0112 + $ M102 = $0
Zj 1for S2 column2 = $ M102 + $ 0102 + $ M1-12 = -$ M
Zj 1for A1 column2 = $ M112 + $ 0102 + $ M102 = $M
Zj 1for A2 column2 = $M102 + $0102 + $M112 = $M
Zj 1for total cost2 = $M11,0002 + $ 013002 + $M11502 = $ 1,150M
4
We should note that there is a second way to solve minimization problems with the simplex method: it involves a
simple mathematical trick. It happens that minimizing the cost objective is the same as maximizing the negative of the
cost objective function. This means that instead of writing the Muddy River objective function as
Minimize cost = 5X1 + 6X2
we can instead write
Maximize 1- Cost2 = - 5X1 - 6X2
The solution that maximizes 1- Cost2 also minimizes cost. It also means that the same simplex procedure shown earlier
for maximization problems can be used if this trick is employed. The only change is that the objective function must be
multiplied by 1- 12.

TABLE M7.7
Cj $5 $6 $0 $0 $M $M
Initial Simplex Tableau for
the Muddy River Chemical SOLUTION
Corporation Problem MIX X1 X2 S1 S2 A1 A2 QUANTITY
$M A1 1 1 0 0 1 0 1,000
$0 S1 1 0 1 0 0 0 300
$M A2 0 1 0 -1 0 1 150 Pivot row
Pivot number
Zj $M $2M 0 -$ M $M $M $1,150M
Cj - Zj -$ M + 5 -$ 2M + 6 $0 $M $0 0 (Total cost)
Pivot column
The Cj - Zj entries are determined as follows:
COLUMN
X1 X2 S1 S2 A1 A2
Cj for column $5 $6 $0 $0 $M $M
Zj for column $M $2M $0 -$M $M $M
Cj - Zj for column -$M + $5 -$2M + $6 $0 $M $0 $0
Here is the initial simplex This initial solution was obtained by letting each of the variables X1, X2, and S2 assume a
solution. value of 0. The current basic variables are A1 = 1,000, S1 = 300, and A2 = 150. This complete
solution could be expressed in vector, or column, form as
X1 0
X2 0
S 300
F 1V = F V
S2 0
A1 1,000
A2 150
An extremely high cost, $1,150M from Table M7.7, is associated with this answer. We know that
this can be reduced significantly and now move on to the solution procedures.
Developing a Second Tableau

We examine whether the current In the Cj - Zj row of Table M7.7, we see that there are two entries with negative values, X1 and
solution is optimal by looking at X2. In the simplex rules for minimization problems, this means that an optimal solution does not
the Cj - Zj row. yet exist. The pivot column is the one with the negative entry in the Cj - Zj row that indicates
the largest improvement—shown in Table M7.7 as the X2 column, which means that X2 will
enter the solution next.
Which variable will leave the solution to make room for the new variable, X2? To find out,
we divide the elements of the quantity column by the respective pivot column substitution rates:
1,000
For the A1 row = = 1,000
1
300
For the S1 row = 1this is an undefined ratio, so we ignore it2
0
A2 is the pivot row because 150 is 150
For the A2 row = = 150 1smallest quotient, indicating pivot row2
the smallest quotient. 1

Hence, the pivot row is the A2 row, and the pivot number (circled) is at the intersection of the X2
column and the A2 row.
The entering row for the next simplex tableau is found by dividing each element in the pivot
row by the pivot number, 1. This leaves the old pivot row unchanged, except that it now repre-
sents the solution variable X2. The other two rows are altered one at a time by again applying the
formula shown earlier in step 4:
1New row numbers2 = 1Numbers in old row2
Number above or below Corresponding number

- ca b * a bd
pivot number in newly replaced row
A1 Row S1 Row
1 = 1 - 112102 1 = 1 - 102102
0 = 1 - 112112 0 = 0 - 102112
0 = 0 - 112102 1 = 1 - 102102
1 = 0 - 1121- 12 0 = 0 - 1021- 12
1 = 1 - 112102 0 = 0 - 102102
-1 = 0 - 112112 0 = 0 - 102112
850 = 1,000 - 11211502 300 = 300 - 10211502
TABLE M7.8 Cj $5 $6 $0 $0 $M $M
Second Simplex Tableau
for the Muddy River SOLUTION
Chemical Corporation MIX X1 X2 S1 S2 A1 A2 QUANTITY
Problem
$M A1 1 0 0 1 1 -1 850
$0 S1 1 0 1 0 0 0 300 Pivot row
Pivot number
$6 X2 0 1 0 -1 0 1 150
Zj $M $6 $0 $ M - 6 $M -$ M + 6 $850M + $900
Cj - Zj -$ M + 5 $0 $0 -$ M + 6 $0 $ 2M - 6
Pivot column
The Zj and Cj - Zj rows are computed next:
Zj 1for X12 = $M112 + $0112 + $6102 = $M

Zj 1for X22 = $M102 + $0102 + $6112 = $6
Zj 1for S12 = $M102 + $0112 + $6102 = $0
Zj 1for S22 = $M112 + $0102 + $61-12 = $M - 6
Zj 1for A12 = $M112 + $0102 + $6102 = $M
Zj 1for A22 = $M1-12 + $0102 + $6112 = -$M + 6
Zj 1for total cost2 = $M18502 + $013002 + $611502 = $850M + 900
COLUMN
X1 X2 S1 S2 A1 A2
Zj for column $M $6 $0 $M - 6 $M - $M + 6
Cj - Zj for column -$ M + 5 $0 $0 -$ M + 6 $0 $ 2M - 6
All of these computational results are presented in Table M7.8.

The solution after the second The solution at the end of the second tableau (point F in Figure M7.3) is A1 = 850,
tableau is still not optimal. S1 = 300, and X2 = 150. X1, S2, and A2 are currently the nonbasic variables and have zero
value. The cost at this point is still quite high, $850M + $900. This answer is not optimal
because not every number in the Cj - Zj row is zero or positive.
Developing a Third Tableau

The new pivot column is the X1 column. To determine which variable will leave the basis to
make room for X1, we check the quantity column–to–pivot column ratios again:
850
For the A1 row = = 850
1
300
The third tableau is developed in For the S1 row = = 300 1smallest ratio2
this section. 1
150
For the X2 row = = undefined
0
TABLE M7.9
Cj $5 $6 $0 $0 $M $M
Third Simplex Tableau for
the Muddy River Chemical SOLUTION
Corporation Problem MIX X1 X2 S1 S2 A1 A2 QUANTITY
$M A1 0 0 -1 1 1 -1 550 Pivot row

$5 X1 1 0 1 0 0 0 300 Pivot number
$6 X2 0 1 0 -1 0 1 150
Zj $5 $6 -$ M + 5 $ M - 6 $M -$ M + 6 $ 550M + 2,400
Cj - Zj $0 $0 $ M - 5 -$ M + 6 $0 $ 2M - 6
Pivot column
Hence, variable S1 will be replaced by X1.5 The pivot number, row, and column are labeled
in Table M7.8.
To replace the pivot row, we divide each number in the S1 row by 1 (the circled pivot num-
ber), leaving the row unchanged. The new X1 row is shown in Table M7.9. The other computa-
tions for this third simplex tableau follow:
Here are the computations for A1 Row S1 Row

the third solution.
0 = 1 - 112112 0 = 0 - 102112
0 = 0 - 112102 1 = 1 - 102102
-1 = 0 - 112112 0 = 0 - 102112
1 = 1 - 112102 -1 = -1 - 102102
1 = 1 - 112102 0 = 0 - 102102
-1 = -1 - 112102 1 = 1 - 102102
550 = 850 - 11213002 150 = 150 - 10213002
5
At this point, it might appear to be more cost effective to replace the A1 row instead of the S1 row. This would remove
the last artificial variable, and its large $M cost, from the basis. The simplex method, however, does not always pick the
most direct route to reaching the final solution. You may be assured, though, that it will lead us to the correct answer. In
Figure M7.3, this would involve moving to point H instead of point G.

The Zj and Cj - Zj rows are computed next:

Zj 1for X12 = $ M102 + $ 5112 + $ 6102 = $5
Zj 1for X22 = $ M102 + $ 5102 + $ 6112 = $6
Zj 1for S12 = $ M1-12 + $ 5112 + $ 6102 = -$ M + 5
Zj 1for S22 = $ M112 + $ 5102 + $ 61-12 = $M - 6
Zj 1for A12 = $ M112 + $ 5102 + $ 6102 = $M
Zj 1for A22 = $ M1-12 + $ 5102 + $ 6112 = -$ M + 6
Zj 1for total cost2 = $ M15502 + $ 513002 + $ 611502 = $ 550M + 2,400
COLUMN
X1 X2 S1 S2 A1 A2
Zj for column $5 $6 -$ M + 5 $M - 6 $M - $M + 6
Cj - Zj for column $0 $0 $M - 5 -$ M + 6 $0 $ 2M - 6
The third solution is still not The solution at the end of the three iterations (point G in Figure M7.3) is still not optimal
optimal. because the S2 column contains a Cj - Zj value that is negative. Note that the current total cost
is nonetheless lower than at the end of the second tableau, which in turn is lower than the initial
solution cost. We are headed in the right direction but have one more tableau to go!
Fourth Tableau for the Muddy River Chemical Corporation Problem

The pivot column is now the S2 column. The ratios that determine the row and variable to be
replaced are computed as follows:
550
For the A1 row: = 550 1row to be replaced2
1
300
For the X1 row: 1undefined2
0
150
For the X2 row: 1not considered because it is negative2
-1
Here are the computations for Each number in the pivot row is divided by the pivot number (again 1, by coincidence). The
the fourth solution. other two rows are computed as follows and are shown in Table M7.10:
X1 Row X2 Row
1 = 1 - 102102 0 = 0 - 1-12102
0 = 0 - 102102 1 = 1 - 1-12102
1 = 1 - 1021- 12 -1 = 0 - 1-121-12
0 = 0 - 102112 0 = - 1 - 1- 12112
0 = 0 - 102112 1 = 0 - 1-12112
0 = 0 - 1021- 12 0 = 1 - 1-121- 12
300 = 300 - 10215502 700 = 150 - 1-1215502
Zj 1for X12 = $0102 + $5112 + $6102 = $5

Zj 1for X22 = $0102 + $5102 + $6112 = $6
Zj 1for S12 = $01-12 + $5112 + $61 -12 = -$1
Zj 1for S22 = $0112 + $5102 + $6102 = $0
Zj 1for A12 = $0112 + $5102 + $6112 = $6
Zj 1for A22 = $01-12 + $5102 + $6102 = $0
Zj 1for total cost2 = $015502 + $513002 + $617002 = $5,700

COLUMN
X1 X2 S1 S2 A1 A2
Zj for column $5 $6 -$ 1 $0 $6 $0
Cj - Zj for column $0 $0 $1 $0 $M - 6 $M
TABLE M7.10
Cj $5 $6 $0 $0 $M $M
Fourth and Optimal
Solution to the Muddy SOLUTION
River Chemical Corporation MIX X1 X2 S1 S2 A1 A2 QUANTITY
Problem
$0 S2 0 0 -1 1 1 -1 550
$5 X1 1 0 1 0 0 0 300
$6 X2 0 1 -1 0 1 0 700
Zj $5 $6 -$ 1 $0 $6 $0 $5,700
Cj - Zj $0 $0 $1 $0 $M - 6 $M
The optimal solution has been On examining the Cj - Zj row in Table M7.10, only positive or 0 values are found. The fourth
reached because only positive tableau therefore contains the optimum solution. That solution is X1 = 300, X2 = 700, and
or zero values appear in the S2 = 550. The artificial variables are both equal to 0, as is S1. Translated into management
Cj - Z j row. terms, the chemical company’s decision should be to blend 300 pounds of phosphate 1X12
with 700 pounds of potassium 1X22. This provides a surplus 1S22 of 550 pounds of potassium
more than required by the constraint X2 Ú 150. The cost of this solution is $5,700. If you look
back to Figure M7.3, you can see that this is identical to the answer found by the graphical
approach.
Although small problems such as this can be solved graphically, more realistic product
blending problems demand use of the simplex method, usually in computerized form.
Review of Procedures for Solving LP Minimization Problems

Just as we summarized the steps for solving LP maximization problems with the simplex
method, let us do so for minimization problems here:
I. Formulate the LP problem’s objective function and constraints.
II. Include slack variables in each less-than-or-equal-to constraint, artificial variables in each
equality constraint, and both surplus and artificial variables in each greater-than-or-equal-
to constraint. Then add all of these variables to the problem’s objective function.
III. Develop an initial simplex tableau with artificial and slack variables in the basis and the
other variables set equal to 0. Compute the Zj and Cj - Zj values for this tableau.
IV. Follow these five steps until an optimal solution has been reached:
1. Choose the variable with the negative Cj - Zj indicating the greatest improvement to
enter the solution. This is the pivot column.
2. Determine the row to be replaced by selecting the one with the smallest (nonnegative)
ratio of quantity to pivot column substitution rate. This is the pivot row.
3. Calculate the new values for the pivot row.
4. Calculate the new values for the other row(s).
5. Calculate the Zj and Cj - Zj values for the tableau. If there are any Cj - Zj numbers
less than 0, return to step 1. If there are no Cj - Zj numbers that are less than 0, an
optimal solution has been reached.

M7.5 Special Cases M7-25
M7.5 Special Cases

In Chapter 7, we addressed some special cases that may arise when solving LP problems graphi-
cally (see Section 7.6). Here we describe these cases again, this time as they refer to the simplex
method.
Infeasibility
A situation with no feasible Infeasibility, you may recall, comes about when there is no solution that satisfies all of the
solution may exist if the problem problem’s constraints. In the simplex method, an infeasible solution is indicated by looking at
was formulated improperly. the final tableau. In it, all Cj - Zj row entries will be of the proper sign to imply optimality, but
an artificial variable 1A12 will still be in the solution mix.
Table M7.11 illustrates the final simplex tableau for a hypothetical minimization type of LP
problem. The table provides an example of an improperly formulated problem, probably con-
taining conflicting constraints. No feasible solution is possible because an artificial variable, A2,
remains in the solution mix, even though all Cj - Zj entries are positive or 0 (the criterion for an
optimal solution in a minimization case).
Unbounded Solutions
Unboundedness describes linear programs that do not have finite solutions. It occurs in maxi-
mization problems, for example, when a solution variable can be made infinitely large without
No finite solution may exist in violating a constraint. In the simplex method, the condition of unboundedness will be discovered
problems that are not bounded. prior to reaching the final tableau. We will note the problem when trying to decide which vari-
This means that a variable can be able to remove from the solution mix. As seen earlier in this module, the procedure is to divide
infinitely large without violating each quantity column number by the corresponding pivot column number. The row with the
a constraint. smallest positive ratio is replaced. But if all the ratios turn out to be negative or undefined, it
indicates that the problem is unbounded.
Table M7.12 illustrates the second tableau calculated for a particular LP maximization
problem by the simplex method. It also points to the condition of unboundedness. The solution
is not optimal because not all Cj - Zj entries are 0 or negative, as required in a maximization
problem. The next variable to enter the solution should be X1. To determine which variable will
leave the solution, we examine the ratios of the quantity column numbers to their corresponding
numbers in the X1, or pivot, column:
30
Ratio for the X2 row:
-1
10
Ratio for the S2 row: Negative ratios unacceptable
-2
Since both pivot column numbers are negative, an unbounded solution is indicated.
TABLE M7.11
Cj $5 $8 $0 $0 $M $M
Illustration of Infeasibility
SOLUTION
MIX X1 X2 S1 S2 A1 A2 QUANTITY
$5 X1 1 0 -2 3 -1 0 200
$8 X2 0 1 1 2 -2 0 100
$M A2 0 0 0 -1 -1 1 20
Zj $5 $8 -$ 2 $ 31 - M -21 - M $M $ 1,800 + 20M
Cj - Zj $0 $0 $2 $ M - 31 $ 2M + 21 $0

TABLE M7.12
Cj $6 $9 $0 $0
Problem with an
Unbounded Solution SOLUTION
MIX X1 X2 S1 S2 QUANTITY
$9 X2 -1 1 2 0 30
$0 S2 -2 0 -1 1 10
Zj -$ 9 $9 $18 $0 $270
Cj - Zj $15 $0 -$ 18 $0
Pivot column
Degeneracy
Degeneracy is another situation that can occur when solving an LP problem using the simplex
method. It develops when three (or more) constraints pass through a single point. For example,
suppose a problem has only these three constraints X1 … 10, X2 … 10, and X1 + X2 6 20. All
three constraint lines will pass through the point 110, 102. Degeneracy is first recognized when
the ratio calculations are made. If there is a tie for the smallest ratio, this is a signal that degen-
Tied ratios in the simplex eracy exists. As a result of this, when the next tableau is developed, one of the variables in the
calculations signal degeneracy. solution mix will have a value of zero.
Table M7.13 provides an example of a degenerate problem. At this iteration of the given
maximization LP problem, the next variable to enter the solution will be X1, since it has the only
positive Cj - Zj number. The ratios are computed as follows:
10
For the X2 row: = 40
0.25
20
For the S2 row: = 5 Tie for the smallest ratio indicates degeneracy
4
10
For the S3 row: = 5
2
Cycling may result from Theoretically, degeneracy could lead to a situation known as cycling, in which the simplex
degeneracy. algorithm alternates back and forth between the same nonoptimal solutions; that is, it puts a
new variable in, then takes it out in the next tableau, then puts it back in, and so on. One simple
way of dealing with the issue is to select either row (S2 or S3, in this case) arbitrarily. If we are
unlucky and cycling does occur, we simply go back and select the other row.
TABLE M7.13
Cj $5 $8 $2 $0 $0 $0
Problem Illustrating
Degeneracy SOLUTION
MIX X1 X2 X3 S1 S2 S3 QUANTITY
$8 X2 0.25 1 1 -2 0 0 10
$0 S2 4 0 0.33 -1 1 0 20
$0 S3 2 0 2 0.4 0 1 10
Zj $2 $8 $8 $16 $0 $0 $80
Cj - Zj $3 $0 -$ 6 -$ 16 $0 $0
Pivot column

M7.6 Sensitivity Analysis with the Simplex Tableau M7-27
TABLE M7.14
Cj $3 $2 $0 $0
Problem with Alternate
Optimal Solutions SOLUTION
$2 X2 1.5 1 1 0 6
$0 S2 1 0 0.5 1 3
Zj $3 $2 $2 $0 $12
Cj - Zj $0 $0 -$ 2 $0
More Than One Optimal Solution

Multiple, or alternate, optimal solutions can be spotted when the simplex method is being used
by looking at the final tableau. If the Cj - Zj value is equal to 0 for a variable that is not in the
solution mix, more than one optimal solution exists.
Alternate optimal solutions Let’s take Table M7.14 as an example. Here is the last tableau of a maximization problem;
may exist if the Cj − Z j each entry in the Cj - Zj row is 0 or negative, indicating that an optimal solution has been
value = 0 for a variable not reached. That solution is read as X2 = 6, S2 = 3, and profit = $12. Note, however, that vari-
in the solution mix. able X1 can be brought into the solution mix without increasing or decreasing profit. The new
solution, with X1 in the basis, would become X1 = 3 and X2 = 1.5, with profit still at $12. Can
you modify Table M7.14 to prove this?
M7.6 Sensitivity Analysis with the Simplex Tableau

In Chapter 7, we introduce the topic of sensitivity analysis as it applies to LP problems that we
have solved graphically. This valuable concept shows how the optimal solution and the value of
its objective function change given changes in various inputs to the problem. Graphical analy-
sis is useful in understanding intuitively and visually how feasible regions and the slopes of
objective functions can change as model coefficients change. Computer programs handling LP
problems of all sizes provide sensitivity analysis as an important output feature. Those programs
use the information provided in the final simplex tableau to compute ranges for the objective
function coefficients and ranges for the RHS values. They also provide shadow prices, a concept
that we introduce in this section.
High Note Sound Company Revisited

In Chapter 7, we use the High Note Sound Company to illustrate sensitivity analysis graphically.
High Note is a firm that makes quality speakers (called X1) and stereo receivers (called X2). Its
LP formulation is repeated here:
Maximize profit = $ 50X1 + $ 120X2

subject to 2X1 + 4X2 … 80 1hours of electricians> time available2
3X1 + 1X2 … 60 1hours of audio technicians> time available2
High Note’s graphical solution is repeated in Figure M7.4.

FIGURE M7.4
X2
High Note Sound Company
(receivers)
Graphical Solution
60
40 Optimal Solution at Point a
X 1 = 0 Speakers
a = (0, 20) X 2 = 20 Receivers
Profits = $2,400
20 b = (16, 12)
Isoprofit Line: $2,400 = 50X1 + 120X2
10
0 10 20 30 40 50 60 X1
c = (20, 0) (Speakers)
Changes in the Objective Function Coefficients

In Chapter 7, we saw how to use graphical LP to examine the objective function coefficients. A
second way of illustrating the sensitivity analysis of objective function coefficients is to consider
the problem’s final simplex tableau. For the High Note Sound Company, this tableau is shown in
Table M7.15. The optimal solution is seen to be as follows:
X2 = 20 stereo receivers
f Basic variables
S2 = 40 hours of slack time of audio technicians
X1 = 0 Speakers
f Nonbasic variables
S1 = 0 hours of slack time of electricians
Basic variables (those in the solution mix) and nonbasic variables (those set equal to 0) must
be handled differently using sensitivity analysis. Let us first consider the case of a nonbasic
variable.
TABLE M7.15
Cj $50 $120 $0 $0
Optimal Solution by the
Simplex Method SOLUTION
$120 X2 0.5 1 0.25 0 20

$0 S2 2.5 0 -0.25 1 40
Zj $60 $120 $30 $0 $2,400
Cj - Zj -$ 10 $0 -$ 30 $0
Nonbasic variables are variables NONBASIC OBJECTIVE FUNCTION COEFFICIENT Our goal here is to find out how sensitive the problem’s
that have a value of zero. optimal solution is to changes in the contribution rates of variables not currently in the basis
(X1 and S1). Just how much would the objective function coefficients have to change before X1
or S1 would enter the solution mix and replace one of the basic variables?

The answer lies in the Cj - Zj row of the final simplex tableau (as in Table M7.15). Since
this is a maximization problem, the basis will not change unless the Cj - Zj value of one of the
nonbasic variables becomes positive. That is, the current solution will be optimal as long as all
numbers in the bottom row are less than or equal to 0. It will not be optimal if X1’s Cj - Zj value
The solution is optimal as long as is positive or if S1’s Cj - Zj value is greater than 0. Therefore, the values of Cj for X1 and S1 that
all Cj − Z j " 0. do not bring about any change in the optimal solution are given by
Cj - Zj … 0
This is the same as writing
Cj … Zj
Since X1’s Cj value is $50 and its Zj value is $60, the current solution is optimal as long as the
profit per speaker does not exceed $60 or, correspondingly, does not increase by more than $10.
Similarly, the contribution rate per unit of S1 (or per hour of electrician’s time) may increase
from $0 up to $30 without changing the current solution mix.
The range over which Cj rates In both cases, when you are maximizing an objective function, you may increase the value
for nonbasic variables can vary of Cj up to the value of Zj. You may also decrease the value of Cj for a nonbasic variable to nega-
without causing a change in the tive infinity 1- ∞2 without affecting the solution. This range of Cj values is called the range of
optimal solution mix is called the
insignificance for nonbasic variables.
range of insignificance.
- ∞ … Cj 1for X12 … $ 60
- ∞ … Cj1for S12 … $ 30
BASIC OBJECTIVE FUNCTION COEFFICIENT Sensitivity analysis on objective function coefficients of

variables that are in the basis or solution mix is slightly more complex. We saw that a change in
the objective function coefficient for a nonbasic variable affects only the Cj - Zj value for that
Testing basic variables involves variable. But a change in the profit or cost of a basic variable can affect the Cj - Zj values of all
reworking the final simplex nonbasic variables because this Cj is not only in the Cj row but also in the Cj column. This then
tableau. impacts the Zj row.
Let us consider changing the profit contribution of stereo receivers in the High Note Sound
Company problem. Currently, the objective function coefficient is $120. The change in this
value can be denoted by the Greek capital letter delta 1∆2. We rework the final simplex tableau
(first shown in Table M7.15) and see our results in Table M7.16.
Notice the new Cj - Zj values for nonbasic variables X1 and S1. These were determined in
exactly the same way as we did earlier in this module. But wherever the Cj value for X2 of $120
was seen in Table M7.15, a new value of $120 + ∆ is used in Table M7.16.
Once again, we recognize that the current optimal solution will change only if one or more
of the Cj - Zj row values becomes greater than 0. The question is, how may the value of ∆ vary
so that all Cj - Zj entries remain negative? To find out, we solve for ∆ in each column.
From the X1 column:
-10 - 0.5∆ … 0
-10 … 0.5∆
-20 … ∆ or ∆ Ú -20
TABLE M7.16
Cj $50 $120 + Δ $0 $0
Change in the Profit
Contribution of Stereo SOLUTION
Receivers MIX X1 X2 S1 S2 QUANTITY
$120 + ∆ X2 0.5 1 0.25 0 20

$0 S2 2.5 0 -0.25 1 40
Zj $ 60 + 0.5∆ $ 120 + ∆ $ 30 + 0.25∆ $0 $ 2,400 + 20∆
Cj - Zj -$ 10 - 0.5∆ $0 -$ 30 - 0.25∆ $0

This inequality means that the optimal solution will not change unless X2’s profit coefficient
decreases by at least $20, which is a change of ∆ = -$20. Hence, variable X1 will not enter the
basis unless the profit per stereo receiver drops from $120 to $100 or less. This, interestingly, is
exactly what we noticed graphically in Chapter 7. When the profit per stereo receiver dropped to
$80, the optimal solution changed from corner point a to corner point b.
Now we examine the S1 column:
-30 - 0.25∆ … 0
-30 … 0.25∆
-120 … ∆ or ∆ Ú -120
This inequality implies that S1 is less sensitive to change than X1. S1 will not enter the basis
unless the profit per unit of X2 drops from $120 all the way down to $0.
The range of optimality is the Since the first inequality is more binding, we can say that the range of optimality for X2’s
range of values over which a profit coefficient is
basic variable’s coefficient can
change without causing a change $ 100 … Cj1for X22 … ∞
in the optimal solution mix.
As long as the profit per stereo receiver is greater than or equal to $100, the current production
mix of X2 = 20 receivers and X1 = 0 speakers will be optimal.
In analyzing larger problems, we would use this procedure to test for the range of optimal-
ity of every real decision variable in the final solution mix. The procedure helps us avoid the
time-consuming process of reformulating and resolving the entire LP problem each time a small
change occurs. Within the bounds set, changes in profit coefficients would not force a firm to
alter its product mix decision or change the number of units produced. Overall profits, of course,
will change if a profit coefficient increases or decreases, but such computations are quick and
easy to perform.
Changes in Resources or RHS Values

Making changes in the RHS values (the resources of electricians’ and audio technicians’ time)
results in changes in the feasible region and often the optimal solution.
The shadow price is the value SHADOW PRICES This leads us to the important subject of shadow prices. Exactly how much
of one additional unit of a should a firm be willing to pay to make additional resources available? Is one more hour of ma-
scarce resource. Shadow pricing chine time worth $1 or $5 or $20? Is it worthwhile to pay workers an overtime rate to stay one
provides an important piece of extra hour each night to increase production output? Valuable management information could be
economic information. provided if the worth of additional resources were known.
Fortunately, this information is available to us by looking at the final simplex tableau of an
LP problem. An important property of the Cj - Zj row is that the negatives of the numbers in its
The negatives of the numbers in slack variable 1Si2 columns provide us with what we call shadow prices. A shadow price is the
the Cj − Zj row’s slack variable change in value of the objective function from an increase of one unit of a scarce resource (e.g.,
columns are the shadow prices. when one more hour of machine time or labor time or other resource is made available).
The final simplex tableau for the High Note Sound Company problem is repeated as
Table M7.17 (it was first shown as Table M7.15). The tableau indicates that the optimal solution
is X1 = 0, X2 = 20, S1 = 0, and S2 = 40 and that profit = $ 2,400. Recall that S1 represents
slack availability of the electricians’ resource and S2 the unused time in the audio technicians’
department.
The firm is considering hiring an extra electrician on a part-time basis. Let’s say that it will
cost $22 per hour in wages and benefits to bring the part-timer on board. Should the firm do
this? The answer is yes: the shadow price of the electrician time resource is $30. Thus, the firm
will net $8 1=$30 - $222 for every hour the new worker helps in the production process.
Should High Note also hire a part-time audio technician at a rate of $14 per hour? The
answer is no: the shadow price is $0, implying no increase in the objective function by making
more of this second resource available. Why? Because not all of the resource is currently being
used—40 hours are still available. It would hardly pay to buy more of the resource.
RIGHT-HAND-SIDE RANGING Obviously, we can’t add an unlimited number of units of r esource with-
out eventually violating one of the problem’s constraints. When we understand and compute the

The range over which shadow shadow price for an additional hour of electricians’ time ($30), we will want to d etermine how
prices remain valid is called many hours we can actually use to increase profits. Should the new resource be added 1 hour,
right-hand-side ranging. 2 hours, or 200 hours per week? In LP terms, this process involves finding the range over which
shadow prices will stay valid. Right-hand-side ranging tells us the number of hours High Note
can add or remove from the electrician department and still have a shadow price of $30.
Ranging is simple in that it resembles the simplex process we used earlier in this mod-
ule to find the minimum ratio for a new variable. The S1 column and quantity column from
Table M7.17 are repeated in the following table; the ratios, both positive and negative, are also
shown:
QUANTITY S1 RATIO
20 0.25 20>0.25 = 80
40 -0.25 40> - 0.25 = - 160
TABLE M7.17
Cj $50 $120 $0 $0
Final Tableau for the High
Note Sound Company SOLUTION
$120 X2 0.5 1 0.25 0 20

$0 S2 2.5 0 -0.25 1 40
Zj $60 $120 $30 $0 $2,400
Cj - Zj - $ 10 $0 -$ 30 $0
Objective function increases by $30 if
1 additional hour of electricians’ time
is made available
The smallest positive ratio (80, in this example) tells us by how many hours the electricians’
time resource can be reduced without altering the current solution mix. Hence, we can decrease
the RHS resource by as much as 80 hours—basically from the current 80 hours all the way down
to 0 hours—without causing a basic variable to be pivoted out of the solution.
The smallest negative ratio 1-1602 tells us the number of hours that can be added to the
resource before the solution mix changes. In this case, we can increase electricians’ time by
160 hours, up to 240 1= 80 currently + 160 may be added2 hours. We have now established the
range of electricians’ time over which the shadow price of $30 is valid. That range is from 0 to
240 hours.
The audio technician resource is slightly different in that all 60 hours of time originally
available have not been used. (Note that S2 = 40 hours in Table M7.17.) If we apply the ratio
test, we see that we can reduce the number of audio technicians’ hours by only 40 (the small-
est positive ratio = 40>1) before a shortage occurs. But since we are not using all the hours
currently available, we can increase them indefinitely without altering the problem’s solution.
Note that there are no negative substitution rates in the S2 column, so there are no negative
ratios. Hence, the valid range for this shadow price would be from 20 1= 60 - 402 hours to an
unbounded upper limit.
The substitution rates in the slack variable column can also be used to determine the actual
values of the solution mix variables if the right-hand side of a constraint is changed. The follow-
ing relationship is used to find these values:
Changes in the RHS values New quantity = Original quantity + 1Substution rate21Change in right@hand side2
of constraints may change the
optimal quantity values of the
solution mix variables.

For example, if 12 more electrician hours were made available, the new values in the quan-
tity column of the simplex tableau are found as follows:
ORIGINAL QUANTITY S1 NEW QUANTITY
20 0.25 20 + 10.2521122 = 23
40 -0.25 40 + 1- 0.2521122 = 37
Thus, if 12 hours are added, X2 = 23 and S2 = 37. All other variables are nonbasic and remain
zero. This yields a total profit of 50102 + 1201232 = $ 2,760, which is an increase of $360 (or
the shadow price of $30 per hour for 12 hours of electrician time). A similar analysis with the
other constraint and the S2 column would show that if any additional audio technician hours
were added, only the slack for that constraint would increase.
M7.7 The Dual

Every LP problem has another LP problem associated with it, which is called its dual. The first
Every LP primal has a dual. The
way of stating a linear problem is called the primal of the problem; we can view all of the
dual provides useful economic
problems formulated thus far as primals. The second way of stating the same problem is called
information.
the dual. The optimal solutions for the primal and the dual are equivalent, but they are derived
through alternative procedures.
The dual contains economic information useful to management, and it may also be easier
to solve, in terms of less computation, than the primal problem. Generally, if the LP primal
involves maximizing a profit function subject to less-than-or-equal-to resource constraints, the
dual will involve minimizing total opportunity costs subject to greater-than-or-equal-to product
profit constraints. Formulating the dual problem from a given primal is not terribly complex, and
once it is formulated, the solution procedure is exactly the same as for any LP problem.
Let’s illustrate the primal–dual relationship with the High Note Sound Company data.
As you recall, the primal problem is to determine the best production mix of Speakers 1X12 and
stereo receivers 1X22 to maximize profit:
Maximize profit = $ 50X1 + $ 120X2
subject to 2X1 + 4X2 … 80 1hours of electricians> time available2
3X1 + 1X2 … 60 1hours of audio technicians> time available2
The dual of this problem has the objective of minimizing the opportunity cost of not using the
The dual variables represent the resources in an optimal manner. Let’s call the variables that it will attempt to solve for U1 and
potential value of resources.
U2. U1 represents the potential hourly contribution or worth of electrician time—in other words,
the dual value of 1 hour of the electrician’ resource. U2 stands for the imputed worth of the a udio
technicians’ time, or the dual technician resource. Thus, each constraint in the primal problem
will have a corresponding variable in the dual problem. Also, each decision variable in the pri-
mal problem will have a corresponding constraint in the dual problem.
The RHS quantities of the primal constraints become the dual’s objective function coef-
ficients. The total opportunity cost that is to be minimized will be represented by the function
80U1 + 60U2—that is,
Minimize opportunity cost = 80U1 + 60U2
The corresponding dual constraints are formed from the transpose6 of the primal constraints’
coefficients. Note that if the primal constraints are … , the dual constraints are Ú :
2 U1 + 3 U2 Ú 50 Primal profit coefficients

4 U1 + 1 U2 Ú 120 Coefficients from the second primal constraint
Coefficients from the first primal constraint
6 a b a c
For example, the transpose of the set of numbers a b is a b . In the case of the transpose of the primal coefficients
2 4 2 3 c d b d
a b , the result is a b . Refer to Module 5, which deals with matrices and determinants, for a review of the trans-
3 1 4 1
pose concept.

M7.7 The Dual M7-33
Let’s look at the meaning of these dual constraints. In the first inequality, the RHS constant ($50)
is the income from one speaker. The coefficients of U1 and U2 are the amounts of each scarce
resource (electrician time and audio technician time) that are required to produce a speaker. That
is, 2 hours of electricians’ time and 3 hours of audio technicians’ time are used up in making
one speaker. Each speaker produced yields $50 of revenue to High Note Sound Company. This
inequality states that the total imputed value or potential worth of the scarce resources needed
to produce a speaker must be at least equal to the profit derived from the product. The second
constraint makes an analogous statement for the stereo receiver product.
Dual Formulation Procedures

The mechanics of formulating a dual from the primal problem are summarized in the following
list.
These are the five steps for Steps to Form a Dual

formulating a dual.
1. If the primal is a maximization, the dual is a minimization, and vice versa.
2. The RHS values of the primal constraints become the dual’s objective function coefficients.
3. The primal objective function coefficients become the RHS values of the dual constraints.
4. The transpose of the primal constraint coefficients becomes the dual constraint coefficients.
5. Constraint inequality signs are reversed.7
Solving the Dual of the High Note Sound Company Problem

The simplex algorithm is applied to solve the preceding dual problem. With appropriate surplus
and artificial variables, it can be restated as follows:
Minimize opportunity cost = 80U1 + 60U2 + 0S1 + 0S2 + MA1 + MA2

subject to 2U1 + 3U2 - 1S1 + 1A1 = 50
4U1 + 1U2 - 1S2 + 1A2 = 120
The first and second tableaus are shown in Table M7.18. The third tableau—containing the opti-
mal solution of U1 = 30, U2 = 0, S1 = 10, S2 = 0, and opportunity cost = $ 2,400—appears
in Figure M7.5, along with the final tableau of the primal problem.
TABLE M7.18 First and Second Tableaus of the High Note Dual Problem
Cj 80 60 0 0 M M
SOLUTION
MIX U1 U2 S1 S2 A1 A2 QUANTITY
First $M A1 2 3 -1 0 1 0 50
tableau $M A2 4 1 0 -1 0 1 120
Zj $6M $4M -$ M -$M $M $M $170M
Cj - Zj 80 - 6M 60 - 4M M M 0 0
Second $80 U1 1 1.5 -0.5 0 0.5 0 25
tableau $M A2 0 -5 2 -1 -2 1 20
Zj $80 $ 120 - 5M -$ 40 + 2M -$ M $ 40 - 2M $M $ 2,000 + 20M
Cj - Zj 0 5M - 60 -2M + 40 M 3M - 40 0
7
If the jth primal constraint should be an equality, the ith dual variable is unrestricted in sign. This technical issue is
discussed in L. Cooper and D. Steinberg, Methods and Applications of Linear Programming (Philadelphia: W. B.
Saunders, 1974), p. 170.

FIGURE M7.5
Comparison of the Primal Primal’s Optimal Solution
and Dual Optimal Tableaus Cj $50 $120 $0 $0
Solution Quantity
Mix X1 X2 S1 S2
$120 X2 0.5 1 0.25 0 20
$0 S2 2.5 0 –0.25 1 40
Zj 60 120 30 0 $2,400
Cj – Zj –10 0 –30 0
Dual’s Optimal Solution
Cj 80 60 0 0 M M
Solution Quantity
Mix U1 U2 S1 S2 A1 A2
80 U1 1 0.25 0 –0.25 0 0.25 30
0 S1 0 –2.5 1 –0.5 –1 0.5 10
Zj 80 20 0 –20 0 20 $2,400
Cj – Zj
0 40 0 20 M M – 20
We mentioned earlier that the primal and dual lead to the same solution even though they
are formulated differently. How can this be?
The solution to the dual yields It turns out that in the final simplex tableau of a primal problem, the absolute values of the
shadow prices. numbers in the Cj - Zj row under the slack variables represent the solutions to the dual prob-
lem—that is, the optimal Uis (see Figure M7.5). In the earlier section on sensitivity analysis, we
termed these numbers in the columns of the slack variables shadow prices. Thus, the solution to
the dual problem presents the marginal profits of each additional unit of resource.
It also happens that the absolute value of the Cj - Zj values of the slack variables in the
optimal dual solution represent the optimal values of the primal X1 and X2 variables. The minimum
opportunity cost derived in the dual must always equal the maximum profit derived in the primal.
Also note the other relationships between the primal and the dual that are indicated in
Figure M7.5 by arrows. Columns A1 and A2 in the optimal dual tableau may be ignored because,
as you recall, artificial variables have no physical meaning.
M7.8 Karmarkar’s Algorithm

The biggest change to take place in the field of LP solution techniques in four decades was the
1984 arrival of an alternative to the simplex algorithm. Developed by Narendra Karmarkar, the
new method, called Karmarkar’s algorithm, often takes significantly less computer time to solve
very large-scale LP problems.8
8
For details, see Narendra Karmarkar, “A New Polynomial Time Algorithm for Linear Programming,” Combinatorica
4, 4 (1984): 373–395, or J. N. Hooker, “Karmarkar’s Linear Programming Algorithm,” Interfaces 16, 4 (July–August
1986): 75–90.

GLOSSARY M7-35
As we saw, the simplex algorithm finds a solution by moving from one adjacent corner
point to the next, following the outside edges of the feasible region. In contrast, Karmarkar’s
method follows a path of points on the inside of the feasible region. Karmarkar’s method is also
unique in its ability to handle an extremely large number of constraints and variables, thereby
giving LP users the capacity to solve previously unsolvable problems.
Although it is likely that the simplex method will continue to be used for many LP problems,
a new generation of LP software built around Karmarkar’s algorithm is already becoming popu-
lar. Delta Air Lines became the first commercial airline to use the Karmarkar program, called
KORBX, which was developed and is sold by AT&T. Delta found that the program streamlined
the monthly scheduling of 7,000 pilots who fly more than 400 airplanes to 166 cities worldwide.
With increased efficiency in allocating limited resources, Delta saves millions of dollars in crew
time and related costs.
Summary
In Chapter 7, we examined the use of graphical methods to remaining row, and (5) computing the Zj and Cj - Zj rows and
solve LP problems that contained only two decision variables. examining for optimality. Each tableau of this iterative proce-
This module moves us one giant step further by introducing the dure is displayed and explained for a sample maximization and
simplex method. The simplex method is an iterative procedure minimization problem.
for reaching the optimal solution to LP problems of any dimen- A few special issues in LP that arise in using the simplex
sion. It consists of a series of rules that, in effect, algebraically method are also discussed in this module. Examples of infeasi-
examine corner points in a systematic way. Each step moves us bility, unbounded solutions, degeneracy, and multiple optimal
closer to the optimal solution by increasing profit or decreasing solutions are presented.
cost, while maintaining feasibility. Although large LP problems are seldom, if ever, solved by
This module explains the procedure for converting less- hand, the purpose of this module is to help you gain an under-
than-or-equal-to, greater-than-or-equal-to, and equality con- standing of how the simplex method works. Understanding the
straints into the simplex format. These conversions employed underlying principles helps you to interpret and analyze com-
the inclusion of slack, surplus, and artificial variables. An ini- puterized LP solutions.
tial simplex tableau is developed that portrays the problem’s This module also provides a foundation for another issue:
original data formulations. It also contains a row providing answering questions about the problem after an optimal solu-
profit or cost information and a net evaluation row. The lat- tion has been found, which is called postoptimality analysis,
ter, identified as the Cj - Zj row, is examined in determining or sensitivity analysis. Included in this discussion is the analy-
whether an optimal solution has yet been reached. It also points sis of the value of additional resources, called shadow pricing.
out which variable next enters the solution mix, or basis, if the Finally, the relationship between a primal LP problem and its
current solution is nonoptimal. dual is explored. We illustrate how to derive the dual from a
The simplex method consists of five steps: (1) identifying primal and how the solutions to the dual variables are actually
the pivot column, (2) identifying the pivot row and number, the shadow prices.
(3) replacing the pivot row, (4) computing new values for each
Glossary
Artificial Variable A variable that has no meaning in a Degeneracy A condition that arises when there is a tie in the
physical sense but acts as a tool to help generate an initial values used to determine which variable will enter the solu-
LP solution. tion next. It can lead to cycling back and forth between two
Basic Feasible Solution A solution to an LP problem that nonoptimal solutions.
corresponds to a corner point of the feasible region. Infeasibility The situation in which there is no solution that
Basis or Basic Variables The set of variables that are in the satisfies all of a problem’s constraints.
solution, have positive, nonzero values, and are listed in the Iterative Procedure A process (algorithm) that repeats the
solution mix column. same steps over and over.
Cj − Zj Row The row containing the net profit or loss that Nonbasic Variables Variables not in the solution mix or
will result from introducing one unit of the variable indi- basis. Nonbasic variables are equal to zero.
cated in that column into the solution. Pivot Column The column with the largest positive number in
Current Solution The basic feasible solution that is the set the Cj - Zj row of a maximization problem or with the largest
of variables presently in the solution. It corresponds to a negative Cj - Zj improvement value in a minimization prob-
corner point of the feasible region. lem. It indicates which variable will enter the solution next.

Pivot Number The number at the intersection of the pivot Simplex Method A matrix algebra method for solving LP
row and pivot column. problems.
Pivot Row The row corresponding to the variable that will Simplex Tableau A table for keeping track of calculations at
leave the basis in order to make room for the variable en- each iteration of the simplex method.
tering (as indicated by the new pivot column). This is the Slack Variable A variable added to less-than-or-equal-to
smallest positive ratio found by dividing the quantity col- constraints in order to create an equality for a simplex
umn values by the pivot column values for each row. method. It represents a quantity of unused resource.
Primal–Dual Relationship An alternative way of stating an Solution Mix A column in the simplex tableau that contains
LP problem. all the basic variables in the solution.
Quantity Column A column in the simplex tableau that Substitution Rates The coefficients in the central body of
gives the numeric value of each variable in the solution mix each simplex table. They indicate the number of units of each
column. basic variable that must be removed from the solution if a
Range of Insignificance The range of values over which a new variable (as represented at any column head) is entered.
nonbasic variable’s coefficient can vary without causing a Surplus Variable A variable inserted in a greater-than-or-
change in the optimal solution mix. equal-to constraint to create an equality. It represents the
Range of Optimality The range of values over which a amount of resource usage above the minimum required
basic variable’s coefficient can change without causing a usage.
change in the optimal solution mix. Unboundedness A condition describing LP maximization
Right-Hand-Side Ranging A method used to find the range problems having solutions that can become infinitely large
over which shadow prices remain valid. without violating any stated constraints.
Shadow Prices The coefficients of slack variables in the Zj Row The row containing the figures for gross profit or
Cj - Zj row. They represent the value of one additional unit loss given up by adding one unit of a variable into the
of a resource. solution.
Key Equations
(M7-1) 1New row numbers2 = 1Numbers in old row2 Formula for computing new values for nonpivot rows in
the simplex tableau (step 4 of the simplex procedure).
Number above or below Corresponding number
- ca b * a b
pivot number in newly replaced row
Solved Problems
Solved Problem M7-1

Convert the following constraints and objective function into the proper form for use in the simplex
method:
Minimize cost = 4X1 + 1X2
subject to 3X1 + X2 = 3
4X1 + 3X2 Ú 6
X1 + 2X2 … 3
Solution
Minimize cost = 4X1 + 1X2 + 0S1 + 0S2 + MA1 + MA2
subject to 3X1 + 1X2 + 1A1 = 3
4X1 + 3X2 - 1S1 + 1A2 = 6
1X1 + 2X2 + 1S2 = 3

Solved Problems M7-37
Solved Problem M7-2

Solve the following LP problem:
Maximize profit = $9X1 + $7X2

subject to 2X1 + 1X2 … 40
X1 + 3X2 … 30
Solution
We begin by adding slack variables and converting inequalities into equalities.
Maximize profit = 9X1 + 7X2 + 0S1 + 0S2

subject to 2X1 + 1X2 + 1S1 + 0S2 = 40
1X1 + 3X2 + 0S1 + 1S2 = 30
The initial tableau is then as follows:
Cj $9 $7 $0 $0
SOLUTION
$0 S1 2 1 1 0 40
$0 S2 1 3 0 1 30
Zj $0 $0 $0 $0 $0
Cj - Zj 9 7 0 0
The correct second tableau and third tableau and some of their calculations follow. The optimal solu-
tion, given in the third tableau, is X1 = 18, X2 = 4, S1 = 0, S2 = 0, and profit = $190.
Steps 1 and 2 To go from the first to the second tableau, we note that the pivot column (in the first tab-
leau) is X1, which has the highest Cj - Zj value, $9. The pivot row is S1, since 40/2 is less than 30/1, and
the pivot number is 2.
Step 3 The new X1 row is found by dividing each number in the old S1 row by the pivot number—that
is, 2>2 = 1, 1>2 = 0.5, 1>2 = 0.5, 0>2 = 0, and 40>2 = 20.
Step 4 The new values for the S2 row are computed as follows:
Corresponding
Number in Number in Number below
a b = a b - Ca b * £ number in ≥ S
new S2 row old S2 row pivot number
new X1 row
0 = 1 - 3112 * 1124
2.5 = 3 - 3112 * 10.524
-0.5 = 0 - 3112 * 10.524
1 = 1 - 3112 * 1024
10 = 30 - 3112 * 12024
Step 5 The following new Zj and Cj - Zj rows are formed:

Zj1for X12 = $9112 + 0102 = $9 Cj - Zj = $9 - $9 = 0
Zj1for X22 = $910.52 + 012.52 = $4.5 Cj - Zj = $7 - 4.5 = $2.5
Zj1for S12 = $910.52 + 01-0.52 = $4.5 Cj - Zj = 0 - 4.5 = $4.5
Zj1for S22 = $9102 + 0112 = $0 Cj - Zj = 0 - 0 = 0
Zj1profit2 = $91202 + 01102 = $180

Cj $9 $7 $0 $0
SOLUTION
$9 X1 1 0.5 0.5 0 20
0 S2 0 2.5 -0.5 1 10 Pivot row
Zj $9 $4.5 $4.5 $0 $180
Cj - Zj 0 2.5 -4.5 0
Pivot column
This solution is not optimal, and you must perform steps 1 to 5 again. The new pivot column is X2, the
new pivot row is S2, and 2.5 (circled in the second tableau) is the new pivot number.
Cj $9 $7 $0 $0
SOLUTION
$9 X1 1 0 0.6 -0.2 18
7 X2 0 1 -0.2 0.4 4
Zj $9 $7 $4 $1 $190
Cj - Zj 0 0 -4 -1
The final solution is X1 = 18, X2 = 4, and profit = $190.
Solved Problem M7-3

Use the final simplex tableau in Solved Problem M7-2 to answer the following questions.
a. What are the shadow prices for the two constraints?
b. Perform RHS ranging for constraint 1.
c. If the right-hand side of constraint 1 were increased by 10, what would the maximum possible profit
be? Give the values for all the variables.
d. Find the range of optimality for the profit on X1.
Solution
a. Shadow price = -1Cj - Zj2
For constraint 1, shadow price = -1-42 = 4.
For constraint 2, shadow price = -1-12 = 1.
b. For constraint 1, we use the S1 column.
QUANTITY S1 RATIO
18 0.6 18>10.62 = 30
4 -0.2 4>1-0.22 = -20
The smallest positive ratio is 30, so we may reduce the right-hand side of constraint 1 by 30 units (for
a lower bound of 40 - 30 = 10). Similarly, the negative ratio of -20 tells us that we may increase
the right-hand side of constraint 1 by 20 units (for an upper bound of 40 + 20 = 60).
c. The maximum possible profit = Original profit + 101shadow price2
= 190 + 10142 = 230

Solved Problems M7-39
The values for the basic variables are found using the original quantities and the substitution rates:
ORIGINAL QUANTITY S1 NEW QUANTITY
18 0.6 18 + 10.621102 = 24
4 -0.2 4 + 1-0.221102 = 2
X1 = 24, X2 = 2, S1 = 0, S2 = 0 1both slack variables remain nonbasic variables2

profit = 91242 + 7122 = 230 1which was also found using the shadow price2
d. Let ∆ = change in profit for X1.
Cj 9+Δ 7 0 0
SOLUTION
9 + ∆ X1 1 0 0.6 - 0.2 18
7 X2 0 1 -0.2 0.4 4
Zj 9 + ∆ 7 4 + 10.62∆ 1 - 10.22∆ 190 + 18∆
Cj - Zj 0 0 -4 - 10.62∆ -1 + 10.22∆
For this solution to remain optimal, the Cj - Zj values must remain negative or zero.
-4 - 10.62∆ … 0
-4 … 10.62∆
-20>3 … ∆
and
-1 + 10.22∆ … 0
10.22∆ … 1
∆ … 5
So the change in profit 1∆2 must be between -20>3 and 5. The original profit was 9, so this solution
remains optimal as long as the profit on X1 is between 2.33 = 9 - 20>3 and 14 = 9 + 5.

Self-Test
●● Before taking the self-test, refer to the learning objectives at the beginning of the module, the notes in the margins, and the
glossary at the end of the module.
●● Use the key at the back of the book to correct your answers.
●● Restudy pages that correspond to any questions that you answered incorrectly or material you feel uncertain about.
1. A basic feasible solution is a solution to an LP problem c. there is more than one optimal solution.
that corresponds to a corner point of the feasible region. d. the solution is degenerate.
a. True 10. The pivot column in a maximization problem is the
b. False column with
2. In preparing a Ú constraint for an initial simplex a. the greatest positive Cj - Zj.
tableau, you would b. the greatest negative Cj - Zj.
a. add a slack variable. c. the greatest positive Zj.
b. add a surplus variable. d. the greatest negative Zj.
c. subtract an artificial variable. 11. A change in the objective function coefficient 1Cj2 for a
d. subtract a surplus variable and add an artificial variable. basic variable can affect
3. In the initial simplex tableau, the solution mix variables a. the Cj - Zj values of all the nonbasic variables.
can be b. the Cj - Zj values of all the basic variables.
a. only slack variables. c. only the Cj - Zj value of that variable.
b. slack and surplus variables. d. the Cj values of other basic variables.
c. artificial and surplus variables. 12. Linear programming has few applications in the real
d. slack and artificial variables. world due to the assumption of certainty in the data and
4. Even if an LP problem involves many variables, an relationships of a problem.
optimal solution will always be found at a corner point of a. True
the n-dimensional polyhedron forming the feasible region. b. False
a. True 13. In a simplex tableau, one variable will leave the basis and
b. False be replaced by another variable. The leaving variable is
5. Which of the following in a simplex tableau indicates a. the basic variable with the largest Cj.
that an optimal solution for a maximization problem has b. the basic variable with the smallest Cj.
been found? c. the basic variable in the pivot row.
a. All the Cj - Zj values are negative or zero. d. the basic variable in the pivot column.
b. All the Cj - Zj values are positive or zero. 14. Which of the following must equal 0?
c. All the substitution rates in the pivot column are nega- a. basic variables
tive or zero. b. solution mix variables
d. There are no more slack variables in the solution mix. c. nonbasic variables
6. To formulate a problem for solution by the simplex d. objective function coefficients for artificial variables
method, we must add slack variables to 15. The shadow price for a constraint is
a. all inequality constraints. a. the value of an additional unit of that resource.
b. only equality constraints. b. always equal to zero if there is positive slack for that
c. only “greater than” constraints. constraint.
d. only “less than” constraints. c. found from the Cj - Zj value in the slack variable
7. If in the optimal tableau of an LP problem an artificial column.
variable is present in the solution mix, this implies d. all of the above.
a. infeasibility. 16. The solution to the dual LP problem
b. unboundedness. a. presents the marginal profit of each additional unit of
c. degeneracy. resource.
d. alternate optimal solutions. b. can always be derived by examining the Zj row of the
8. If in the final optimal simplex tableau the Cj - Zj value primal’s optimal simplex tableau.
for a nonbasic variable is zero, this implies c. is better than the solution to the primal.
a. feasibility. d. is all of the above.
b. unboundedness. 17. The number of constraints in a dual problem will equal
c. degeneracy. the number of
d. alternate optimal solutions. a. constraints in the primal problem.
9. In a simplex tableau, all of the substitution rates in the b. variables in the primal problem.
pivot column are negative. This indicates that c. variables plus the number of constraints in the primal
a. there is no feasible solution to this problem. problem.
b. the solution is unbounded. d. variables in the dual problem.

DISCUSSION QUESTIONS AND PROBLEMS M7-41
Discussion Questions and Problems

Discussion Questions M7-14 If a primal problem has 12 constraints and eight
M7-1 Explain the purpose and procedures of the simplex variables, how many constraints and variables will
method. its corresponding dual have?
M7-2 How do the graphical and simplex methods of solv- M7-15 Explain the relationship between each number in a
ing LP problems differ? In what ways are they the primal and corresponding numbers in the dual.
same? Under what circumstances would you prefer M7-16 Create your own original LP maximization problem
to use the graphical approach? with two variables and three less-than-or-equal-to con-
M7-3 What are slack, surplus, and artificial variables? straints. Now form the dual for this primal problem.
When is each used, and why? What value does each
carry in the objective function?
Problems
M7-4 You have just formulated an LP problem with 12 M7-17 The first constraint in the High Note example in this
decision variables and eight constraints. How many module is
basic variables will there always be? What is the dif-
2X1 + 4X2 … 80 (hours of electricians’ time available)
ference between a basic and a nonbasic variable?
M7-5 What are the simplex rules for selecting the pivot Table M7.17 gives the final simplex tableau for this
column? The pivot row? The pivot number? example. From the tableau, it was determined that
M7-6 How do maximization and minimization problems the maximum increase in electrician hours was 160
differ when applying the simplex method? (for a total of 240 hours).
M7-7 Explain what the Zj value indicates in the simplex (a) Change the right-hand side of that constraint to
tableau. 240, and graph the new feasible region.
M7-8 Explain what the Cj - Zj value indicates in the sim- (b) Find the new optimal corner point. How much
plex tableau. did the profit increase as a result of this?
M7-9 What is the reason behind the use of the minimum (c) What is the shadow price?
ratio test in selecting the pivot row? What might (d) Increase the electrician hours available by one unit
happen without it? more (to 241), and find the optimal solution. How
much did the profit increase as a result of this one
M7-10 A particular LP problem has the following objective
extra hour? Explain why the shadow price from
function:
the simplex tableau is no longer relevant.
Maximize profit = $8X1 + $6X2 + $12X3 - $2X4
M7-18 The Dreskin Development Company is building
Which variable should enter at the second simplex two apartment complexes. It must decide how many
tableau? If the objective function were units to construct in each complex subject to labor
and material constraints. The profit generated for
Minimize cost = $2.5X1 + $2.9X2 + $4.0X3 + $7.9X4
each apartment in the first complex is estimated at
which variable would be the best candidate to enter $900, and for each apartment in the second complex,
the second tableau? $1,500. A partial initial simplex tableau for Dreskin
M7-11 What happens if an artificial variable is in the final is given in the following table:
optimal solution? What should the manager who for-
mulated the LP problem do? Cj $900 $1,500 $0 $0
M7-12 The great Romanian operations researcher Dr. Ima SOLUTION
Student proposes that instead of selecting the vari- MIX X1 X2 S1 S2 QUANTITY
able with the largest positive Cj - Zj value (in a
14 4 1 0 3,360
maximization LP problem) to enter the solution mix
next, a different approach be used. She suggests that 10 12 0 1 9,600
any variable with a positive Cj - Zj can be chosen, Zj
even if it isn’t the largest. What will happen if we
adopt this new rule for the simplex procedure? Will Cj - Zj
an optimal solution still be reached?
M7-13 What is a shadow price? How does the concept r elate (a) Complete the initial tableau.
to the dual of an LP problem? How does it relate to (b) Reconstruct the problem’s original constraints
the primal? (excluding slack variables).
Note: means the problem may be solved with QM for Windows; means the problem may be solved with Excel; and means the problem may be
solved with QM for Windows and/or Excel.

(c) Write the problem’s original objective function. (a) Solve this problem graphically.
(d) What is the basis for the initial solution? (b) Set up the initial simplex tableau. On the graph,
(e) Which variable should enter the solution at the identify the corner point represented by this
next iteration? tableau.
(f) Which variable will leave the solution at the next (c) Select the pivot column. Which variable is the
iteration? entering variable?
(g) How many units of the variable entering the (d) Compute the ratio of the quantity-to-pivot col-
solution next will be in the basis in the second umn substitution rate for each row. Identify the
tableau? points on the graph related to these ratios.
(h) How much will profit increase in the next (e) How many units of the entering variable will be
solution? brought into the solution in the second tableau?
M7-19 Consider the following LP problem: What would happen if the largest ratio rather
than the smallest ratio were selected to deter-
Maximize earnings = $0.80X1 + $0.40X2 + $1.20X3
mine this (see the graph)?
- $0.10X4 (f) Which variable is the leaving variable? What will
subject to X1 + 2X2 + X3 + 5X4 … 150 the value of this variable be in the next tableau?
Q/A (g) Finish solving this problem using the simplex
X2 - 4X3 + 8X4 = 70
algorithm.
6X1 + 7X2 + 2X3 - X4 Ú 120
(h) The solution in each simplex tableau is a corner
X1, X2, X3, X4 Ú 0 point on the graph. Identify the corner point as-
sociated with each tableau.
(a) Convert these constraints to equalities by adding
M7-22 Solve the following LP problem first graphically and
the appropriate slack, surplus, or artificial vari-
then by the simplex algorithm:
ables. Also, add the new variables into the prob-
lem’s objective function. Minimize cost = 4X1 + 5X2
(b) Set up the complete initial simplex tableau for subject to X1 + 2X2 Ú 80
this problem. Do not attempt to solve.
3X1 + X2 Ú 75
(c) Give the values for all variables in this initial
solution. X1,X2 Ú 0
M7-20 Solve the following LP problem graphically. Then What are the values of the basic variables at each
set up a simplex tableau and solve the problem us- iteration? Which are the nonbasic variables at each
ing the simplex method. Indicate the corner points iteration?
generated at each iteration by the simplex method on
M7-23 The final simplex tableau for an LP maximization
your graph.
problem is shown on this page. Describe the situa-
Maximize profit = $3X1 + $5X2 tion encountered here.
subject to X2 … 6 M7-24 Solve the following problem by the simplex method.
3X1 + 2X2 … 18 What condition exists that prevents you from reach-
ing an optimal solution?
X1, X2 Ú 0 Maximize profit = 6X1 + 3X2
M7-21 Consider the following LP problem: subject to 2X1 - 2X2 … 2
Maximize profit = 10X1 + 8X2 -X1 + X2 … 1
X1, X2 Ú 0
subject to 4X1 + 2X2 … 80
Q/A
X1 + 2X2 … 50 M7-25 Consider the following financial problem:
X1, X2 Ú 0
Maximize return on investment = $2X1 + $3X2
Tableau for Problem M7-23
Cj 3 5 0 0 - M
SOLUTION
MIX X1 X2 S1 S2 A1 QUANTITY
$5 X2 1 1 2 0 0 6
-M A1 -1 0 -2 -1 1 2
Zj $5 + M $5 $10 + 2M $M -$M $30 - 2M
Cj - Zj -2 - M 0 -10 - 2M -M 0

subject to 6X1 + 9X2 … 18 a supplement of 1 unit of protein and 1 unit of ribo-

9X1 + 3X2 Ú 9 flavin to each can. A kilogram of brand B provides
X1, X2 Ú 0 2 units of protein and 4 units of riboflavin in each
can. Bitz-Karan must satisfy these minimum nutri-
(a) Find the optimal solution using the simplex ent standards while keeping costs of supplements to a
method. minimum.
(b) What evidence indicates that an alternate opti-
(a) Formulate this problem to find the best combi-
mal solution exists?
nation of the two supplements to meet the mini-
(c) Find the alternate optimal solution.
mum requirements at the least cost.
(d) Solve this problem graphically as well, and illus-
(b) Solve for the optimal solution by the simplex
trate the alternate optimal corner points.
method.
M7-26 At the third iteration of a particular LP maximiza-
M7-29 The Roniger Company produces two products: bed mat-
tion problem, the tableau on this page is established.
tresses and box springs. A prior contract requires that
What special condition exists as you improve the
the firm produce at least 30 mattresses or box springs,
profit and move to the next iteration? Proceed to
in any combination. In addition, union labor agreements
solve the problem for the optimal solution.
demand that stitching machines be kept running at least
M7-27 A pharmaceutical firm is about to begin production 40 hours per week, which is one production period.
of three new drugs. An objective function designed Each box spring takes 2 hours of stitching time, and
to minimize ingredient costs and three production each mattress takes 1 hour on the machine. Each mat-
constraints are as follows: tress produced costs $20; each box spring costs $24.
Minimize cost = 50X1 + 10X2 + 75X3 (a) Formulate this problem so as to minimize total
Q/A
Subject to X1 - X2 = 1,000 production costs.
2X2 + 2X3 = 2,000 (b) Solve using the simplex method.
X1 … 1,500 M7-30 Each coffee table produced by Meising Designers
X1, X2, X3 Ú 0 nets the firm a profit of $9. Each bookcase yields a
$12 profit. Meising’s firm is small, and its resources
(a) Convert these constraints and objective function
are limited. During any given production period of
to the proper form for use in the simplex tableau.
(b) Solve the problem by the simplex method. What Q/A one week, 10 gallons of varnish and 12 lengths of
high-quality redwood are available. Each coffee
is the optimal solution and cost?
table requires approximately 1 gallon of varnish
M7-28 The Bitz-Karan Corporation faces a blending deci- and 1 length of redwood. Each bookcase takes 1
sion in developing a new cat food called Yum-Mix. gallon of varnish and 2 lengths of redwood. For-
Two basic ingredients have been combined and tested, mulate Meising’s production mix decision as an LP
and the firm has determined that to each can of Yum- problem, and solve using the simplex method. How
Mix at least 30 units of protein and at least 80 units many tables and bookcases should be produced each
of riboflavin must be added. These two nutrients are week? What will the maximum profit be?
available in two competing brands of animal food M7-31 Bagwell Distributors packages and distributes indus-
supplements. The cost per kilogram of the brand A trial supplies. A standard shipment can be packaged
supplement is $9, and the cost per kilogram of the in a class A container, a class K container, or a class
brand B supplement is $15. A kilogram of brand A T container. A single class A container yields a profit
added to each production batch of Yum-Mix provides of $8; a class K container, a profit of $6; and a class
Cj $6 $3 $5 0 0 0
SOLUTION
$5 X3 0 1 1 1 0 3 5
$6 X1 1 -3 0 0 0 1 12
$0 S2 0 2 0 1 1 -1 10
Zj $6 -$13 $5 $5 $0 $21 $97
Cj - Zj $0 $16 $0 -$5 $0 -$21

T container, a profit of $14. Each shipment prepared total of $35,000 is budgeted for all new carpet in
requires a certain amount of packing material and the building.
a certain amount of time, as seen in the following Zoning regulations dictate that the building con-
table: tain no more than 50 condominiums when the con-
version is completed—and no fewer than 25 units.
The development company decides that to have a
CLASS OF PACKING PACKING TIME
CONTAINER MATERIAL (LB) (HOURS) good blend of owners, at least 40% but no more than
70% of the units should be one-bedroom apartments.
A 2 2 Not all money budgeted in each category need be
K 1 6 spent, although profit is not affected by cost savings.
T 3 4 But since the money represents a bank loan, under
no circumstances may it be exceeded or even shifted
Total amount of resource 120 lb 240 hours
available each week
from one area, such as carpeting, to another, such as
painting.
(a) Formulate Foggy Bottom Development Corpora-
Bill Bagwell, head of the firm, must decide the opti-
tion’s decision as a linear program to maximize
mal number of each class of container to pack each
profits.
week. He is bound by the previously mentioned
(b) Convert your objective function and constraints
r esource restrictions, but he also decides that he
to a form containing the appropriate slack, sur-
must keep his six full-time packers employed all 240
plus, and artificial variables.
hours (6 workers, 40 hours) each week. Formulate
and solve this problem using the simplex method. M7-33 The initial simplex tableau on the following page
M7-32 The Foggy Bottom Development Corporation has was developed by Tommy Gibbs, vice president of
just purchased a small hotel for conversion to con- a large cotton spinning mill. Unfortunately, Gibbs
dominium apartments. The building, in a popu- quit before completing this important LP applica-
lar area of Washington, D.C., near the U.S. State tion. Stephanie Robbins, the newly hired replace-
Department, will be highly marketable, and each ment, was immediately given the task of using LP
condominium sale is expected to yield a good profit. to determine what different kinds of yarn the mill
Q/A should use to minimize costs. Her first need was
The conversion process, however, includes several
options. Basically, four types of condominiums can to be certain that Gibbs correctly formulated the
be designed out of the former hotel rooms. They objective function and constraints. She could find
are deluxe one-bedroom apartments, regular one- no statement of the problem in the files, so she de-
bedroom apartments, deluxe studios, and efficiency cided to reconstruct the problem from the initial
apartments. Each will yield a different profit, but tableau.
each type also requires a different level of invest-
(a) What is the correct formulation, using real deci-
ment in carpeting, painting, appliances, and car-
sion variables (that is, Xis) only?
pentry work. Bank loans dictate a limited budget
(b) Which variable will enter this current solution
that may be allocated to each of these needs. Profit
mix in the second tableau? Which basic variable
data and the conversion costs for each apartment are
will leave?
shown in the table on this page.
Thus, we see that the cost of carpeting a deluxe
one-bedroom unit is $1,100, the cost of carpeting
a regular one-bedroom unit is $1,000, and so on. A
Table for Problem M7-32
TYPE OF APARTMENT
DELUXE REGULAR DELUXE TOTAL

RENOVATION ONE-BEDROOM ONE-BEDROOM STUDIO EFFICIENCY BUDGETED
REQUIREMENT ($) ($) ($) ($) ($)
New carpet 1,100 1,000 600 500 35,000

Painting 700 600 400 300 28,000
New appliances 2,000 1,600 1,200 900 45,000
Carpentry work 1,000 400 900 200 19,000
Profit per unit 8,000 6,000 5,000 3,500

Cj $12 $18 $10 $20 $7 $8 $0 $0 $0 $0 $0 M M M M
SOLUTION
MIX X1 X2 X3 X4 X5 X6 S1 S2 S3 S4 S5 A1 A2 A3 A4 QUANTITY
$M A1 1 0 -3 0 0 0 0 0 0 0 0 1 0 0 0 100
0 S1 0 25 1 2 8 0 1 0 0 0 0 0 0 0 0 900
M A2 2 1 0 4 0 1 0 -1 0 0 0 0 1 0 0 250
M A3 18 - 15 -2 -1 15 0 0 0 -1 0 0 0 0 1 0 150
0 S4 0 0 0 0 0 25 0 0 0 1 0 0 0 0 0 300
M A4 0 0 0 2 6 0 0 0 0 0 -1 0 0 0 1 70
Zj $21M - $14M -$5M $5M $21M $M $0 $0 -$M $0 -$M $M $M $M $M $570M
Cj - Zj 12 - 21M 18 + 14M 10 + 5M 20 - 5M 7 - 21M 8 - M 0 0 M 0 M 0 0 0 0
M7-34 Consider the following optimal tableau, where

S1 and S2 are slack variables added to the original Cj 80 120 90 0 0 0
problem: SOLUTION
Cj $10 $30 $0 $0 120 X2 -1.5 1 0 0.125 - 0.75 0 37.5

90 X3 3.5 0 1 -0.125 1.25 0 12.5
SOLUTION
MIX X1 X2 S1 S2 QUANTITY 0 S3 -1.0 0 0 0 - 0.5 1 10.0
$10 X1 1 4 2 0 160 Zj 135 120 90 3.75 22.5 0 5,625
$0 S2 0 6 -7 1 200 Cj - Zj -55 0 0 -3.75 - 22.5 0

Zj $10 $40 $20 $0 $1,600
Cj - Zj 0 - 10 - 20 0 (a) What are the shadow prices for the three con-
straints? What does a zero shadow price mean?
How can this occur?
(a) What is the range of optimality for the contribu- (b) How much could the right-hand side of the first
tion rate of the variable X1? constraint be changed without changing the so-
(b) What is the range of insignificance of the contri- lution mix (i.e., perform RHS ranging for this
bution rate for the variable X2? constraint)?
(c) How much would you be willing to pay for one (c) How much could the right-hand side of the third
more unit of the first resource, which is repre- constraint be changed without changing the so-
sented by slack variable S1? lution mix?
(d) What is the value of one more unit of the second
resource? Why? M7-36 Clapper Electronics produces two models of
(e) What would the optimal solution be if the profit telephone-answering devices, model 102 1X12 and
on X2 were changed to $35 instead of $30? model H23 1X22. Jim Clapper, vice president for
(f) What would the optimal solution be if the profit production, formulates their constraints as follows:
on X1 were changed to $12 instead of $10? How 2X1 + 1X2 … 40 1hours of time available
much would the maximum profit change?
on soldering machine2
(g) How much could the right-hand side in con-
straint 2 be decreased before profit would be 1X1 + 3X2 … 30 1hours of time available
affected? in inspection department2
M7-35 A linear program has been formulated and solved. Clapper’s objective function is
The optimal simplex tableau for this is as follows:
Maximize profit = $9X1 + $7X2

Solving the problem using the simplex method, he (b) If the original constraint that “no more than 300
produces the following final tableau: pounds of phosphate can be used” 1X1 … 3002
were changed to X1 … 400, would the ba-
Cj $9 $7 $0 $0 sis change? Would the values of X1, X2, and S2
change?
SOLUTION
M7-39 Formulate the dual of this LP problem:
Maximize profit = 80X1 + 75X2
$9 X1 1 0 0.6 - 0.2 18
1X1 + 3X2 … 4
7 X2 0 1 - 0.2 0.4 4
2X1 + 5X2 … 8
Zj $9 $7 $4 $1 $190 Find the dual of the problem’s dual.
Cj - Zj 0 0 -4 –1 M7-40 What is the dual of the following LP problem?
Primal: Minimize cost = 120X1 + 250X2
(a) What is the optimal mix of models 102 and H23 subject to 12X1 + 20X2 Ú 50
to produce? X1 + 3X2 Ú 4
(b) What do variables S1 and S2 represent? M7-41 The third, and final, simplex tableau for the LP prob-
(c) Clapper is considering renting a second solder- lem stated here follows:
ing machine at a cost to the firm of $2.50 per Maximize profit = 200X1 + 200X2
hour. Should he do so?
subject to 2X1 + X2 … 8
(d) Clapper computes that he can hire a part-time
inspector for only $1.75 per hour. Should he X1 + 3X2 … 9
do so? What are the solutions to the dual variables, U1 and
M7-37 Refer to Table M7.6, which is the optimal tableau U2? What is the optimal dual cost?
for the Flair Furniture Company problem.
(a) What are the values of the shadow prices? Cj $200 $200 $0 $0
(b) Interpret the physical meaning of each shadow
SOLUTION
price in the context of the furniture problem.
(c) What is the range over which the profit per ta-
ble can vary without changing the optimal basis $200 X1 1 0 0.6 - 0.2 3
(solution mix)? 200 X2 0 1 -0.2 0.4 2
(d) What is the range of optimality for C (number of
Zj $200 $200 $80 $40 $1,000
chairs produced)?
(e) How many hours can Flair Furniture add to or Cj - Zj 0 0 -80 - 40
remove from the first resource (painting depart-
ment time) without changing the basis?
(f) Conduct RHS ranging on the carpentry depart- M7-42 The tableau on this page provides the optimal solu-
ment resource to determine the range over which tion to this dual:
the shadow price remains valid. Minimize cost = 120U1 + 240U2
M7-38 Consider the optimal solution to the Muddy River subject to 2U1 + 2U2 Ú 0.5
Chemical Corporation problem in Table M7.10.
U1 + 3U2 Ú 0.4
(a) For each of the two chemical ingredients, phosphate
and potassium, determine the range over which What does the corresponding primal problem look
their cost may vary without affecting the basis. like, and what is its optimal solution?

Cj 120 240 0 0 M M
SOLUTION
MIX U1 U2 S1 S2 A1 A2 QUANTITY
$120 U1 1 0 -0.75 0.5 0.75 -0.5 0.175
240 U2 0 1 0.25 -0.5 -0.25 0.5 0.075
Zj $120 $240 -$30 -$60 $30 $60 $39
Cj - Zj 0 0 30 60 M - 30 M - 60

M7-43 Given the following dual formulation, reconstruct

MINIMUM
the original primal problem: TESTS PER HOUR BY SCIEN- TEST TIME
Minimize cost = 28U1 + 53U2 + 70U3 + 18U4 TIST TYPE NEEDED
subject to U1 + U4 Ú 10 LAB
EXPERIMENT BIOPHYSICIST BIOCHEMIST PER DAY
U1 + 2U2 + U3 Ú 5
Test 1 8 4 120
- 2U2 + 5U4 Ú 31
Test 2 4 6 115
5U3 Ú 28 Test 3 9 4 116
12U1 + 2U3 - U4 Ú 17
This means that a biophysicist can complete 8, 4,
U1, U2, U3, U4 Ú 0
and 9 of tests 1, 2, and 3 per hour. Similarly, a bio-
M7-44 A firm that makes three products and has three ma- chemist can perform 4 of test 1, 6 of test 2, and 4
chines available as resources constructs the follow- of test 3 per hour. The optimal solution to the lab’s
ing LP problem: primal problem is
Maximize profit = 4X1 + 4X2 + 7X3 X1 = 8.12 hours and X2 = 13.75 hours
subject to 1X1 + 7X2 + 4X3 … 100 1hours on machine 12 Total cost = $434.37 per day
2X1 + 1X2 + 7X3 … 110 1hours on machine 22 The optimal solution to the dual problem is
8X1 + 4X2 + 1X3 … 110 1hours on machine 32 U1 = 2.07, U2 = 1.63, U3 = 0

Solve this problem by computer and answer these (a) What is the dual of the primal LP problem?
questions: (b) Interpret the meaning of the dual and its solution.
(a) Before the third iteration of the simplex method,
M7-46 Refer to Problem M7-45.
which machine still has unused time available?
(b) When the final solution is reached, is there (a) If this is solved with the simplex algorithm,
any unused time available on any of the three how many constraints and how many variables
machines? (including slack, surplus, and artificial variables)
(c) What would it be worth to the firm to make an will be used?
additional hour of time available on the third (b) If the dual of this problem is formulated and
machine? solved with the simplex algorithm, how many
(d) How much would the firm’s profit increase if an constraints and how many variables (including
extra 10 hours of time were made available on slack, surplus, and artificial variables) will be
the second machine at no extra cost? used?
M7-45 Management analysts at a Fresno laboratory have (c) If the simplex algorithm is used, will it be easier
developed the following LP primal problem: to solve the primal problem or the dual problem?
Minimize cost = 23X1 + 18X2 M7-47 The Flair Furniture Company, described first in
Chapter 7 and again in this module, manufactures
subject cost 8X1 + 4X2 Ú 120 inexpensive tables (T) and chairs (C). The firm’s
4X1 + 6X2 Ú 115 daily LP formulation is given as
9X1 + 4X2 Ú 116
Maximize profits = 70T + 50C
This model represents a decision concerning number
of hours spent by biochemists on certain laboratory subject to 4T + 3C … 240 hours of carpentry time available
experiments 1X12 and number of hours spent by bio- 2T + 1C … 100 hours of painting time available
physicists on the same series of experiments 1X22. A
biochemist costs $23 per hour, while a biophysicist’s In addition, Flair finds that three more constraints
salary averages $18 per hour. Both types of scien- are in order. First, each table and chair must
tists can be used on three needed laboratory opera- be inspected and may need reworking. The follow-
tions: test 1, test 2, and test 3. The experiments and ing constraint describes the time required on average
their times are as follows: for each:

0.5T + 0.6C … 36 hours of inspection>rework time available (b) Will Flair use all of its resources to their limits
each day? Be specific in explaining your answer.
Second, Flair faces a resource constraint relating to (c) Explain the physical meaning of each shadow
the lumber needed for each table or chair and the price.
amount available each day: (d) Should Flair purchase more lumber if it is avail-
32T + 10C … 1,248 linear feet of lumber available for able at $0.07 per linear foot? Should it hire more
production carpenters at $12.75 per hour?
(e) Flair’s owner has been approached by a friend
Finally, the demand for tables is found to be a maxi- whose company would like to use several hours
mum of 40 daily. There are no similar constraints in the painting facility every day. Should Flair
regarding chairs. sell time to the other firm? If so, how much?
T … 40 1maximize table production daily2 Explain.
(f) What is the range within which the carpentry
These data have been entered in the QM for Win- hours, painting hours, and inspection/rework
dows software that is available with this book. The hours can fluctuate before the optimal solution
inputs and results are shown in Programs M7.1A, changes?
M7.1B, and M7.1C and should be referred to in (g) Within what range for the current solution can
answering these questions. the profit contribution of tables and chairs
(a) How many tables and chairs should Flair Furni- change?
ture produce daily? What is the profit generated
by this solution?
PROGRAM M7.1A
QM for Windows Input
Data for Revised Flair
Furniture Problem
(Problem M7-47)
PROGRAM M7.1B
Solution Results (Final
Tableau) for Revised
Flair Furniture Problem
(Problem M7-47)

PROGRAM M7.1C
Sensitivity Analysis for
Revised Flair Furniture
Problem (Problem M7-47)
M7-48 A Chicago manufacturer of office equipment is (d) Two tons of steel alloy are available from an
desperately attempting to control its profit and loss overstocked supplier at a total cost of $8,000.
statement. The company currently manufactures 15 Should the steel be purchased? All or part of the
different products, each coded with a one-letter and supply?
three-digit designation, as shown in the table on the (e) The accountants have just discovered that an
next page. error was made in the contribution to profit for
product N150. The correct value is actually
(a) How many of each of the 15 products should be
$8.88. What are the implications of this error?
produced each month?
(f) Management is considering the abandonment
(b) Clearly explain the meaning of each shadow
of five product lines (those beginning with the
price.
letters A through E). If no minimum monthly
(c) A number of workers interested in saving money
d emand is established, what are the implica-
for the holidays have offered to work overtime
tions? Note that there already is no minimum for
next month at a rate of $12.50 per hour. What
two of these products. Use the corrected value
should the response of management be?
for N150.

STEEL MINIMUM
ALLOY PLASTIC WOOD ALUMINUM FORMICA LABOR MONTHLY CONTRIBU-
REQUIRED REQUIRED REQUIRED REQUIRED REQUIRED REQUIRED DEMAND TION TO
PRODUCT (LB) (SQ FT) (BD FT) (LB) (BD FT) (HOURS) (UNITS) PROFIT
A158 — 0.4 0.7 5.8 10.9 3.1 — $18.79
B179 4 0.5 1.8 10.3 2.0 1.0 20 6.31
C023 6 — 1.5 1.1 2.3 1.2 10 8.19
D045 10 0.4 2.0 — — 4.8 10 45.88
E388 12 1.2 1.2 8.1 4.9 5.5 — 63.00
F422 — 1.4 1.5 7.1 10.0 0.8 20 4.10
G366 10 1.4 7.0 6.2 11.1 9.1 10 81.15
H600 5 1.0 5.0 7.3 12.4 4.8 20 50.06
I701 1 0.4 — 10.0 5.2 1.9 50 12.79
J802 1 0.3 — 11.0 6.1 1.4 20 15.88
K900 — 0.2 — 12.5 7.7 1.0 20 17.91
L901 2 1.8 1.5 13.1 5.0 5.1 10 49.99
M050 — 2.7 5.0 — 2.1 3.1 20 24.00
N150 10 1.1 5.8 — — 7.7 10 88.88
P259 10 — 6.2 15.0 1.0 6.6 10 77.01
Availability
per month 980 400 600 2,500 1,800 1,000
Bibliography
See the Bibliography at the end of Chapter 7.

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MODULE

Z08_REND3161_13_AIE_M07.indd 1 28/10/16 11:40 AM

M7.1 How to Set Up the Initial Simplex Solution

T = number of tables produced

and that the problem was formulated as

Maximize profit = $70T + $50C 1objective function2

Converting the Constraints to Equations

S1 = slack variable representing unused hours in the painting department

The constraints to the problem may now be written as

and there will be 10 hours of slack, or unused, painting time available.

Z08_REND3161_13_AIE_M07.indd 2 28/10/16 11:40 AM

2T + 1C + 1S1 + 0S2 = 100

Maximize profit = $70T + $50C + $0S1 + $0S2

Finding an Initial Solution Algebraically

Z08_REND3161_13_AIE_M07.indd 3 28/10/16 11:40 AM

The First Simplex Tableau

Here are the constraints in

TABLE M7.1 Flair ­Furniture’s Initial Simplex Tableau

Cj SOLUTION $70 $50 $0 $0

$0 S1 2 1 1 0 100 Constraint equation rows

Z08_REND3161_13_AIE_M07.indd 4 28/10/16 11:40 AM

Z08_REND3161_13_AIE_M07.indd 5 28/10/16 11:40 AM

Zj = 1Profit per unit of S12 * 1Substitution rate in row 12

Zj 1for column T2 = 1$02122 + 1$02142 = $0

IN ACTION Resource Allocation at Pantex

C ompanies often use optimization techniques such as LP to

Z08_REND3161_13_AIE_M07.indd 6 28/10/16 11:40 AM

Cj for column $70 $50 $0 $0

M7.2 Simplex Solution Procedures

Five Steps of the Simplex Method for Maximization Problems

Number above Corresponding number in

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Here we apply the five steps to The Second Simplex Tableau

For the S1 row:

For the S2 row:

$0 S1 2 1 1 0 100

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Cj SOLUTION MIX T C S1 S2 QUANTITY

$0 S1 2 1 1 0 100 Pivot row

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0 = 4 - 142 * 112

Cj SOLUTION MIX T C S1 S2 QUANTITY

$70 T 1 0.5 0.5 0 50

Zj 1for T column2 = 1$702112 + 1$02102 = $70

Note that the current profit is $3,500.

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TABLE M7.4 Completed

$70 T 1 0.5 0.5 0 50

Cj for column $70 $50 $0 $0

Interpreting the Second Tableau

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The Third Simplex Tableau

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The entire new C row looks like this:

Cj SOLUTION MIX T C S1 S2 QUANTITY

The new T row is computed here. Number Number Number Corresponding

$70 T 1 0 1.5 -0.5 30

The net profit per unit row appears as follows:

Cj for column $70 $50 $0 $0

TABLE M7.1 Flair Furniture’s Initial Simplex Tableau