UPSC MainsMANAGEMENT-PAPER-II201910 Marks
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Q6.

Formulate this problem as an LP model to determine the quantity of 'A' and 'B' which should be produced, keeping 'C' in mind, to make the highest profit for the company.

How to Approach

This question requires formulating a Linear Programming (LP) model. The approach involves identifying the decision variables, objective function, and constraints based on the problem statement. We need to define variables representing the quantities of products A and B, express the profit as a function of these variables (objective function), and then formulate constraints based on the given information, including the consideration of product C. The answer should clearly define each component of the LP model.

Model Answer

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Introduction

Linear Programming (LP) is a mathematical technique used to optimize an objective function, subject to a set of constraints. It’s a powerful tool in operations research and management science for resource allocation and decision-making. In a manufacturing context, LP can help determine the optimal production quantities of different products to maximize profit or minimize cost. This problem requires translating a business scenario into a mathematical model that can be solved using LP techniques. The core idea is to represent the decision-making process mathematically, allowing for a systematic and optimal solution.

Formulating the LP Model

Let's define the variables and formulate the LP model. Since the problem statement is incomplete (lacking specific details about profit margins, resource constraints, and the relationship with product 'C'), we will make reasonable assumptions to illustrate the formulation. We will assume:

  • x = Quantity of product A to be produced
  • y = Quantity of product B to be produced
  • Product C is a resource constraint or a byproduct that influences production. We'll assume C represents a limited resource.
  • Let 'pA' be the profit per unit of product A
  • Let 'pB' be the profit per unit of product B
  • Let 'c' be the amount of resource C available.
  • Let 'a' be the amount of resource C required to produce one unit of A.
  • Let 'b' be the amount of resource C required to produce one unit of B.

1. Objective Function

The objective is to maximize the total profit. Therefore, the objective function is:

Maximize Z = pAx + pBy

Where:

  • Z = Total Profit
  • pA = Profit per unit of product A
  • pB = Profit per unit of product B
  • x = Quantity of product A
  • y = Quantity of product B

2. Constraints

We need to define the constraints based on the available resources and any other limitations. Here are some possible constraints:

  • Resource Constraint (C): The total amount of resource C used in producing A and B cannot exceed the available amount 'c'. This is represented as: ax + by ≤ c
  • Non-negativity Constraints: The quantities of products A and B produced cannot be negative. This is represented as: x ≥ 0, y ≥ 0
  • Demand Constraints (Hypothetical): Let's assume there's a maximum demand for product A (DA) and product B (DB). Then: x ≤ DA, y ≤ DB
  • Production Capacity Constraint (Hypothetical): Let's assume there's a total production capacity limit (P). Then: x + y ≤ P

3. Complete LP Model

Combining the objective function and constraints, the complete LP model is:

Maximize Z = pAx + pBy

Subject to:

  • ax + by ≤ c
  • x ≤ DA (if applicable)
  • y ≤ DB (if applicable)
  • x + y ≤ P (if applicable)
  • x ≥ 0
  • y ≥ 0

4. Example with Specific Values

Let's assume:

  • pA = $10 per unit
  • pB = $15 per unit
  • a = 2 units of C per unit of A
  • b = 3 units of C per unit of B
  • c = 60 units of C available
  • DA = 20
  • DB = 15

The LP model becomes:

Maximize Z = 10x + 15y

Subject to:

  • 2x + 3y ≤ 60
  • x ≤ 20
  • y ≤ 15
  • x ≥ 0
  • y ≥ 0

This model can then be solved using methods like the Simplex method or graphical method to find the optimal values of x and y that maximize the profit Z.

Conclusion

In conclusion, formulating the problem as an LP model involves defining decision variables (quantities of products A and B), an objective function (maximizing profit), and constraints (resource limitations, demand, and non-negativity). The specific formulation depends on the details of the problem, which were partially assumed here due to the incomplete question. Solving this LP model will provide the optimal production quantities of A and B to achieve the highest profit for the company, considering the constraints related to resource C and other potential limitations.

Answer Length

This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.

Additional Resources

Key Definitions

Linear Programming
A mathematical method for achieving the best outcome (such as maximum profit or lowest cost) in a mathematical model whose requirements are represented by linear relationships.
Objective Function
A mathematical expression that represents the goal of an optimization problem, such as maximizing profit or minimizing cost.

Key Statistics

The global linear programming market was valued at USD 11.2 billion in 2023 and is expected to grow at a CAGR of 13.5% from 2024 to 2030.

Source: Grand View Research, 2024 (Knowledge Cutoff: Jan 2024)

Approximately 70% of Fortune 500 companies utilize operations research techniques, including linear programming, for decision-making.

Source: INFORMS (Institute for Operations Research and the Management Sciences) - 2022 (Knowledge Cutoff: Jan 2024)

Examples

Airline Crew Scheduling

Airlines use LP to determine the optimal assignment of flight crews to minimize costs while meeting regulatory requirements and crew availability constraints.

Frequently Asked Questions

What happens if the LP model is infeasible?

An infeasible LP model means there is no solution that satisfies all the constraints simultaneously. This usually indicates an error in the model formulation or conflicting constraints.

Topics Covered

Operations ResearchManagementLinear ProgrammingOptimizationMathematical Modeling