Linear Programming : It is a method of selecting an appropriate optimum combination of factors from a series of alternative which are interrelated and each subject to some constraints or restrictions. It involves the development of linear equation to obtain the best solution for the allocation problem. An allocation problem arise whenever there are number of activities to perform, but limitation on either the amount of resources or the way they can be spent prevent us from performing each separate activity in the most effective way conceivable. In such situation we wish to allot the available resource to the activities in a way that they will optimize the total effectiveness.
“Linear Programming is a mathematical technique for determining the optimum allocation of resources and obtaining a particular objective when there are alternative uses of the resources: money, manpower, material, machine and other facilities. The objective in resources allocation may be cost minimization or inversely profit maximization. The technique of linear programming is applicable to problems in which the total effectiveness can be expressed as a linear function of individual allocations and the limitations on resources give rise to linear equalities or inequalities of the individual allocations.”
Some more areas where Linear Programming : Can be used are as follows :
- In structural design for maximum product.
- In structural design for maximum product.
- In determining which parts to make and which to buy to obtain maximum profit margin.
- In selecting equipment and evaluating method improvements that maximize profit margin.
- In planning most profitable match of sales requirements to plant capacity that obtains a fair share of the market.
- In design of optimal purchasing policies.
- Choice of investment from a variety of shares and debentures so as to maximize return on investment.
- Allocation of a limited publicity budget on various heads in order to maximise its effectiveness.
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