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Sup-E - Linear Programming Using POM for Windows Software 1...

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1 Linear Programming Using POM for Windows Software
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2 1 Setting up a Linear Program Linear Program (LP) – An optimization process for allocating scarce resources among competing demands.
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3 Examples of Resource Allocation W here do I use my resources? Advertising I have many advertising channels, but limited money and important demographics I must reach. Which avenues do I use? Investments I have many investment vehicles, but limited capital and important goals. Where do I invest my money? Staffing I have many kinds of people I can hire, but a limited budget and technical requirements I must meet What kind of people do I hire?
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4 LP Problems Formulating” means setting up the problem in an LP format Formulation Example Objective is to minimize staffing and inventory costs Decision variables are: amount of staff, overtime, and subcontracting. Constraints are: meet demand and maintain minimum inventory levels.
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5 Key Elements of LP Decision variables Choices a decision maker can control. Variables assumed continuous and non-negative. (Other variables may relate only to constraints.) Objective function – A mathematical statement of what is being maximized (e.g., profit) or minimized (e.g., cost) with respect to variables Constraints – Limitations on permissible choices , stated with respect to variable values. Parameters – Values in the objective function or constraints the decision maker cannot control , usually as coefficients or limits in the objective function and constraints statements.
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6 Steps to Setting up LP 1. Identify the problem – Write a descriptive narrative 2. Define the decision variables – Identify choices precisely and clearly. 3. Develop the objective function – Write as a linear function of variables 4. Develop constraints – Write as linear function of variables.
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7 Example 1 from Note Problem – Conduct least expensive set
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