Ch 2 THE GOALS OF A FIRM Sacramento State这2个公司的目标国王的状态.ppt

TU-91.113 Managerial Economics / Hannele Wallenius Ch 7 LINEAR PROGRAMMING Linear programming1 is a mathematical technique that enables a decision maker to arrive at the optimal solution to problems involving the allocation of scarce resources. Typically, many economic and technical problems involve maximization or minimization of a certain objective subject to some restrictions. 1During World War II US army began to formulate certain linear optimization problems. Their solutions were called plans or programs. Today important application areas include airline crew scheduling, shipping or telecommunication networks, oil refining and blending, and stock and bond portfolio selection. Typical Applications of Linear Programming 1. A manufacturer wants to develop a production schedule and inventory policy that will satisfy sales demand in future periods and same time minimize the total production and inventory cost. 2. A financial analyst must select an investment portfolio from a variety of stock and bond investment alternatives. He would like to establish the portfolio that maximizes the return on investment. Typical Applications of Linear Programming continued 3. A marketing manager wants to determine how best to allocate a fixed advertising budget among alternative advertising media such as radio, TV, newspaper, and magazines. The goal is to maximize advertising effectiveness. 4. A company has warehouses in a number of locations throughout the country. For a set of customer demands for its products, the company would like to determine how much each warehouse should ship to each customer so that the total transportation costs are minimized. Constructing Linear Programming Models Next we list what is required in order to construct a linear programming model: 1. Objective Function. There must be an objective (or goal or target) the firm or organization wants to achieve. For example, maximize dollar profits, minimize dollar cost, maximize total number of expecte