Linear Programming in Business

Blessing Amaechi Written by Blessing Amaechi · 1 min read >

We are in business to maximize profit, gain market share, increase revenue, solve a need, create jobs, and many more. Sometimes we know why we are in business and what we want to achieve but do not have technical knowledge on how to achieve them. What do we do in this instance? We may wish to employ a manager or train ourselves to have the pre-requisite knowledge to help make good and sound decisions, plans, and strategies on how to achieve these business objectives. Implementing this strategy always requires resources. However, these resources are always not available because they are scarce and limited.

Therefore, one needs to look for the best way to make use of the available resources to achieve set goals and objectives. We should use resources optimally to achieve a certain expected outcome. The outcomes ultimately depend on what the owners want. If you are not able to achieve these outcomes based on your agreed key performance indicators (KPI), then you need to go back to the drawing board or re-strategize. Managers need to learn tools and techniques that will help them to optimize i.e., make the best use of the available resources. They require the knowledge of linear programming.

What is linear programming? It is a mathematical technique for allocating limited resources in an optimal manner. A linear programming problem is one that is concerned with finding the optimal value (maximum or minimum) of a linear function of several variables (called objective function) subject to the conditions that the variables are non-negative and satisfy a set of linear inequalities (called linear constraints). Before we optimize whether maximum or minimum of a linear function, the relationship between the variables most times is 1 to 1. There must be constraints, therefore you need to understand your objective. Your objective is to select the best possible strategy from a number of alternatives, and it must be subject to a set of constraints. Constraints here mean limited resources.

Knowledge of Linear programming can be applied in almost every field. It could be applied to production, medicine, marketing, banking, insurance, etc. It is a tool that helps managers optimize their limited resources. In simple terms, make the best use of available resources. Therefore, linear programming is an important technique for the optimization of resources.

Before dwelling deep into linear programming applications for business, there are certain things we must take into consideration. This includes our objectives of going into the business. Do we want to either maximize profit, revenue and or minimize cost? We must take into consideration that there must be constraints, subject to limited resources. We, therefore, must consider the objective function, constraints, non-negativity, linearity, and finite characteristic of linear programming and apply them accordingly.

The decisions that manager makes sometimes can be simple or complex. If it is simple, you may not need to bother yourself with a mathematical model in solving the problem. Though, there are many factors you must take into consideration without using the mathematical method to achieve it. However, when the problem is a complex one, then the manager needs to adopt some tools that will enable them to make a better decision. Linear programming is one of those tools and an indispensable one for making effective decisions in optimizing limited resources.

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