Part 2 book “Quantitative analysis for management” has contents: Linear programming applications, transportation, assignment, and network models, project management, waiting lines and queuing theory models, simulation modeling, markov analysis, statistical quality control, integer programming, goal programming, and nonlinear programming. | CHAPTER 8 Linear Programming Applications LEARNING OBJECTIVES After completing this chapter, students will be able to: Formulate and solve LP problems with Excel Solver in marketing. Formulate and solve LP problems with Excel Solver in production. Formulate and solve LP problems with Excel Solver in the scheduling of employees. Formulate and solve LP problems with Excel Solver in finance. Formulate and solve LP problems with Excel Solver in the blending of ingredients. Formulate and solve LP problems with Excel Solver in revenue management. T he graphical method of linear programming (LP) discussed in Chapter 7 is useful for understanding how to formulate and solve small LP problems. The purpose of this chapter is to go one step further and show how a large number of real-life problems can be modeled using LP. We do this by presenting examples of models in the areas of marketing research, media selection, production mix, labor scheduling, production scheduling, ingredient mix, and financial portfolio selection. We will solve many of these LP problems using Excel’s Solver and QM for Windows. Although some of these models are relatively small numerically, the principles developed here are definitely applicable to larger problems. Moreover, this practice in “paraphrasing” LP model formulations should help you to develop skill in applying the technique to other, less common applications. Marketing Applications Media Selection Media selection problems can be approached with LP from two perspectives. The objective can be to maximize audience exposure or to minimize advertising costs. Linear programming models have been used in the advertising field as a decision aid in selecting an effective media mix. Sometimes the technique is employed in allocating a fixed or limited budget across various media, which might include radio or television commercials, newspaper ads, direct mailings, social media, and so on.
