MGMT430 Columbia Resource Allocation Problems & Linear Programming Model Paper

Business Finance

Choose one of the major categories of applications of linear programming discussed in the chapter (resource-allocation problems). Give an example of an application of the model. Support whether the variables have to be integers for your example.

Definition (Verbatim from book:)

Resource-allocation problems: are linear programming problems involving the allocation of resources to activities. The identifying feature for any such problem is that each functional constraint in the linear programming model is a resource constraint, which has the form Amount of resource used ≤ Amount of resource available for one of the resources. The amount of a resource used depends on which activities are undertaken, the levels of those activities, and how heavily those activities need to use the resource. Thus, the resource constraints place limits on the levels of the activities. The objective is to choose the levels of the activities so as to maximize some overall measure of performance (such as total profit) from the activities while satisfying all the resource constraints. Beginning with the Super Grain case study and then the Wyndor case study from Chapter 2, we will look at four examples that illustrate the characteristics of resource-allocation problems. These examples also demonstrate how this type of problem can arise in a variety of contexts.

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