Linear programming, Financial Management

Linear programming, one of the important techniques of operations research, has been applied to a wide range of business problems. This technique is useful in solving decision making problems which involve maximizing a linear objective function subject to a set of linear constraints.

Linear programming is helpful in solving a variety of problems in finance, budgeting and investments. The important applications of this technique are in the following areas:

  • Selection of a product mix which maximizes the profits of the firm subject to several production, material, marketing, personnel and financial constraints.

  • Determination of the capital budget which maximizes the net present value of the firm subject to several financial, managerial, environmental, and other constraints.

  • Choice of mixing short-term financing which minimizes the cost subject to certain funding constraints.

This note, expounding the basis of linear programming is divided into four sections including this introductory section. Section II presents the graphical method of solving the linear programming problem. Though this method can be applied only to those problems having only two basic variables, it is a very useful pedagogic device to understand certain concepts underlying the more advanced methods of linear programming. 

Posted Date: 9/13/2012 8:22:15 AM | Location : United States







Related Discussions:- Linear programming, Assignment Help, Ask Question on Linear programming, Get Answer, Expert's Help, Linear programming Discussions

Write discussion on Linear programming
Your posts are moderated
Related Questions
b) Each $1 of outlay prior to 31 December 2003 would mean a loss in NPV on the alternative project of $0·20. There is so an opportunity cost of using funds in 2002. Purchasing

Difference between mortgage bond and a debenture? A mortgage bond is a secured bond whereas a debenture is an unsecured bond.

Mount Hutt Ltd. just paid dividend of $2.20 per share. The dividends are expected to grow at a constant rate of 4% per year, indefinitely. If investors require an 11% return on Mou


A. Initial evaluation Comment on the structure of the attached portfolio, and on the financial risks facing Copper Based plc (CB), making use of what you know about how a port

This case has been framed in order to test the skills in evaluating a credit request and reaching a correct decision. Perluence International is large manufacturer of petroleum and

What is Financial risk Financial risk is affected by mixture of long-term financing or capital structure, of firm. Firms with high levels of long-term debt in proportion to t

What are the advantages and disadvantages of the internal rate of return method? The internal rate of return process is a discounted cash flow method and a number expressed as

where can i found a loan if i am unemployed ?

Does your company have a cutting-edge product idea that will blaze new trails in its industry? Is it properly retiring out-of-date products and keeping current with new consumer de