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
Q. Explain demerits of accept-reject criteria? Demerits of ARR:- (i) It utilizes accounting income rather than cash flows: - The principal short coming of ARR schema is th

I need report on Risk and Return. Do you provide help in topic Risk and Return? I need expert's assistance to solve my college assignment. Please suggest if it works for me.

The risk free rate is 10 percent and the expected return on the market portfolio is 14 percent. A firm considers a project that is expected to have a beta of 1.3, whereas the beta

What can a financial institution often do for a surplus economic unit that it would have difficulty doing for itself if the surplus economic unit (SEU) were to deal directly with a

Do a Gantts Chart, project-managing the Budget process. This task should contain a well designed chart with tables and discussion. Budgeting thus is identified as a project to be m

Testing the Hypothesis To test the null hypothesis, we compare the observed and the expected frequencies. If the actual and the expected values are nearly equal to each other w

Identification the management risk: The first and most essential aspect of risk management is recognising what events may occur within a business.  It is only when all the poss

Market based Ratio's   PE:           The Price-to-Earnings ratio is calculated by market price per share to earnings per share and is expressed in terms of times. It shows h

1. Let's look at the cash flow of the volatility (variance) spread swap: - ( σ 2 Nasdaq - σ 2 S & P 500 ) N 2 It is noticeable from this expression that investor

Explain Vernon’s product life-cycle theory of FDI. What are the strength and weakness of the theory? Answer:  As to the product life-cycle theory, companies undertake FDI at a ce