Linear Programming Techniques-General Observations:
The maximization and minimization studies,
together with the exercises and presented in this section, are realistic
examples of the types of problems management faces.
By maximizing certain
managerial objectives such as
contribution margin and utilization of available labor hours or factory
capacity, or by minimizing functions such as cost, weight, materials mix, or
time, management's goal can be determined quantitatively. To find a feasible
solution, it is necessary to state each situation in mathematical notations.
Restrictions or constraints must confine the solution with a well defined
area and appear in the form of equations with nonnegative variables. All
data must be deterministic, i.e., involve exact relationships and known
factors.
For the accounting community, a definite
similarity exists between certain managerial problems and mathematical
programming techniques. Further more, as other chapters have pointed out,
the growing need for and involvement of accounting and cost data in
management's planning and decision making process are supported and enhanced
by these techniques.
Problems dealing with the short-run uses of
facilities or with output having varying combination of output in order to
determine the maximum
contribution margin or the minimum cost. Such a procedure, while proven
feasible and acceptable, may no longer be necessary. The introduction of
newer and more sophisticated decision models, particularly that of linear
programming, allows the accountant to administer the implementation of these
models by determining the data needed for their application. When the cases
move beyond the possibility of being solved manually or by simple desk or
hand calculator, the electronic computers aid the accountant in arriving at
a correct and immediate solution
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