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 non negative 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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