GRAND MARK INTERNATIONAL

COLLEGE

MASTER OF BUSINESS ADMINISTRATION PROGRAM

Course- Quantitative Analysis for Management Decisions.

Individual assignment.

Name-Tewahido Genene ID-GSR/0286/22

Instructor’s name - Solomon Melese (PhD)

Date-NOV/2023
1. Formulate the LPP:

Decision variables:

• x1: Number of units of Product A to produce

Objective function:

• Maximize: 5x1+4x2

Constraints:

• Department A: 3x1+2x2≤60
• Department B: 4x1+3x2≤72
• Non-negativity constraints: x1,x2≥0
2. Graphical Analysis

To graphically analyze the LPP, we first need to plot the two constraints.
Therefore, the optimal solution is Z=96

Coordinates Objective Function Value

3. Simplex Method

Objective function:

• Maximize: 5x1+4x2

Constraints:

• Department A: 3x1+2x2≤60
• Department B: 4x1+3x2≤72
• Non-negativity constraints: x1,x2≥0

Initial Tableau

Table 1 Cj 5 4 0 0

Cb Base X1 X2 S1 S2 R
 0 S1 3 2 1 0 60

0 S2 4 3 0 1 72

Z -5 -4 0 0 0

Pivot Step 1

The first iteration involves selecting a variable to enter the basis (in this case, X1) and a variable
to leave the basis (in this case, S2). The pivot element is then calculated as 4

Tableau After Pivot Step 1

Table 2 Cj 5 4 0 0

Cb Base X1 X2 S1 S2 R

0 S1 0 -1/4 1 -3/4 6

5 X1 1 ¾ 0 1/4 18

Z 0 -1/4 0 5/4 90

Pivot Step 2
The second iteration involves selecting X2 to enter the basis and X1 to leave the basis, with a
pivot element of 3/4

Tableau After Pivot Step 2

Table 3 Cj 5 4 0 0

Cb Base X1 X2 S1 S2 R

0 S1 1/3 0 1 -2/3 12

4 X2 4/3 1 0 1/3 24

Z 1/3 0 0 4/3 96

Final Tableau

Optimal Solution

• X1= 0
• X2= 24
• S1=12
• S2=0
• Z = 96

Therefore, the optimal solution is to produce 4 units of Product A and 2 units of Product B,
which yields a maximum profit of 120 Birr.

4. Dual Problem
the dual problem’s objective function is Minimize: W = 60X1 + 72X2 and its constraints are:

• 3X1 + 4X2 ≥ 5

• 2X1 + 3X2 ≥ 4

• X1, X2 ≥ 0

Objective Function:

Minimize: Z = 0X1 + 0X2 + 0S1 + 0S2 + 1A1 + 1A2

3X1 + 4X2 - 1S1 + 0S2 + 1A1 + 0A2 = 5

Solution

Initial Table - Phase I

T abl e 1 Cj 0 0 0 0 1 1

Cb B ase X1 X2 S1 S2 A1 A2 R

1 A1 3 4 -1 0 1 0 5

1 A2 2 3 0 -1 0 1 4

Z 5 7 -1 -1 0 0 9

Enter the variable X2 and the variable A1 leaves the base. The pivot element is 4
Iteration 1

T abl e 2 Cj 0 0 0 0 1 1

Cb B ase X1 X2 S1 S2 A1 A2 R

0 X2 3/4 1 -1/4 0 1/4 0 5/4

1 A2 -1/4 0 3/4 -1 -3/4 1 1/4

Enter the variable S1 and the variable A2 leaves the base. The pivot element is 3/4
Iteration 2

T abl e 3 Cj 0 0 0 0 1 1

Cb B ase X1 X2 S1 S2 A1 A2 R

0 X2 2/3 1 0 -1/3 0 1/3 4/3

0 S1 -1/3 0 1 -4/3 -1 4/3 1/3

Z 0 0 0 0 -1 -1 0

The iterations of the first phase are finished and there is some possible solution to the problem.
We eliminate the artificial variables and go to the second phase:

Initial Table - Phase II

T abl e 1 Cj 60 72 0 0

Cb B ase X1 X2 S1 S2 R

72 X2 2/3 1 0 -1/3 4/3

0 S1 -1/3 0 1 -4/3 1/3

Z -12 0 0 -24 96

The optimal solution is Z = 96

X1= 0, X2= 4/3, S1= 1/3, S2= 0

5a. Changes in Objective-Function Coefficients (cj) of the Optimal Basic Feasible Solution
The optimal solution provided is:
X1 = 0 (No units of Product A are produced)
X2 = 24 (24 units of Product B are produced)
S1 = 12 (12 hours of production time in Department A are unused)
S2 = 0 (All 72 hours of production time in Department B are utilized)
Z = 96 (Total profit in Birr)
Objective-function coefficients (cj) represent the contribution of each decision variable (in this
case, the profit earned per unit of Product A and Product B) towards the total objective function
(in this case, total profit).

Since the optimal solution shows that no units of Product A are produced (X1 = 0), the
coefficient for X1 is irrelevant. Therefore, a change in its value will not affect the optimal
solution.

For Product B (X2), the coefficient is 4 Birr. This means that for every unit of Product B
produced, the company earns 4 Birr. If the coefficient for X2 were to change, it would directly
impact the objective function and potentially lead to a different optimal solution.

5b. Effect of Discrete Change in the Availability of Resources from [60, 72] T to [70, 50] T

However, a discrete change in the availability of resources from [60, 72]T to [70, 50]T will
affect the optimal solution. The new optimal solution will be Z = 200/3

X1= 0, X2= 50/3, S1= 110/3, S2= 0