Solved Problem:

Problem #1
The computerized solution of a given problem is given below:

Sensitivity Analysis: Objective function:

Variable Final Reduced Objective Allowable Allowable

Value Cost Coefficient Increase Decrease
M 25 0 90 1E+30 6
B 425 0 84 6 34
R 150 0 70 17 1E+30
D 0 -45 60 45 1E+30

Sensitivity Analysis: Right hand side:

Constraints Final Shadow Constraint Allowable Allowable

Value Price R.H. Side Increase Decrease
1 5000 3 5000 850 50
2 1775 0 1800 1E+30 25
3 600 60 600 3.571428571 85
4 150 -17 150 50 150

Answer the following questions:

a) Should manager increase the capacity of resource 1 (Resource 1 cost is sunk cost) by 100 units if the
cost of such a change is Tk. 200? Why or why not?
b) What will be the change in objective value if resource 1 is increased by 1000 units?
c) If management wants to increase resource, which resource will get the priority, considering enough
money is available? Why or why not?
d) The Price of 1 unit of product D is Tk. 90. What should the product sell for in order to be included in
the solution?
e) Which constraints are fully utilized? What is the utilization (in percent) of resource 2?
f) Whether there will be a change or not in the optimum solution, if the profit of 1 unit of product M is
Tk. 80? Tk. 110?

Solution:
a) The allowable increase of resource 1 is up to 850 from its current level and shadow price (Unit worth
of resource) for per unit increase is 3. So increasing resource 1 by 100 units will contribute 3X100 = Tk.
300 to the profit at a cost of Tk. 200 only. So management should increase the capacity of resource 1 by
100 units.

b) The allowable increase of resource 1 is up to 850 from its current level. So increasing this resource by
1000 units will make the resource abundant. So contribution to profit for such a change will be 850X3=
Tk. 2550.

c) If fund is available, then we should go for increasing the resource that will contribute the most to the
total profit.
Resource 1: 850X3= Tk. 2550
Resource 2: 3.571428571X60= Tk. 214.29. Here, resource 1 will be the choice.

If fund is not sufficient, then we should go for increasing the resource that will contribute the most on
per taka basis. (Contribution/Cost)

d) The product should sell for Tk.(90 + 45) = Tk. 135 in order to be included in the optimum solution.
Product D is a non basic variable in the optimum solution. Its reduce cost -45.00 indicates that it has less
contribution to the profit by Tk.45.00. So selling price should be increased by Tk. 45.00.

e) Resource 1, 3 and 4 are fully utilized. (These 3 resources have shadow price other than zero)
The utilization of resource 2 is 1775/1800 = 98.61%.

f) The profit range of M within which current solution will remain optimum is:
Upper limit: Infinity to Lower limit: 90-6 = 84.
So, when profit will change to Tk. 110, current solution will remain optimum. But when profit will change
to Tk. 80, current solution will change (since it is outside the range).
Problem#2

Tucker Inc. produces high-quality suits and sport coats for men. Each suit requires 1.2
hours of cutting time and 0.7 hours of sewing time, uses 6 yards of material, and provides
a profit contribution of $190. Each sport coat requires 0.8 hours of cutting time and 0.6
hours of sewing time, uses 4 yards of material, and provides a profit contribution of $150.
For the coming week, 200 hours of cutting time, 180 hours of sewing time, and 1200 yards
of fabric are available. Additional cutting and sewing time can be obtained by scheduling
overtime for these operations. Each hour of overtime for the cutting operation increases the
hourly cost by $15, and each hour of overtime for the sewing operation increases the
hourly cost by $10. A maximum of 100 hours of overtime can be scheduled. Marketing
requirements specify a minimum production of 100 suits and 75 sport coats. Let

The computer solution is shown in the following Figure.

a. What is the optimal solution, and what is the total profit? What is the plan for the use of
overtime?

b. A price increase for suits is being considered that would result in a profit contribution of
$210 per suit. If this price increase is undertaken, how will the optimal solution change?

c. Discuss the need for additional material during the coming week. If a rush order for
material can be placed at the usual price plus an extra $8 per yard for handling, would you
recommend the company consider placing a rush order for material? What is the maximum
price Tucker would be willing to pay for an additional yard of material? How many
additional yards of material should Tucker consider ordering?

d. Suppose the minimum production requirement for suits is lowered to 75. Would this
change help or hurt profit? Explain.
 FIGURE THE SOLUTION FOR THE TUCKER INC. PROBLEM
Sensitivity Analysis: Objective function:

Reduce
Variable Final d Objective Allowable Allowable
Coefficien
Name Value Cost t Increase Decrease
S 100 0 190 35 1E+30
SC 150 0 150 1E+30 23.33333333
D1 40 0 -15 15 172.5
D2 0 -10 -10 10 1E+30

Sensitivity Analysis: Right hand side Sensitivity

Constraints Final Shadow Constraint Allowable Allowable

Value Price R.H. Side Increase Decrease
1 200 15 200 40 60
2 160 0 180 1E+30 20
133.333333
3 1200 34.5 1200 3 200
4 40 0 100 1E+30 60
5 100 -35 100 50 100
6 150 0 75 75 1E+30

ANSWER

a. The optimal solution calls for the production of 100 suits and 150 sport coats. Forty hours of cutting
overtime should be scheduled, and no hours of sewing overtime should be scheduled. The total profit is
$40,900. (190X100+150X150-40X15).

b. The objective coefficient range for suits shows and upper limit of $225. Thus, the optimal solution will
not change. But, the value of the optimal solution will increase by ($210-$190)100 = $2000. Thus, the
total profit becomes $42,990.

c. The slack for the material coefficient is 0. Because this is a binding constraint, Tucker should consider
ordering additional material. The dual price of $34.50 is the maximum extra cost per yard that should be
paid. Because the additional handling cost is only $8 per yard, Tucker should order additional material.
Note that the dual price of $34.50 is valid up to 1333.33 -1200 = 133.33 additional yards.

d. The dual price of -$35 for the minimum suit requirement constraint tells us that lowering the minimum
requirement by 25 suits will improve profit by $35(25) = $875.
Problem#3

The computer solution is shown in the following Figure.

a. What is the optimal solution, and what is the value of the objective function?

b. Which constraints are binding?

c. Which constraint shows extra capacity? How much?

d. If the profit for the deluxe model were increased to $150 per unit, would the optimal solution change?

e. Identify the range of optimality for each objective function coefficient.

f. Suppose the profit for the economy model is increased by $6 per unit, the profit for the standard model
is decreased by $2 per unit, and the profit for the deluxe model is increased by $4 per unit. What will the
new optimal solution be?

g. Identify the range of feasibility for the right-hand-side values.

h. If the number of fan motors available for production is increased by 100, will the dual value for that
constraint change? Explain.
FIGURE: THE SOLUTION FOR THE QUALITY AIR CONDITIONING PROBLEM

Sensitivity Analysis: Objective function:

Reduce Allowabl Allowabl
Variable Final d Objective e e
Valu Coefficien
Name e Cost t Increase Decrease
E 80 0 63 12 15.5
S 120 0 95 31 8
D 0 -24 135 24 1E+30

Sensitivity Analysis: Right hand side Sensitivity

Allowabl Allowabl
Constraints Final Shadow Constraint e e
Valu
e Price R.H. Side Increase Decrease
1 200 31 200 80 40
2 320 32 320 80 120
3 2080 0 2400 1E+30 320
Solution:

a. E = 80, S = 120, D = 0, Profit = $16,440.

b. Fan motors and cooling coils

c. Labor hours; 320 hours available.

d. Objective function coefficient range of optimality: No lower limit to 159 (135+24). Since $150 is in this range,
the optimal solution would not change.

e. Range of optimality:
E 47.5 to 75
S 87 to 126
D No lower limit to 159.
f.

g. Range of feasibility
Constraint 1 160 to 180
Constraint 2 200 to 400
Constraint 3 2080 to No Upper Limit

h. Yes, fan motors = 200 + 100 = 300 is outside the range of feasibility. The dual price will change.
Assignment:
Main Text: Page no 131 and onward

Problem no: 14, 15

Problem # 3

The Porsche Club of America sponsors driver education events that provide high performance
driving instruction on actual race tracks. Because safety is a primary consideration at such
events, many owners elect to install roll bars in their cars. Deegan Industries manufactures two
types of roll bars for Porsches. Model DRB is bolted to the car using existing holes in the car’s
frame. Model DRW is a heavier roll bar that must be welded to the car’s frame. Model DRB
requires 20 pounds of a special high alloy steel, 40 minutes of manufacturing time, and 60
minutes of assembly time. Model DRW requires 25 pounds of the special high alloy steel, 100
minutes of manufacturing time, and 40 minutes of assembly time. Deegan’s steel supplier
indicated that at most 40,000 pounds of the high-alloy steel will be available next quarter. In
addition, Deegan estimates that 2000 hours of manufacturing time and 1600 hours of assembly
time will be available next quarter. The profit contributions are $200 per unit for model DRB
and $280 per unit for model DRW. The linear programming model for this problem is as follows:

The computer solution is shown in the following Figure.

a. What are the optimal solution and the total profit contribution?

b. Another supplier offered to provide Deegan Industries with an additional 500 pounds of the
steel alloy at $2 per pound. Should Deegan purchase the additional pounds of the steel alloy?
Explain.

c. Deegan is considering using overtime to increase the available assembly time. What would
you advise Deegan to do regarding this option? Explain.

d. Because of increased competition, Deegan is considering reducing the price of model DRB
such that the new contribution to profit is $175 per unit. How would this change in price affect
the optimal solution? Explain.

e. If the available manufacturing time is increased by 500 hours, will the dual value for the
manufacturing time constraint change? Explain.
FIGURE THE SOLUTION FOR THE DEEGAN INDUSTRIES PROBLEM

Sensitivity Analysis: Objective function:

Reduce
Variable Final d Objective Allowable Allowable
Coefficien
Name Value Cost t Increase Decrease
DRB 1000 0 200 24 88
DRW 800 0 280 220 30

Sensitivity Analysis: Right hand side Sensitivity

Constraints Final Shadow Constraint Allowable Allowable
Value Price R.H. Side Increase Decrease
909.090909
1 40000 8.8 40000 1 10000
12000 5714.28571
2 0 0.6 120000 40000 4
3 92000 0 96000 1E+30 4000
Problem # 4
TJ’s, Inc., makes three nut mixes for sale to grocery chains located in the Southeast. The three mixes,
referred to as the Regular Mix, the Deluxe Mix, and the Holiday Mix, are made by mixing different
percentages of five types of nuts.
In preparation for the fall season, TJ’s has just purchased the following shipments of nuts at the prices
shown:

The Regular Mix consists of 15% almonds, 25% Brazil nuts, 25% filberts, 10% pecans, and 25% walnuts.
The Deluxe Mix consists of 20% of each type of nut, and the Holiday Mix consists of 25% almonds, 15%
Brazil nuts, 15% filberts, 25% pecans, and 20% walnuts.

TJ’s accountant analyzed the cost of packaging materials, sales price per pound, and so forth, and
determined that the profit contribution per pound is $1.65 for the Regular Mix, $2.00 for the Deluxe Mix,
and $2.25 for the Holiday Mix. These figures do not include the cost of specific types of nuts in the
different mixes because that cost can vary greatly in the commodity markets.
Customer orders already received are summarized here:
Type of Mix Orders (pounds)
Regular 10,000
Deluxe 3,000
Holiday 5,000

Because demand is running high, it is expected that TJ’s will receive many more orders than can be
satisfied.
TJ’s is committed to using the available nuts to maximize profit over the fall season; nuts not used will be
given to a local charity. Even if it is not profitable to do so, TJ’s president indicated that the orders
already received must be satisfied.

Managerial Report
Perform an analysis of TJ’s product-mix problem, and prepare a report for TJ’s president that summarizes
your findings. Be sure to include information and analysis on the following:
1. The cost per pound of the nuts included in the Regular, Deluxe, and Holiday mixes.
2. The optimal product mix and the total profit contribution.
3. Recommendations regarding how the total profit contribution can be increased if additional quantities
of nuts can be purchased.
4. A recommendation as to whether TJ’s should purchase an additional 1000 pounds of almonds for
$1000 from a supplier who overbought.
5. Recommendations on how profit contribution could be increased (if at all) if TJ’s does not satisfy all
existing orders.

Try to formulate the problem first. If you can’t formulate, then look through the model provided below.
Solve it by excel and based on sensitivity report, answer the above question.
Model Formulation:
Microsoft Excel 15.0 Sensitivity Report
Worksheet: [Book1]Sheet1
Report Created: 11/3/2018 10:52:31 AM

Variable Cells
Reduce
Final d Objective Allowable Allowable
Nam Coefficien
Cell e Value Cost t Increase Decrease
1750
$A$2 R 0 0 1.65 0.35 0.15
1062 0.10769230
$B$2 D 5 0 2 0.2 8
$C$2 H 5000 0 2.25 0.175 1E+30

Constraints
Final Shadow Constraint Allowable Allowable
Nam
Cell e Value Price R.H. Side Increase Decrease
583.333333
$F$6 1 6000 8.5 6000 3 610
$F$7 2 7250 0 7500 1E+30 250
$F$8 3 7250 0 7500 1E+30 250
$F$9 4 5125 0 6000 1E+30 875
$F$1
0 5 7500 1.5 7500 250 750
$F$1 1750
1 6 0 0 10000 7500 1E+30
$F$1 1062
2 7 5 0 3000 7625 1E+30
$F$1 4692.30769
3 8 5000 -0.175 5000 2 5000