how will the final solution mix and total profit change? If additional resources. However in the real world. we assume complete certainty in the data and the relationships of a problem – namely prices are fixed. resources known. Available Resources – B FACTOR This task is alternatively called sensitivity analysis. Contribution rates for each variable – C FACTOR 2. Technological coefficients – A FACTOR 3. such as 10 labor hours or 3 hours of machine time. time needed to produce a unit exactly etc. conditions are seldom static i. will this change the problem’s answer? Such analyses are used to examine the effects of changes in these three areas: 1.e.e. should become available. How can such discrepancy be handled? For example if a firm realizes that profit per unit is not Rs 5 as estimated but instead closer to Rs 5. Sensitivity analysis often involves a series of what if? questions.SENSITIVITY ANALYSIS The solution obtained by simplex or graphical method of LP is based on deterministic assumptions i. What if the profit of product 1 increases by 10%? What if less money is available in advertising budget constraints? What if new technology will allow a product to be wired in one-third the time it used to take? So we can see that sensitivity analysis can be used to deal not only with errors in estimating input parameters to the LP model but also with management’s experiments with possible future changes in the firm that may affect profits. It is also called as post optimality analysis.5. they are dynamic. .

0. 0. 0. after an LP problem has been solved. 120.e. 1.25 0. 0. 0. Its LP Formulation is: MAXIMIZE PROFIT = $50X1 + $120X2 Subject to : 2X1 + 4X2 <= 80 (hour’s of electrician’s time available) 3X1 + 1 X2 <= 60 (hours of audio technician’s time available) 1) ITERATIONS: Sensitivity Analysis Solution Cj Iteration 1 0 0 slack 1 slack 2 zj cj-zj Iteration 2 120 0 Stereo Players slack 2 zj cj-zj 0. -30.There are two approaches to determining how sensitive an optimal solution is to changes. 1. 40. 0. 1. -10.5 2. 20. 3. 0. 1. .5 60. -0. 60. Basic Variables 50 CD Players 120 0 0 Stereo slack slack Quantity Players 1 2 0. 4. 30.25 120. 80. 2.400. 0. 0. 0. 0. 50. The first is simply a trial and error approach. Consider an example of ABC Sound Company that makes CD players (called X1’s) and stereo players (called X2’s). 0. 0. This is illustrated by the following example. 1. This is done without resolving the whole problem again. 2. however we prefer the second approach of post optimality method i. and we attempt to determine a range of changes in problem parameters that will not affect the optimal solution or change the variables in the solution.

Infinity Upper Bound Variable CD Players Stereo Players Constraint Value 0.2) LINEAR PROGRAMMING RESULTS: Sensitivity Analysis Solution CD Players Maximize Electrician Hrs Audio Tech Hours Solution-> 3) SOLUTION LIST: Sensitivity Analysis Solution Variable CD Players Stereo Players slack 1 slack 2 Optimal Value (Z) Status NON Basic Basic NON Basic Basic Value 0. 40. Lower Bound Upper Bound 60. 0. 2. Original Val Lower Bound -Infinity 100. 50. 60. 3. 20. 4. 30. 2. 20. 0. 120. 0.400. Dual Slack/Surplus Value . Original Value 50. Stereo Players 120. 0. 1. 20. 2. RHS Dual 4) RANGE: Sensitivity Analysis Solution Reduced Cost 10.400. <= <= 80.

240.  Does not affect profit. 20. 0. A change in C-Factor will affect the Cj-Zj values of all non basic variables .50 and its Zj value is Rs. The answer lies in Cj-Zj row of Iterations table.60. or does not increase by Rs. the current solution is optimal as long as the profit per CD does not exceed Rs. Infinity ANALYSES OF EFFECT OF CHANGE IN C-FACTOR: 1) For Non-Basic Objective Function co-efficient: Our objective is to find out how sensitive problem’s optimal solution is to changes in the C-Factors not in the basis. In other words any change in the C-Factor for NonBasic Objective Function co-efficient:  Affects only coefficient in the Cj-Zj row under the column of the variable whose objective coefficient is being changed.0 to Rs. Now Cj-Zj <= 0 is same as Cj <= Zj.Electrician Hrs Audio Tech Hours 30. 60. the basis will not change unless the Cj-Zj value of one of the non basic variables becomes positive. Similarly the C-Factor for S1 (per hour of electrician’s time) may increase from Rs.10. 40. 80. Since X1’s Cj value is Rs. 2) For Basic Objective function co-efficient: Let us consider changing the C-Factor of stereo players by Δ.60. 0. Since this is a maximization problem. the current solution will be optimal as long as all numbers in the bottom row are less than or equal to zero.30 without changing the current solution mix. That is. 0.

4.5 2. In other words any change in the C-Factor for Basic Objective function co-efficient:  Affects only the coefficients in the Zj row and Zj-Cj row under the columns of the non basic variables. S1 will not enter the basis unless the C-Factor drops from Rs. 0.) Sensitivity Analysis Solution Cj Iteration 1 0 0 slack 1 slack 2 zj cj-zj Iteration 2 120 + Δ 0 Stereo Players slack 2 zj 0.25 30 + ¼ Δ. 0. 3. 0. 2. 40.because this Cj is not only in Cj row but Cj column. 80. This then impacts the Zj row. 0. 2. This implies that S1 is less sensitive to change than X1. 0. 0. 1. The revised profit = (Profit before change + Δ * coefficient in the constraint row of the variable whose objective function is being changed. 0. 1. 120 + Δ. 120 + Δ.  Affects Profit. When we examine the S1 column in the table below: -30 – ¼ Δ <= 0 -30 <= ¼ Δ -120 <= Δ or Δ >= -120. 1.400 + 20 Δ. 50. 1. 0. 0.5 60 + ½ Δ. 0. Basic Variables 50 CD Players 120 + Δ 0 0 Stereo slack Quantity slack 1 Players 2 .120 to 0. 0. 60. 20. 1.25 -0. 0. 0.

e. Quantity S1 RATIO 20 1/4 20/(1/4) = 80 40 -1/4 40/(1/4) = -160 From the above table it’s clear that we can decrease the electrician’s time resource by 80 hours i. 0. RIGHT HAND SIDE RANGING.cj-zj -10.e. If it is increased by a value beyond this range say Δ it will:  Affect the values in the solution column of the optimal simplex tableau. 0.½ Δ. In this case the Cj-Zj row’s S1 Column is (-30) which suggests that the additional cost of one electrician hour should not exceed Rs.e. So let’s determine the range of shadow prices i. the value of one additional unit of a scarce resource which provides important economic information. to 0 hours or increase it by 160 hours i. ANALYSES OF EFFECT OF CHANGE IN B-FACTOR: This leads us to the concept of shadow price i. it suggests that the audio technician hours are under utilized. Similarly since Cj-Zj row’s S2 column is 0. -30 – ¼ Δ. Now we cannot add an unlimited number of units of resources without eventually violating one of the problem’s constraints.e. to 240 hours without affecting the current solution’s mix. .30. The negative of the numbers in the Cj-Zj row’s slack variable columns are the shadow prices.

The revised profit = (Profit before change + Δ * corresponding element in the Zj row and Cj-Zj row under the column of slack variable of the resource whose availability is changed. Affect the profit.) .

 INTRODUCTION TO OPERATIONS RESEARCH BYHILIER & LIEBERMAN . Taha (University of Arkansas. Fayetteville).REFERENCES:  Operations Research An Introduction BY.  Operations Research BY-Richard Bronson & Govindasami Naadimuthu.Hamdy A.

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