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Chapter 4: Q10.

Zippy motorcycle manufacturing produces two popular pocket bikes: Razor and Zoomer. In the coming

week, the manufacturer wants to produce up to 700 bikes and wants to ensure the number of Razors

produced does not exceed the number of Zoomers by more than 300. Each Razor can be sold for a $70

profit, while each Zoomer can be sold for a profit of $40. Each Razors trim requires 2 pounds of

polymer and 3 hours of production time, while each Zoomer requires 1 pound of polymer and 4 hours of

production time. Assume that 900 pounds of polymer and 2,400 labor hours are available for production

in the coming week.

1. Formulate an LP model for this problem.

2. Use Solver to create Sensitivity Report to answer the following questions:

a. If the profit on Razors decreased to $35, would the optimal solution change?

b. If the profit on Zoomers decreased to $30, would the optimal solution change?

c. Interpret the shadow price for the supply of polymer.

d. Why is the shadow price $0 for the constraint limiting the production of bikes to be no more than

700 units?

e. Suppose the company could obtain 300 additional labor hours in production. What would the new

optimal profit be?

f. Suppose the marginal profit on Razors decreases by $10. What is the maximum profit that can be

earned on Zoomers without changing the optimal solution?

g. Suppose the amount of production time required on Razors is increased to 4 hours. Does this

change the optimal solution? Why and why not?

ANS:

1. Define R = number of Razors produced,

Z = number of Zoomers produced

MAX 70 R + 40 Z

ST

2 R + 1 Z 900 (Polymer)

3 R + 4 Z 2400 (Production hour)

R + Z 700

R Z 300

R, Z 0

2.

Adjustable Cells

Cell

Name

Final

Reduced

Objective

Allowable

Allowable

Value

Cost

Coefficient

Increase

Decrease

$C$5

Razors

240

70

10

40

$D$5

Zoomers

420

40

53.33

Constraints

Cell

Name

$E$9

Polymer Used

$E$10

$E$11

$E$12

Final

Shadow

Constraint

Allowable

Allowable

Value

Price

R.H. Side

Increase

Decrease

900

32

900

200

300

2400

660

2400

200

800

700

1E+30

40

-180

300

1E+30

480

b. Yes. The decrease of $10 is more than the allowable decrease of 5. The optimal solution would

change.

c. Each additional unit of polymer (up to 200) would increase profit by $32, each unit decrease of

polymer (up to 300) would decrease profit by $32.

d. This is a non-binding constraint. The optimal solution is 40 units below the constraint so

increasing the constraint would not change the solution or allow for additional profit.

e. The allowable increase on the shadow price for labor is 200 units. So we cant say what profit

would result from a 300 unit increase in lable without resolving the problem.

f. Let X = the increase in the price of Zoomer. We can be sure the optimal solution will not

change as long as 10/40 + X/53.33 < 1 or X < 40. So the maximum profit on Zoomers would

be $40+$40 = $80.

g. The new reduced cost on Razors would be 70 (232+24 )= -2. Thus, it would be

unprofitable to produce Razors in the new optimal solution. Thus, the optimal solution would

change.

Chapter 4: Q11

Electro-Poly is a leading maker of slip-rings. A $750,000 order has just been received for three types of

slip rings. The company has 10,000 hours of wiring capacity and 5,000 hours of harnessing capacity.

The per-unit cost to make and cost to buy as well as the resource requirements for making the three

models are summarized the following table. Electro-Poly wants to determine the number of slip rings to

make and the number to buy in order to fill the customer order at the least possible cost. For more

details, please refer to Electro-Polys make vs. buy problem in Section 3.9 of Chapter 3.

Model 1

Model 2

Model 3

Number ordered

3,000

2,000

900

Hours of wiring/unit

2

1.5

3

Hours of harnessing/unit 1

2

1

Cost to Make

$50

$83

$130

Cost to Buy

$61

$97

$145

Create a sensitivity report for this problem, and answer the following questions:

a. Is the solution degenerate?

b. How much can the cost of making model 1 slip rings increase before it becomes more

economical to buy some of them?

c. Suppose the cost of making model 2 slip rings decreases by $9 per unit. Would the optimal

solution change?

d. Assume workers in the wiring area normally make $12 per hour and get 50% more when they

work overtime. Should Electro-Poly schedule these employees to work overtime to complete

this job? If so, how much money would this save?

e. Assume workers in the harnessing area normally make $12 per hour and get 50% more when

they work overtime. Should Electro-Poly schedule these employees to work overtime to

complete this job? If so, how much money would this save?

Adjustable Cells

Cell

$B$6

$C$6

$D$6

$B$7

$C$7

$D$7

Constraints

Name

- Make Model 1

- Make Model 2

- Make Model 3

- Buy Model 1

- Buy Model 2

- Buy Model 3

Final

Value

3,000

550

900

0

1,450

0

Cell

$B$13

$C$13

$D$13

$E$17

$E$18

Name

# Available Model 1

# Available Model 2

# Available Model 3

- Wiring Used

- Harnessing Used

Final

Value

3,000

2,000

900

9,525

5,000

Reduced

Cost

0.00

0.00

0.00

4.00

0.00

8.00

Objective

Coefficient

50

83

130

61

97

145

Allowable

Increase

4

14

8

1E+30

8

1E+30

Allowable

Decrease

57

8

137

4

14

8

Shadow

Price

57.00

97.00

137.00

0.00

-7.00

Constraint

R.H. Side

3000

2000

900

10000

5000

Allowable

Increase

380

1E+30

211.1111

1E+30

633.3333

Allowable

Decrease

2900

1450

900

475

1100

ANS:

a. No. None of the Allowable Increase and Allowable Decrease Columns of the RHS value of the

resources constraint is zero.

b. The cost of making model 1 slip rings can increase by $4 without changing the solution.

c. Yes. The allowable decrease on the objective coefficient for making model 2 slip rings is $8.

d. No. There is presently a surplus of 475 hours in the wiring department. Overtime would only

add to this surplus.

e. Yes. Harnessing represents a binding constraint with a shadow price of -$7. Each additional

unit of this resource (up to 633.33) will reduce costs by $7. Since workers are paid an additional

$6 per hour for overtime, the company could save $633.33.

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