The Bluegrass Distillery produces custom-blended whiskey. A particular blend consists of rye and bourbon whiskey.

The customer specified that the order must contain at least 40% rye and not more than 250 gallons of bourbon. The
one part bourbon. The distillery can produce 500 gallons per week, regardless of the blend. The production manage
The distillery company's cost per gallon is $3 for rye and $2 for bourbon. The company wants to determine the blen
a. Formulate and document a linear programming model for this problem. This includes identifying decision variabl
b. Solve the model using QM or Excel (but I’d recommend using QM).
c. What increase in the objective function coefficients in this model would change the optimal solution point? Expla
d. How much would it be worth to the distillery to obtain additional production capacity?
e. If the customer decided to change the blend requirement for its custom-made whiskey to a mix of three parts rye

The Bluegrass Distillery

Blend consist of Rye (X1) Bourbon (X2)

Resources
Usage Constraint Available

0.4 0.6 133.33 >= 0

specifications
Customers

1 0 166.67 <= 250

1 1 500 >= 400
1 1 500 <= 500
2 1 0 = 0

Part B Part A
Production
Rye 166.7 Objective --> maximize Z = 7(X1+X2)- (3X1+2X2)
Bourbon 333.3 where
Profit = 2333.3 Decision X1= Amount of Rye
Variables X2= Amount of Bourbon
subject to X2>= 0.4(X1+X2)
X1<= 250
Constraints

subject to X1+X2>=400
X1+X2<=500
2X1=X2
X1,X2 >=0

Optimal solution for custom-made whiskey to a mix of three parts rye to one part bourbon
Part E
Rye (X1) Bourbon (X2) Resources
Usage Constraint Available
 0.4 0.6 175.00 >= 0

specifications
Customers
1 0 125.00 <= 250
1 1 500 >= 400
1 1 500 <= 500
3 1 0 = 0

Objective --> maximize Z = 7(X1+X2)- (3X1+2X2)

Production where
Rye 125.0 Decision X1= Amount of Rye
Bourbon 375.0 Variables X2= Amount of Bourbon
Profit = 2375.0 subject to X2>= 0.4(X1+X2)
X1<= 250

Constraints
subject to X1+X2>=400
X1+X2<=500
3X1=X2
X1,X2 >=0
sts of rye and bourbon whiskey. The company has received an order for a minimum of 400 gallons of the custom blend.
han 250 gallons of bourbon. The customer also specified that the blend should be mixed in the ratio of two parts rye to
e blend. The production manager wants to complete the order in 1 week. The blend is sold for $7 per gallon.
ny wants to determine the blend mix that will meet customer requirements and maximize profits.
udes identifying decision variables, objective function, and constraints in standard form.

he optimal solution point? Explain your answer.

acity?
hiskey to a mix of three parts rye to one part bourbon, how would this change the optimal solution?

Profit per
gallon of
blend $7
Left Over Cost of Rye $3
Cost of
-133.3333333 Bourbon $2
83.33333333
-100
0
0 Part C

Please see Q2-Sensitivity spreadsheet for objective function

coefficients in this model that would change the optimal solution
point.Values in the “Allowable Increase” and “Allowable Decrease”
columns for the Changing Cells indicate the amounts by which an
objective function coefficient can change without changing the
optimal solution, assuming all other coefficients remain constant.

Part D

parts rye to one part bourbon
Left Over
Shadow price would be the amout that will show how much it
worths to the distillery to obtain additional production capacity.
Please see Q2-Sensitivity spreadsheet for the shadow prices for two
binding constraints which are ;
1) Blend should be mixed in the ratio of two parts rye to
one part bourbon
2)The distillery can produce 500 gallons per week,
regardless of the blend ( X1+X2<=500 and 2X1=X2 )
 -175
125
-100
0
0

1+X2)- (3X1+2X2)

mount of Rye
mount of Bourbon
2>= 0.4(X1+X2)
ns of the custom blend.
ratio of two parts rye to
7 per gallon.
ts.

tion?
Microsoft Excel 14.3 Sensitivity Report
Worksheet: [AEM805_M2.xlsx]Question 2
Report Created: 9/6/2015 4:50:21 PM

Variable Cells
Final Reduced Objective Allowable
Cell Name Value Cost Coefficient Increase
$B$14 Rye Customers166.6666667 0 4 1E+030
$B$15 Bourbon Custo
333.3333333 0 5 1E+030

Constraints
Final Shadow Constraint Allowable
Cell Name Value Price R.H. Side Increase
$E$10 Usage 0 -0.33333333 0 250
$E$6 Customers spe133.3333333 0 0 133.3333333
$E$7 Usage 166.6666667 0 250 1E+030
$E$8 Usage 500 0 400 100
$E$9 Usage 500 4.666666667 500 250
 Allowable
Decrease
14
7

Allowable
Decrease
500
1E+030
83.33333333
1E+030
100
Worksheet: [AEM805_M2.xlsx]Question 2
Report Created: 9/6/2015 4:50:25 PM

Objective
Cell Name Value
$B$16 Profit = Customers specifications 2333.3

Variable
Cell Name Value
$B$14 Rye Customers specifications 166.7
$B$15 Bourbon Customers specifications 333.3
Lower Objective Upper Objective
Limit Result Limit Result
166.7 2333.3 166.7 2333.3
333.3 2333.3 333.3 2333.3
 Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Solve Without Integer

Objective Cell (Max)

Cell Name Original Value Final Value
$B$16 Profit = Customers specifications 2333.3 2333.3

Variable Cells
Cell Name Original Value Final Value
$B$14 Rye Customers specifications 166.7 166.7
$B$15 Bourbon Customers specifications 333.3 333.3

Constraints
Cell Name Cell Value Formula
$E$10 Usage 0 $E$10=$G$10
$E$6 Customers specifications Usage 133.33 $E$6>=$G$6
$E$7 Usage 166.67 $E$7<=$G$7
$E$8 Usage 500 $E$8>=$G$8
$E$9 Usage 500 $E$9<=$G$9
nce 1%, Solve Without Integer Constraints, Assume NonNegative

Integer
Contin
Contin

Status Slack
Binding 0
Not Binding 133.33
Not Binding 83.33333333
Not Binding 100
Binding 0