Q4

1.
Interpretation of Answer Report :-
The company should produce 514 units of Painting Packets and 437 units of
Glazing Packets. The decimal values of 514.28 and 437.14 are rounded off to
integer value because units produced cannot be in decimals.
With this decision the company can maximize the Revenue(objective function)
up to Rs. 47957.14
2.
For this decision total requirement of Printing time would be 2160 minutes.
Since Slack value is zero which shows status is binding/ tight. This means all
the available Printing time has been consumed/used at optimal.
For this decision total requirement of Collating time would be 1800 minutes .
Since Slack value is zero which shows status is binding. This means that all the
available Collating time has been consumed at optimal.
Slack = Units produced – RHS
The company can maximize the revenue by producing 514.28 units of Printing
packets. The slack status is not binding and value is 114.28 units which shows
that 114.28 units are produced above the lower demand limit of 400.
The company can maximize the revenue by producing 437.14 units of Glazing
packets. The slack status is not binding and value is 137.14 units which shows
that 137.14 units are produced above the lower demand limit of 300.
3.
Cell Value - Shows how much of each constraint is
being used up at the optimal solution. For a binding
constraint this will be equal to the RHS. For a
non-binding constraint the formula is RHS-Slack.
Status - Tells whether a constraint is binding or not.
A binding constraint is one that has all of its
resources used up. A non-binding constraint’s
resources are not all being used.
Slack - Shows how much excess resources we have
for each constraint. A binding constraint will have
slack of “0”. Slack = RHS - Resources Used
ANSWER REPORT
SENSITIVITY REPORT
Adjustible Cells - Final Value - Same as above.
Reduced Cost - For any adjustible cell that has a final
value that is NOT “0”, the reduced cost will be “0”.
Otherwise Reduced Cost is equal to -(A. Increase).
Objective Coefficient - The coefficient attached to
each variable in the optimization function.
Allowable Increase/Decrease - Shows the range in
which the shadow price and opt. solution remain
valid for the coefficients in the optimization function
and the RHS of a constraint. For a non-binding
constraint the allowable increase is infinity and the
allowable decrease is equal to the slack.
Constraint - Final Value - Tells us how much of each
constraint is being used up at the optimal solution.
Shadow Price - shows a how a 1 unit increase or
decrease will affect the maximized profit or
minimized cost. The shadow price for a
non-binding constraint is “0”
Cell Value - Shows how much of each constraint is
being used up at the optimal solution. For a binding
constraint this will be equal to the RHS. For a
non-binding constraint the formula is RHS-Slack.
Status - Tells whether a constraint is binding or not.
A binding constraint is one that has all of its
resources used up. A non-binding constraint’s
resources are not all being used.
Slack - Shows how much excess resources we have
for each constraint. A binding constraint will have
slack of “0”. Slack = RHS - Resources Used
ANSWER REPORT
SENSITIVITY REPORT
Adjustible Cells - Final Value - Same as above.
Reduced Cost - For any adjustible cell that has a final
value that is NOT “0”, the reduced cost will be “0”.
Otherwise Reduced Cost is equal to -(A. Increase).
Objective Coefficient - The coefficient attached to
each variable in the optimization function.
Allowable Increase/Decrease - Shows the range in
which the shadow price and opt. solution remain
valid for the coefficients in the optimization function
and the RHS of a constraint. For a non-binding
constraint the allowable increase is infinity and the
allowable decrease is equal to the slack.
Constraint - Final Value - Tells us how much of each
constraint is being used up at the optimal solution.
Shadow Price - shows a how a 1 unit increase or
decrease will affect the maximized profit or
minimized cost. The shadow price for a
non-binding constraint is “0”
Cell Value - Shows how much of each constraint is
being used up at the optimal solution. For a binding
constraint this will be equal to the RHS. For a
non-binding constraint the formula is RHS-Slack.
Status - Tells whether a constraint is binding or not.
A binding constraint is one that has all of its
resources used up. A non-binding constraint’s
resources are not all being used.
Slack - Shows how much excess resources we have
for each constraint. A binding constraint will have
slack of “0”. Slack = RHS - Resources Used
SENSITIVITY REPORT
VARIABLE CELLS

Allowable range of Selling Price per unit of Painting packet =

(55 – 14.5 , 55 + 1.25) or (40.5, 56.25)

Allowable range of Selling Price per unit of Glazing packet =

(45 – 16.11 , 45+1 ) or (28.89 , 46 )

If the Selling Price per unit of Painting packet is in this range (40.5, 56.25) and
Selling Price per unit of Glazing packet is constant at Rs 45 (assumed that rest
maintain their initial values) then in that case the optimal solution remains same i.e.
514.28 & 437.14 units.

If the Selling Price per unit of Glazing packet is in this range (28.89 , 46 ) and
Selling Price per unit of Painting packet is constant at Rs 55 (assumed that rest
maintain their initial values) then in that case the optimal solution remains same i.e.
514.28 & 437.14 units.

Painting packet insensitivity range difference = 56.25 - 40.5 = 15.75

Glazing packet insensitivity range difference = 46 – 28.89 = 17.11

The range difference for Painting packet is low so we cannot compromise on that &
it needs to be monitored carefully.

CONSTRAINTS
Allowable range for constraint 1 = (2160+106.66, 2160-80) = (2266.66 , 2080)
Allowable range for constraint 2 = (1800+80, 1800-76.8) = (1880 , 1723.20 )
Allowable range for constraint 3 = (400+114.28, - infinity) = ( 514.28 , - infinity)
Allowable range for constraint 4 = (300+137.14, - infinity) = ( 437.14 , - infinity)

Shadow Price gives rate of change in objective function for unit change in right
hand side availability.
Shadow price is only applicable in the allowable range of Right hand side
availabilty.
Since that the shadow price of Constraint 3 and 4 is 0, this means that any
change in the allowable range will not affect the objective function and also
maintains optimal solution.
But in case of Constraints 1 and 2 it is different for e.g., Constraint 1 increases RHS
in one unit, moving from 2160 to 2161 units then the objective function Revenue
value will increase to : 47957.14 + (2161 - 2160 ) *(20.71) = Rs 47977.85.

We cannot comment on the Revenue if the values are outside the allowable range.

4.
Constraint R.H side for collation is 1800 and the upper limit is 1880. If the
company hire a collation agent who charges Rs 100 per hour then the time of
collation becomes 1860 and because of the shadow price the profit becomes Rs
47957.14 + Rs 106.8= Rs 48063.94 and deducting the agent charge the final
profit becomes Rs 47963.94 which is higher than the optimum profit. So, the
company should hire the collation agent.
5.
The company should arrange the printing resource because its shadow price is
maximum which means if the constraint R.H side is increased by 1 unit
Revenue (objective funcation) will increase by 20.71 unit provided the
constraint R.H side should remain in allowable range.