Quiz-1 (XPGDM-2020)

Total – 20 points

Aunt Sima operates a small business: she produces seasonal ceramic objects to sell to tourists.
For the upcoming season, she is planning to make baskets, eggs, and rabbits. Based on your
discussion with your aunt you construct the following table:

Based on the information in the table, you formulate the problem as a linear program.
B = number of baskets produced
E = number of eggs produced
R = number of rabbits produced

Max z = 2.5B + 1.5E + 2R

s.t.
0.5B + 0.333E + 0.25R ≤ 20
B + E + R ≤ 50
0.25B + 0.333E + 0.75R ≤ 80

This formulation was solved in Excel. The sensitivity report of the solution is shown below.

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$2 Baskets 30 0 2.5 1.5 0.5
$B$3 Eggs 0 -0.666 1.5 0.666 1E+30
$B$4 Rabbits 20 0 2 0.5 0.75

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$5 Mix/Mold 20 2 20 5 7.5
$E$5 Kiln 50 1.5 50 30 10
$F$5 Paint & Seal 22.5 0 80 1E+30 57.5
Based on the sensitivity report answer the following questions. Treat each question as independent of
each other, unless otherwise mentioned explicitly.

A) What would be Aunt Sima’s total profit for the season? (1)

30 x 2.5 + 20 x 2 = 115$

B) By how much should the profit from eggs increase for us to start producing eggs? (1.5)

Eggs – Non-basic variable

Reduced Cost = -0.666

Profit from eggs has to increase by at least 0.666$

C) Neighbor aunty Sheela offers you 10 units of Kiln capacity, at $0.5/hour. Would you take up (3.5)
this offer? If yes, what would be the net increase in overall profit?

What would be the quantities produced (baskets, egg, rabbits) in this case?

Allowable increase in Kiln = 30.

Additional capacity offered is within this allowable increase.
Hence, the sensitivity table can be used.

Offer is at $0.5/hr. Gain per hour in profit from Kiln capacity is shadow price of the constraint,
i.e, $1.5. Hence, the offer can be taken up.

Net increase in profit = 10 x (1.5 – 0.5) = 10$

The new constraints would be

0.5B + 0.25R = 20
B + R = 60

B + 0.5 R = 40
B + R = 60

0.5R = 20, R = 40
B = 20

D) Neighbor Aunty Jaya also offers her skills of painting and sealing, at just $0.1/hr. Would you (1.5)
take up this offer?

Painting and sealing is not a binding constraint. Aunt Sima already has a surplus capacity of
57.5 hours. So, the offer is not useful.

E) By how much can the profit per unit from baskets reduce, without affecting your current (1)
decision to produce baskets?

Allowable decrease for coefficient of Baskets in objective function is 0.5. Hence, the profit per
unit from baskets can go down to (2.5 – 0.5) = 2$, before we reconsider producing baskets.
F) Unforeseen events have reduced the available mix/mold capacity to only 15 pounds. What (3.5)
would be the impact of this on the overall profit and production?

Mix/mold capacity decrease is 5 pounds. This is within allowable decrease of 7.5 pounds.
Hence, we can use the table.

Impact in profit would be a reduction in profit by 2$ x 5 = 10$

This change would be due to change in production quantities, dictated by the change in RHS of
the mix/mold constraint

0.5B + 0.25R = 15
B + R = 50

B + 0.5R = 30
B + R = 50

0.5R = 20, R = 40
B = 10

G) Continuing with part (F), your aunt has promised 15 baskets to a souvenir store. Would she be (4)
able to meet the promise? If no, what is the minimum amount of mix/mold that she must
urgently acquire to be able to meet the demand? Do remember that all resources must be used
optimally

Shortfall in baskets is 5 units. She can’t meet the promise given the current situation. We need
to determine the value of x (amount of mix/mold to urgently acquire), such that B is atleast 15.

0.5B + 0.25R = 15 + x
B + R = 50

The Kiln capacity remains unchanged. So, if we have to make 15 baskets, we need to make
lesser number of rabbits, dictated by kiln capacity

R = 50 – 15 = 35

To, make 15 baskets and 35 rabbits, we need

0.5 x 15 + 0.25 x 35 = 16.25 pounds of mix/mold

So, we need to urgently acquire 1.25 pounds of mix/mold.

H) Your aunt expects to lose 5 units of capacity in the Kiln. What would be the impact on Aunt (2.5)
Sima’s profits due to this? What would be the new production numbers?

Allowable decrease in kiln capacity is 10 units. The decrease expected is 5 units. So, we can use
the sensitivity table.
 Impact on profit would be a reduction of 1.5$ x 5 = 7.5$

This impact would be due to change in production numbers

0.5B + 0.25R = 20
B + R = 45

B + 0.5R = 40
B + R = 45

0.5R = 5, R = 10
B = 35

I) If your aunt were to lose 15 units of capacity in the Kiln, what would be the impact on Aunt (1.5)
Sima’s profits?

The decrease expected is more than the allowable decrease of 10 units. There would definitely
be a reduction in profit. But to compute the same, we would need to resolve the formulation
with the change in kiln capacity.