Module 3: Sensitivity Analysis and Interpretation of Solution

AEC 24: Summer SY 2020 – 2021

The parameters discussed in Module 2 were assumed to be known with certainty. These include the objective
function coefficients, model constraint quantity values, and constraint coefficients.

However, rarely does a manager know all these parameters exactly. In reality, the model parameters are simply
estimates or best guesses that are subject to change. Therefore, it is the interest of the manager to see what
effect a change in a parameter will have on the solution model. Changes may be either reactions to anticipated
uncertainties in the parameters or reactions to information.

Sensitivity Analysis
- Also called as Post-Optimality Analysis
- The analysis of the effect of parameter changes on the optimal solution;
- The study of how the changes in the coefficients of an optimization model affect the optimal solution
- Usually answers the questions:
1. How will a change in a coefficient of the objective function affect the optimal solution?
2. How will a change in the right-hand-side value for a constraint affect the optimal solution?
- The analysis does not begin until the optimal solution to the original linear programming problem has
been obtained
- The most obvious way to ascertain the effect of a change in the parameter of a model is to make the
change in the original model, re-solve the model, and compare the solution results with the original.

Changes in Objective Function Coefficients

The first model parameter change that we will analyze is the change in an objective function coefficient. We
will use the Bran Pottery Company example to illustrate this change.

Remember that the objective function of Bran Pottery Company was:

𝑀𝑎𝑥𝑖𝑚𝑖𝑧𝑒 𝑍 = 40𝑥1 + 50𝑥2

𝑆𝑢𝑏𝑗𝑒𝑐𝑡 𝑡𝑜
1𝑥1 + 2𝑥2 ≤ 40 ℎ𝑜𝑢𝑟𝑠 𝑜𝑓 𝑙𝑎𝑏𝑜𝑟
4𝑥1 + 3𝑥2 ≤ 120 𝑙𝑏𝑠. 𝑜𝑓 𝑐𝑙𝑎𝑦
𝑥1 , 𝑥2 ≥ 0

The graph presented below shows the optimal solution point is shown to be at point B where 𝑥1 =
24 𝑎𝑛𝑑 𝑥2 = 8, which is the last point the objective function, denoted by the dashed line, touches as it leaves
the feasible solution area.

What if the profit generated from producing bowls (𝑥1 ) change from P40.00 to P100.00? How would that affect
the solution identified in the graph presented above? The change is presented in the graph below.
Increasing the profit for a bowl from P40.00 to P100.00 makes the objective function line steeper, so much that
the optimal solution point changes from point B to point C.

Alternatively, if the profit generated from the mug (𝑥2 ) is increased from P50.00 to P100.00, the objective
function line would become flatter, to extent that point A would become optimal, with
𝑥1 = 0, 𝑥2 = 20, 𝑎𝑛𝑑 𝑍 = 2,000
This is illustrated in the graph below.

The objective of the sensitivity analysis in this case is to determine the range of values for a specific objective
function coefficient over which the optimal solution point, 𝑥1 𝑎𝑛𝑑 𝑥2 , will remain optimal.

For instance, the coefficient of 𝑥1 in the objective function is originally P40.00 but at some value greater than
P40.00, point C will become optimal, and at some value less than P40.00, point A will become optimal.

The focus of sensitivity analysis is to determine those two (2) values, referred as the Sensitivity Range for the
𝑥1 coefficient, which now will be designated as 𝑐1 . The sensitivity range for an objective function coefficient is
the range of values over which the current optimal solution point will remain optimal.

Consider the graph presented below as an example and let us determine the sensitivity range for the 𝑥1
coefficient.
 4
The slope of the objective function is currently at − 5, determined as follows:

𝑍 = 40𝑥1 + 50𝑥2
or
50𝑥2 = 𝑍 − 40𝑥1
and
𝑍 4𝑥1
𝑥2 = −
50 5

The objective function is now in the form of the equation of a straight line, 𝑦 = 𝑎 + 𝑏𝑥, where the intercept,
𝑍 4
a, equals 50 and the slope, b, is − 5.

4
If the slope of the objective function increases to − 3, the objective function line becomes exactly parallel to
the constraint line, 4𝑥1 + 3𝑥2 = 120 and point C becomes optimal (along with B). The slope of this constraint
4
line is − 3, so the question now is what objective function coefficient for 𝑥1 will make the objective function
4
slope equal to − 3?

The answer is determined as follows, where 𝑐1 is the objective function coefficient for 𝑥1 :
−𝑐1 −4
=
50 3

−3𝑐1 = −200

𝑐1 = 𝑃66.67

66.67 4
If the coefficient of 𝑥1 is 66.67, then the objective function will have a slope of − 50
or − 3, which is
illustrated in the graph below.
It has been determined that the upper limit of the sensitivity range for 𝑐1 , the 𝑥1 coefficient, is 66.67. So if
the profit of the bowl increases to exactly P66.67, the solution point will be both B and C. If the profit for a
bowl is more than P66.67, point C will be the optimal solution point.

The lower limit for the sensitivity range can be determined by observing the graph below.

4
In this case, if the objective function line slope decreases (becomes flatter) from − 5 to the same slope as the
constraint line 𝑥1 + 2𝑥2 = 40 then point A becomes optimal (along with B). The slope of this constraint line is
1 1 1
− 2, that is, 𝑥2 = 20 − (2)𝑥1 . In order to have an objective function slope of − 2, the profit for a bowl would
have to decrease to P25.00, as follows:
−𝑐1 −1
=
50 2

−2𝑐1 = −50

𝑐1 = 25

This is the lower limit of the sensitivity range for the 𝑥1 coefficient.

The complete sensitivity range for the 𝑥1 coefficient can be expressed as: 𝟐𝟓 ≤ 𝒄𝟏 ≤ 𝟔𝟔. 𝟔𝟕

The entire computation means that the profit for a bowl can vary anywhere between P25.00 and P66.67, and
the optimal solution point, 𝒙𝟏 = 𝟐𝟒 and 𝒙𝟐 = 𝟖 will not change. The total profit, Z, will change, depending
on whatever value 𝒄𝟏 actually is.

For the manager, this is useful information. Changing the production schedule in terms of how many items are
produced can have a number of ramifications in an operation. Packaging, logistical, and marketing
requirements for the product might need to be altered. However, with the preceding sensitivity range, the
manager knows how much the profit, and hence the selling price and costs, can be altered without resulting in
a change in production.

The same type of graphical analysis will provide the sensitivity range for the 𝑥2 objective function coefficient,
𝑐2 . The range is 𝟑𝟎 ≤ 𝒄𝟐 ≤ 𝟖𝟎.

This means that the profit for a mug can vary between P30.00 and P80.00, and the optimal solution point B,
will not change. However, for this case and range for 𝒄𝟏 , the sensitivity range generally applies only if one
coefficient is varied and the other held constant. Thus, when it is said the profit for mug can vary between
P30.00 and P80.00, this is only true if 𝒄𝟏 remains constant.

Simultaneous changes can be made in the objective function coefficients as long as the changes taken together
do not change the optimal solution point.

However, determining the effect of these simultaneous changes is overly complex and time-consuming using
graphical analysis. In fact, using graphical analysis is a tedious way to perform sensitivity analysis in general,
and it is impossible when the linear programming model contains three or more variables, thus requiring a
three-dimensional graph.
Let us take a look at one more aspect of the sensitivity ranges for objective function coefficients.

Recall that the model for our fertilizer minimization model is:

𝑀𝑖𝑛𝑖𝑚𝑖𝑧𝑒 𝑍 = 6𝑥1 + 3𝑥2

𝑆𝑢𝑏𝑗𝑒𝑐𝑡 𝑡𝑜:
2𝑥1 + 4𝑥2 ≥ 16 𝑙𝑏𝑠. 𝑜𝑓 𝑛𝑖𝑡𝑟𝑜𝑔𝑒𝑛
4𝑥1 + 3𝑥2 ≥ 24 𝑙𝑏𝑠. 𝑜𝑓 𝑝ℎ𝑜𝑠𝑝ℎ𝑎𝑡𝑒
𝑥1 , 𝑥2 ≥ 0

and the solution shown graphically below is 𝑥1 = 0, 𝑥2 = 8 𝑎𝑛𝑑 𝑍 = 24.

The sensitivity ranges for the objective function coefficients are

4 ≤ 𝑐1 ≤ ∞
0 ≤ 𝑐2 ≤ 4.5

As the objective function coefficient for 𝑥1 decreases from P6.00, the objective function slope of -2 decreases,
and the objective function line gets flatter.

4
When the coefficient, 𝑐1 , equals P4.00, then the slope of the objective function is − 3, which is the same as the
constraint line, 4𝑥1 + 3𝑥2 = 24.

This makes point B optimal (as well as A). Thus, the lower limit of the sensitivity range for 𝑐1 is P4.00.

However, notice that as 𝑐1 increases from P6.00, the objective function simply becomes steeper and steeper
as it rotates toward the 𝑥2 axis of the graph. The objective function will not come into contact with another
feasible solution point. Thus, no matter how much we increase cost for the fertilizer (𝑥1 ), point A will always
be optimal.

Changes in Constraint Quantity Values

The second type of sensitivity analysis is the sensitivity ranges for the constraint quantity values – the values
to the right of the inequality signs in the constraints.

For the Bran Pottery Company model,

𝑀𝑎𝑥𝑖𝑚𝑖𝑧𝑒 𝑍 = 40𝑥1 + 50𝑥2
𝑆𝑢𝑏𝑗𝑒𝑐𝑡 𝑡𝑜
1𝑥1 + 2𝑥2 ≤ 40 ℎ𝑜𝑢𝑟𝑠 𝑜𝑓 𝑙𝑎𝑏𝑜𝑟
4𝑥1 + 3𝑥2 ≤ 120 𝑙𝑏𝑠. 𝑜𝑓 𝑐𝑙𝑎𝑦
𝑥1 , 𝑥2 ≥ 0
the constraint quantity values are 40 and 120.

Consider a change in which the manager of the pottery company can increase the labor hours from 40 hours
to 60 hours. The effect of this change in the model is graphically presented below.
Increasing the available labor hours from 40 to 60 causes the feasible solution space to change.

It was originally 0ABC and now it is 0A’B’C. B’ is the new optimal solution, instead of B. However, the important
consideration in this type of sensitivity analysis is that the solution mix or the variables that do not have zero
values, including slack values, did not change, even though the values of 𝑥1 and 𝑥2 did change (from 𝑥1 =
24, 𝑥2 = 8 𝑡𝑜 𝑥1 = 12, 𝑥2 = 24).

The focus of sensitivity analysis for constraint quantity values is to determine the range over which the
constraint quantity values can change without changing the solution variable mix, specifically including the
slack variables.

If the quantity value for the labor constraint is increased from 40 to 80 hours, the new solution space is 0A’C,
and a new solution variable mix occurs at A’ as shown below. Whereas at the original optimal point, B, both 𝑥1
and 𝑥2 are in the solution, at the new optimal point, A’, only 𝑥2 is produced (ex., 𝑥1 = 0, 𝑥2 = 40, 𝑠1 = 0, 𝑠2 =
0).

Thus, the upper limit of the sensitivity range for the quantity value for the first constraint, which is now referred
as 𝑞1 , is 80 hours. At this value the solution mix changes such that bowls are no longer produced. Furthermore,
as 𝑞1 increases past 80 hours, 𝑠1 increases. Similarly, if the value for 𝑞1 is decreased to 30 hours, the new
feasible solution space is 0A’C, as shown below.
The new optimal point is at C, where no mugs are produced. The new solution is 𝑥1 = 30, 𝑥2 = 0, 𝑠1 = 0, 𝑠2 =
0, 𝑎𝑛𝑑 𝑍 = 1,200. Again, the variable mix is changed.

Summarizing, the sensitivity range for the constraint quantity value for labor hours is 𝟑𝟎 ≤ 𝒒𝟏 ≤ 𝟖𝟎 𝒉𝒐𝒖𝒓𝒔

The sensitivity range for clay can be determined graphically in the same manner. If the quantity value for the
clay constraint, 4𝑥1 + 3𝑥2 ≤ 120, is increased from 120 to 160, shown in the graph below, then a new
solution space, 0AC’, results, with a new optimal point, C’.

Alternatively, if the quantity value is decreased from 120 to 60, as shown below, the new solution space is 0AC’,
and the new optimal point is A (𝑥1 = 0, 𝑥2 = 20, 𝑠1 = 0, 𝑠2 = 0, 𝑍 = 800)
Summarizing, the sensitivity ranges for 𝑞1 and 𝑞2 are:
𝟑𝟎 ≤ 𝒒𝟏 ≤ 𝟖𝟎 𝒉𝒐𝒖𝒓𝒔
𝟔𝟎 ≤ 𝒒𝟐 ≤ 𝟏𝟔𝟎 𝒍𝒃𝒔.

As was the case with the sensitivity ranges for the objective function coefficient, these sensitivity ranges are
valid for only one 𝑞𝑖 value. All other 𝑞𝑖 values are assumed to be held constant. However, simultaneous changes
can occur, as long as they do not change the variable mix.

These ranges for constraint quantity values provide useful information for the manager, especially regarding
production scheduling and planning. If resources are reduced at the pottery company, then at some point one
of the products will no longer be produced, and the support facilities and apparatus for that production will
not be needed, or extra hours of resources will be created that are not needed. A similar result, albeit a better
one, will occur if resources are increased because profit will be more than with a reduction in resources.