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IQDM

Session 4
Case Discussion:
Merton Truck Company
Graph all Vertices
Solving by Exhausting

y
Feasible Region: ABCDEF Contributions:
A (0, 0) 0
B (2500, 0) $7.5 million
C (2500, 500) $10 million
D (2000,
D (2000, 1000)
1000) $$ 11
11 million
million
max z = 3000x + 5000y E (1000, 1500) $ 10.5 million
3000
s.t. F (0, 1500) $ 7.5 million
x + 2y  4000
2x + 2y  6000 2000
2x  5000 102A E
3y  4500 F EA
x, y 0 D
1000 Feasible MS
Region C
101A
0
A B
1000 2000 3000 4000 x
Solving Graphically
Graphical Solution

y
Iso-contribution lines:
3000x + 5000y = c Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
3y  4500 F
x, y 0 D
1000 Feasible
Region C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y
Iso-contribution lines:
Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
3y  4500 F
x, y 0 D
1000 Feasible
An iso-contribution line
Region C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y
Iso-contribution lines:
Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
3y  4500 F
x, y 0 D Move it in the direction of
1000 Feasible
Region better objective function value
C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y
Iso-contribution lines:
Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
3y  4500 F
x, y 0 D
1000 Feasible
Region C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y
Iso-contribution lines:
Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
3y  4500 F
x, y 0 D
1000 Feasible
Region C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y
Iso-contribution lines:
Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
3y  4500 F
x, y 0 D
1000 Feasible
Region C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y
Iso-contribution lines:
Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
3y  4500 F
x, y 0 D
1000 Feasible
Region C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y
Iso-contribution lines:
Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
3y  4500 F …till it touches a boundary point
x, y 0 D or edge, after which it leaves the
1000 Feasible feasible region
Region C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y
Iso-contribution lines:
Lines with slope −3/ 5
y = (−3000/5000)x + c

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
Optimal point
3y  4500 F
x, y 0 D
1000 Feasible
Region C
0
A B
1000 2000 3000 4000 5000 x
Graphical Solution

y Optimal Solution:

Optimal point is (2000, 1000), that is,


2000 M101 trucks and
y = (−3000/5000)x + c 1000 M102 trucks.

max z = 3000x + 5000y Optimal value (that is, max contribution) is


3000
s.t. z = $11 million
x + 2y  4000
2x + 2y  6000 2000
2x  5000 E
Optimal point
3y  4500 F
x, y 0 D
1000 Feasible
Region C
0
A B
1000 2000 3000 4000 5000 x
Excel Solver
Sensitivity Analysis of
Capacities (RHS of Constraints)
Sensitivity Analysis of
Engine Assembly Capacity
(RHS of EA Constraint)

• What if one more hour of engine assembly is


available?

• RHS of EA constraint increases by 1.

• Shadow price of EA constraint


= increase in contribution per EA hour
Sensitivity Analysis of EA

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E
x, y 0 D
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour

As D1 (D, after modification) continues to be optimal,

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour

As D1 (D, after modification) continues to be optimal,


solve modified EA, x + 2y = 4001, and
max z = 3000x + 5000y 3000 MS, 2x + 2y = 6000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour

D1 (New D) is (1999, 1001).

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour

D1 (New D) is (1999, 1001).


New max contribution
max z = 3000x + 5000y 3000 = 3000(1999) + 5000(1001)
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour

D1 (New D) is (1999, 1001).


New max contribution
max z = 3000x + 5000y 3000 = 3000(1999) + 5000(1001)
s.t. = 11002000
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour
=

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour
= 11002000 – 11000000

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Shadow Price of EA
= Increase in contribution per EA hour
= 11002000 – 11000000
= $2000/ hour

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Alternatively,

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Alternatively,

1 hour increase in EA capacity


corresponds to increasing y by 1

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Alternatively,

1 hour increase in EA capacity


corresponds to increasing y by 1
(and decreasing x by 1).
max z = 3000x + 5000y 3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

y Contribution increases by 5000 – 3000

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
• So, it makes sense to outsource engine
assembly for at most $2000 per hour.
• How many additional hours will you buy?
Sensitivity Analysis of EA

Allowable Increase?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E1
x, y 0 D1
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
E2 D2
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500 D3
E3
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500 Dk
Ek
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

New D (E) is (1500, 1500).


max z = 3000x + 5000y 3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

New D (E) is (1500, 1500).


max z = 3000x + 5000y Each “step” involved increasing y by 1.
3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

New D (E) is (1500, 1500).


max z = 3000x + 5000y Each “step” involved increasing y by 1.
3000
s.t. Therefore, from (2000, 1000),
x + 2y  4000 we have moved “500 steps”
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

New D (E) is (1500, 1500).


max z = 3000x + 5000y Each “step” involved increasing y by 1.
3000
s.t. Therefore, from (2000, 1000),
x + 2y  4000 we have moved “500 steps”,
2x + 2y  6000 2000 corresponding to 500 EA hours.
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

New D (E) is (1500, 1500).


max z = 3000x + 5000y Alternatively,
3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

New D (E) is (1500, 1500).


max z = 3000x + 5000y Alternatively, used EA capacity
3000
s.t. = x + 2y
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

New D (E) is (1500, 1500).


max z = 3000x + 5000y Alternatively, used EA capacity
3000
s.t. = x + 2y
x + 2y  4000 = 4500
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

Alternatively,
max z = 3000x + 5000y 3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

Alternatively, max possible increase in y


max z = 3000x + 5000y 3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

Alternatively, max possible increase in y


max z = 3000x + 5000y = slack in 102A/ hours per 102 truck
3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

Alternatively, max possible increase in y


max z = 3000x + 5000y = slack in 102A/ hours per 102 truck
3000
s.t. = 1500/3
x + 2y  4000
2x + 2y  6000 2000
2x  5000
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Increase?

Alternatively, max possible increase in y


max z = 3000x + 5000y = slack in 102A/ hours per 102 truck
3000
s.t. = 1500/3
x + 2y  4000
2x + 2y  6000 2000 Each “step” involved increasing y by 1.
2x  5000 Therefore, allowable increase = 500.
E
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x
Questions?
Excel Solver
Q. 2
• Should Merton buy engine assembly hours?

• If so, how much should be paid per hour?


(Shadow price)

• How many hours?


(Allowable increase)
Sensitivity Analysis of EA

Allowable Decrease?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

C
0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Decrease?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0
1000 D
C
0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Decrease?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0
1000

C
0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Decrease?

C is (2500, 500).
max z = 3000x + 5000y 3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0
1000

C
0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Decrease?

C is (2500, 500).
max z = 3000x + 5000y Per hour decrease in EA capacity,
3000
s.t. x goes up by 1 and y goes down by 1
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0
1000

C
0
1000 2000 3000 4000 x
Sensitivity Analysis of EA

Allowable Decrease?

C is (2500, 500).
max z = 3000x + 5000y Per hour decrease in EA capacity,
3000
s.t. x goes up by 1 and y goes down by 1.
x + 2y  4000
2x + 2y  6000 2000 Therefore, allowable decrease
2x  5000 = 500 hours.
3y  4500
x, y 0
1000

C
0
1000 2000 3000 4000 x
Questions?
Other Departments
Sensitivity Analysis of MS Capacity

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Shadow price of MS constraint is
obtained by solving
x + 2y = 4000
2x + 2y = 6001
max z = 3000x + 5000y 3000
s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Shadow price of MS constraint is
obtained by solving
x + 2y = 4000
2x + 2y = 6001
max z = 3000x + 5000y 3000
s.t. New D is (2001, 999.5).
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Shadow price of MS constraint is
obtained by solving
x + 2y = 4000
2x + 2y = 6001
max z = 3000x + 5000y 3000
s.t. New D is (2001, 999.5).
x + 2y  4000
2x + 2y  6000 2000 New contribution = $11000500
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Shadow price of MS constraint
= $500 per MS hour

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Increase?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Increase?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Increase?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0
1000 New D = New C (2500, 750)

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Increase = 500 MS hours

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0
1000 New D = C (2500, 750)

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Decrease?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Decrease?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Decrease?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500 D
x, y 0
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Decrease?

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 New D = E (1000, 1500)
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Sensitivity Analysis of MS Capacity

y
Allowable Decrease = 1000

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000 New D = E (1000, 1500)
3y  4500
x, y 0
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of MS Capacity


Excel Solver
Questions?
101A and 102A?

• Shadow prices?
Complementarity
• If slack is non-zero, shadow price is zero.

• If shadow price is non-zero, slack is zero.

• If slackness is zero?

• If shadow-price is zero?
101A and 102A?

• Shadow prices?

• Allowable increase?

• Allowable decrease?
Sensitivity Analysis of 101A and 102A

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x
Excel Solver
Questions?
Q.3: Model 103

• Should Merton produce them?


Q.3: Should Merton Produce
Model 103?
Each Model 103 truck requires

• 4000/5000 = 0.8 machine-hours of engine


assembly capacity,

• 6000/4000 = 1.5 machine hours of machine


stamping capacity, and

• 1 machine-hour of Model 101 assembly capacity.


Q.3: Model 103
D.V.s : x, y as earlier.
w = number of M103 trucks

max z = 3000x + 5000y + 2000w


s.t. x + 2y + 0.8w  4000 … (EA)
2x + 2y + 1.5w  6000 … (MS)
2x + w  5000 … (101A)
3y  4500 … (102A)
x, y,w  0
Q.3: Model 103

• When is it worthwhile to produce M103?

• Reduced cost
Computation of Reduced Cost
• For one unit of M103, lost contribution
because of diverting resources from M101 and M102
= $(0.82000 +
1.5*500)
= $2350
(sum of resource use for each constraint times the
respective shadow price)

• The additional contribution from the production and sale of


one Model 103 truck is $2000.

• Merton would lose $350 if it makes one unit of M103.


Reduced Cost
• We have just “priced out” Model 103 trucks and
have shown that their “reduced cost” is $-350

• Cross-check with corresponding LP formulation


using Solver.

• Add constraint w = 1, and observe the change in


contribution.
Complementarity
• If reduced cost is non-zero, optimal value of DV is
zero.

• If optimal value of DV is non-zero, reduced cost is


zero.

• If reduced cost is zero?

• If optimal value of DV is zero?


Questions?
Q.4: Overtime production
• ?

• Reformulate by adding two more decision


variables

• xO, yO for M101 and M102 trucks produced


during overtime
(that is, EA overtime
and other departments regular)
• Additional constraints?

• Engine assembly operations overtime.

• Merton’s contribution increases by $0.7


million.

• Therefore…?
Q.5: More M101 trucks
• ?

• Additional constraint

• Hence, …?
y

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x
y

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x
Q.6.

• What if we increase the price of M101?

• Should we re-solve?
Sensitivity Analysis of
Objective Function Coefficients
Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000 New
2x + 2y  6000 2000
optimal
2x  5000 E
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


Sensitivity Analysis

max z = 3000x + 5000y 3000


s.t.
x + 2y  4000
2x + 2y  6000 2000
2x  5000
3y  4500
x, y 0 D
1000

C
0
1000 2000 3000 4000 x

Figure: Sensitivity Analysis of Objective Function Coefficients


• Allowable Increase and Decrease of Objective
Function Coefficients

• Excel Solver
Q.7.

• What if we rent out capacities across


departments?
Questions?
Thank You

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