IQDM

Session 5
 Complementarity:
Complementary Slackness
• If slack is non-zero, shadow price is zero.

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

• If slackness is zero, shadow price may or may not

be zero.

• If shadow-price is zero, slack may or may not be

zero.
 Complementarity
(Reduced Cost and DV)
• 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, optimal value of DV may or

may not be zero.

• If optimal value of DV is zero, reduced cost may or

may not be zero.
Questions?
 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 1 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 1 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 1 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 1 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 1 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 1 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 1 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 1 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 1 Sensitivity Analysis of Objective Function Coefficients

• Allowable Increase and Decrease of Objective
Function Coefficients

• Excel Solver
100% rule
 Q.7.

• What if we rent out capacities across

departments?
 Q.7.
• What if we rent out capacities across
departments?

max z = 3000x + 5000y

s.t.
x + 2y  4000
2x + 2y  6000
2x  5000
3y  4500
x, y 0
 Q.7.
• What if we rent out capacities across
departments?

max z = 3000x + 5000y

s.t. DVs
x + 2y  4000 u1
2x + 2y  6000 u2
2x  5000 u3
3y  4500 u4
x, y 0
 Q.7.
• What if we rent out capacities across
departments?

max z = 3000x + 5000y Dual

s.t. DVs
x + 2y  4000 u1
2x + 2y  6000 u2
2x  5000 u3
3y  4500 u4
x, y 0
 Q.7.
• What if we rent out capacities across
departments?
Primal LP Dual LP

max z = 3000x + 5000y min 4000u1+ 6000u2+ 5000u3+ 4500u4

s.t. s.t.
x + 2y  4000 u1 + 2u2 + 2u3 ≥ 3000
2x + 2y  6000
2u1+ 2u2+ 3u4 ≥ 5000
2x  5000
3y  4500 u1 , u2 , u3 ≥ 0
x, y 0
 Solution of Dual LP

• ?
Excel Solver
Primal (P):

Slack Shadow
Engine Assembly 0 2000
Metal Stamping 0 500
M101 Assembly 1000 0
M102 Assembly 1500 0

Dual (D):

Slack Shadow
Constraint 1 0 2000
Constraint 2 0 1000
Primal (P):

Slack Shadow Dual DV

Engine Assembly 0 2000 2000
Metal Stamping 0 500 500
M101 Assembly 1000 0 0
M102 Assembly 1500 0 0

Dual (D):

Slack Shadow Primal DV

Constraint 1 0 2000 2000
Constraint 2 0 1000 1000
 Some observations/ properties
• Dual of Dual is Primal

• Optimal objective function values coincide

• Shadow price  Optimal value of DV

• Complementarity
Remarks/ Discussion/ Questions
 Red Brand Canners Case

• Case context?

• Discussion
 Data vs. Assumptions

• Discussion
• Decision Question(s)?

• Objective?
• Decide the amount of tomato products to
pack this season

• …so as to?
 Decision Questions

• How to apportion crop of tomatoes?

• Should we purchase additional Grade A

tomatoes?
• Decision variables?
• x1 = Amount of Grade A tomatoes
in whole canned tomatoes
• x2 = Amount of Grade B tomatoes
in whole canned tomatoes
• x3 = Amount of Grade A tomatoes
in tomato juice
• x4 = Amount of Grade B tomatoes
in tomato juice
• x5 = Amount of Grade A tomatoes
in tomato paste
• x6 = Amount of Grade B tomatoes
in tomato paste
Given:

• 3 million pound crop

• Grade A: 20% of the crop

• Grade B: 80% of the crop

• From Sales Manager, Myers:
– Data: Demand Forecasts and Selling Prices (Exhibit 1)

• Other inputs: Whole canned tomatoes’ demand?

• Limit on whole tomato production?

– Production Manager, Tucker
• Inputs from the Production Manager, Tucker
– Although there was ample production capacity, it
was impossible to produce all whole tomatoes.
– A’s quality averaged 9 points per pound
– B’s quality averaged 5 points per pound
– Min 8 for canned whole tomatoes
– Min 6 for juice
– Paste could be made from Grade B
– Whole tomato production was limited to 800,000
pounds
• Inputs from the Controller, Cooper:
– Purchasing Price and Product Profitability
• Incremental profit on whole tomatoes > any other
• Incremental profit?
• Exhibit 2 (at average price of 18 cents per pound)
• Vice-President of Operations, Gordon:
– 80,000 pounds of Grade A tomatoes available at 25.5
cents/ lb.

• Sales Manager, Myers:

– Tomato cost should be allocated on the basis of
quality and quantity rather than by quantity only
– Exhibit 3
– Concluded that RBC should use 2 million pounds of
Grade B for paste, remaining and all Grade A for juice.
– If demand expectations were realized, contribution of
$144,000.
 Decision Questions

• How to apportion crop of tomatoes?

• Should we purchase additional Grade A

tomatoes?
• Should we use Exhibit 2 for our formulation?

• Should we use Exhibit 3 for our formulation?

• Exhibit 2:
– Where do the values corresponding to “Fruit”
come from?

• Exhibit 3:
– Values of Z and Y?
– Tomato cost?
– Marginal Profit?
LP Formulation
DVs already identified
Objective Function
Constraints
• Excel Solver
Questions?
Thank You