SOLVER/COMPUTER SOLUTIONS

• LPPs involving large number of variables and constraints

(say 1000 each) are now-a-days routinely solved with
computer packages/solvers.
• LP solvers are now part of many spreadsheet packages,
such as Microsoft Excel.
• Leading commercial packages include CPLEX, LINGO,
MOSEK, Xpress-MP, and Premium Solver for Excel.
• We will rely on spreadsheet package of Microsoft Excel
 SPREADSHEET DATA REPRESENTATION

Montana Product-Mix Problem

Chairs Tables
Profit Per Unit 15 21
Resources Resources
Resources Used Per Unit Produced Used Available
Labour Constraint 4 3 0 <= 920
Wood Constraint 8 12 0 <= 2400
Atleast tables produced 0 1 0 >= 40
Req. chairs for every tables 1 -4 0 >= 0

Chairs (x_1) Tables (x_2) Total Profit ($)

Units Produced 0 0 0
 SPREADSHEET SOLUTION
Montana Product-Mix Problem
Chairs Tables
Profit Per Unit 15 21
Resources Resources
Resources Used Per Unit Produced Used Available
Labour Constraint 4 3 920 <= 920
Wood Constraint 8 12 2130.53 <= 2400
Atleast tables produced 0 1 48.4211 >= 40
Req. chairs for every tables 1 -4 0 >= 0

Chairs (x_1) Tables (x_2) Total Profit ($)

Units Produced 193.6842105 48.42105263 3922.105263
 SPREADSHEET SOLUTION
■ Interpretation of Computer Output

We see from the previous slide that:

Objective Function Value = 3922.105263
Decision Variable #1 (𝑥𝑥1 ) = 193.6842105
Decision Variable #2 (𝑥𝑥2 ) = 48.42105263
Slack in Constraint #1 = 920 – 920 = 0 (Binding Const.)
Slack in Constraint #2 = 2400 – 2130.53 = 269.47 (Not Binding
Const.)
Surplus in Constraint #3 = 48.4211 – 40 = 8.4211 (Not Binding
Const.)
Surplus in Constraint #4 = 0 – 0 = 0 (Binding Const.)
 SPREADSHEET ANSWER REPORT
Microsoft Excel 16.0 Answer Report
Worksheet: Montana
Report Created: 18-08-2022 10.28.09 AM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.016 Seconds.
Iterations: 3 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001, Use Automatic Scaling
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

Objective Cell (Max)

Cell Name Original Value Final Value
$G$13 TotalProfit 0 3922.105263

Variable Cells
Cell Name Original Value Final Value Integer
$C$13 Units Produced Doors (x_1) 0 193.6842105 Contin
$D$13 Units Produced Windows (x_2) 0 48.42105263 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$E$10 Req. chairs for every tables Used 0 $E$10>=$G$10 Binding 0
$E$7 Labour Constraint Used 920 $E$7<=$G$7 Binding 0
$E$8 Wood Constraint Used 2130.526316 $E$8<=$G$8 Not Binding 269.4736842
$E$9 Atleast tables produced Used 48.42105263 $E$9>=$G$9 Not Binding 8.421052632
SENSITIVITY
A N A LY S I S
Sensitivity analysis is the study of how the changes in the coefficients of an optimization
model affect the optimal solution. Using sensitivity analysis, we can answer questions such
as the following:
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?
Because sensitivity analysis is concerned with how these changes affect the optimal solution,
the analysis does not begin until the optimal solution to the original linear programming
problem has been obtained. For that reason, sensitivity analysis is often referred to as
postoptimality analysis.

Sensitivity analysis is important to decision makers because real-world problems exist in a

changing environment. Prices of raw materials change, product demand changes,
companies purchase new machinery, stock prices fluctuate, employee turnover occurs, and
so on. If a linear programming model has been used in such an environment, we can expect
some of the coefficients to change over time. We will then want to determine how these
changes affect the optimal solution to the original linear programming problem.
Sensitivity analysis provides us with the information needed to respond to such changes
without requiring the complete solution of a revised linear program.
Par, Inc., is a small manufacturer of golf equipment and supplies whose management has decided to move into the
market for medium- and high-priced golf bags. Par’s distributor is enthusiastic about the new product line and has
agreed to buy all the golf bags Par produces over the next three months.
After a thorough investigation of the steps involved in manufacturing a golf bag, management determined that each
golf bag produced will require the following operations:
1. Cutting and dyeing the material
2. Sewing
3. Finishing (inserting umbrella holder, club separators, etc.)
4. Inspection and packaging
The director of manufacturing analyzed each of the operations and concluded that if the company produces a
medium-priced standard model, each bag will require 7⁄10 hour in the cutting and dyeing department, 1⁄2 hour in the
sewing department, 1 hour in the finishing department, and 1⁄10 hour in the inspection and packaging department.
The more expensive deluxe model will require 1 hour for cutting and dyeing, 5⁄6 hour for sewing, 2⁄3 hour for
finishing, and 1⁄4 hour for inspection and packaging.
Par’s production is constrained by a limited number of hours available in each department. After studying
departmental workload projections, the director of manufacturing estimates that 630 hours for cutting and dyeing, 600
hours for sewing, 708 hours for finishing, and 135 hours for inspection and packaging will be available for the
production of golf bags during the next three months.
The accounting department analyzed the production data, assigned all relevant variable costs, and arrived at prices for
both bags that will result in a profit contribution1 of $10 for every standard bag and $9 for every deluxe bag
produced. The problem is to determine the number of standard bags and the number of deluxe bags to produce in
order to maximize total profit contribution.
 Production Time (hours)
Let, Department Available Hours
𝑆𝑆 : number of standard bags Standard Bag Deluxe Bag
𝐷𝐷 : number of deluxe bags Cutting and Dyeing 7� 1 630
10
Sewing 1� 5� 600
Then, 2 6
Finishing 1 2� 708
𝑧𝑧 : total profit 3
Inspection and Packaging 1� 1� 135
10 4
Formulation: Profit ($) 10 9
max 𝑧𝑧 = 10𝑆𝑆 + 9𝐷𝐷
𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑡𝑡𝑡𝑡: Suppose we later learn that a price reduction causes the profit
7⁄ 𝑆𝑆 + 𝐷𝐷 ≤ 630 (Cutting and dyeing) contribution for the standard bag to fall from $10 to $8.50. Sensitivity
10
1⁄ 𝑆𝑆 + 5⁄ 𝐷𝐷 ≤ 600 (Sewing) analysis can be used to determine whether the production schedule
2 6

𝑆𝑆 + 2⁄3 𝐷𝐷 ≤ 708 (Finishing) calling for 540 standard bags and 252 deluxe bags is still best. If it is,
1⁄ 𝑆𝑆 + 1⁄ 𝐷𝐷 ≤ 135 (Inspection and solving a modified linear programming problem with 8.5𝑆𝑆 + 9𝐷𝐷 as the
10 4
packaging) new objective function will not be necessary.
𝑆𝑆, 𝐷𝐷 ≥ 0
Also, what would happen to the optimal solution and total profit
contribution if Par could obtain additional quantities of either of these
Its optimal solution is:
𝑆𝑆 = 540 and 𝐷𝐷 = 252
resources? Sensitivity analysis can help determine how much each
additional hour of production time is worth and how many hours can be
added before diminishing returns set in.
 GRAPHICAL SENSITIVITY ANALYSIS
• Objective Function Coefficients
Let us consider how changes in the objective function coefficients might affect the optimal solution to
the Par, Inc., problem. The current contribution to profit is $10 per unit for the standard bag and
$9 per unit for the deluxe bag. It seems obvious that an increase in the profit contribution for one
of the bags might lead management to increase production of that bag, and a decrease in the profit
contribution for one of the bags might lead management to decrease production of that bag. It is not as
obvious, however, how much the profit contribution would have to change before management would
want to change the production quantities.

The current optimal solution to this problem calls for producing 540 standard golf bags and 252
deluxe golf bags. The range of optimality for each objective function coefficient provides the range
of values over which the current solution will remain optimal. Managerial attention should be
focused on those objective function coefficients that have a narrow range of optimality
and coefficients near the end points of the range. With these coefficients, a small change
can necessitate modifying the optimal solution. Let us now compute the ranges of optimality for
this problem.
The figure shows the graphical
solution. A careful inspection of this
graph shows that as long as the slope
of the objective function line is
between the slope of line A (which
coincides with the cutting and dyeing
constraint line) and the slope of line B
(which coincides with the finishing
constraint line), extreme point ③ with
S=540 and D=252 will be optimal.
Changing an objective function
coefficient for S or D will cause the
slope of the objective function line to
change. Such changes cause the
objective function line to rotate around
extreme point ③. However, as long as
the objective function line stays within
the shaded region, extreme point ③
will remain optimal.
 Rotating the objective function line counter-
clockwise causes the slope to become less
negative, and the slope increases. When the
objective function line rotates counter-clockwise
(slope increased) enough to coincide with line A,
we obtain alternative optimal solutions between
extreme points ③ and ④. Any further counter-
clockwise rotation of the objective function line
will cause extreme point ③ to be nonoptimal.
Hence, the slope of line A provides an upper limit
for the slope of the objective function line.

Rotating the objective function line clockwise

causes the slope to become more negative, and
the slope decreases. When the objective function
line rotates clockwise (slope decreases) enough
to coincide with line B, we obtain alternative
optimal solutions between extreme points ③ and
②. Any further clockwise rotation of the
objective function line will cause extreme point
③ to be nonoptimal. Hence, the slope of line B
provides a lower limit for the slope of the
objective function line.

Thus, extreme point ③ will be the optimal solution as long as:

Slope of line B ≤ Slope of the objective function line ≤ Slope of line A
 The equation for line A, the cutting and dyeing constraint line, is as
follows:

7� 𝑆𝑆 + 𝐷𝐷 ≤ 630
10

By solving this equation for D, we can write the equation for line A in
its slope-intercept form, which yields:

𝐷𝐷 = − 7�10 𝑆𝑆 + 630

Slope of Intercept of line A

line A on D axis
The equation for line B is:

𝑆𝑆 + 2�3 𝐷𝐷 = 708

Solving for D provides the slope-intercept form for line B. Doing so

yields:

𝐷𝐷 = − 3�2 𝑆𝑆 + 1062

Now that the slopes of lines A and B have been computed, we see that for extreme point ③ to remain optimal, we must
have: − 𝟑𝟑⁄𝟐𝟐 ≤ Slope of the objective function line ≤ − 𝟕𝟕⁄𝟏𝟏𝟏𝟏
General form of the slope of the objective function line

Let,
𝐶𝐶𝑆𝑆 : profit of a standard bag
𝐶𝐶𝐷𝐷 : profit of a deluxe bag
P : value of the objective function

Using this notation, the objective function line can be written as: 𝑷𝑷 = 𝑪𝑪𝑺𝑺 𝑺𝑺 + 𝑪𝑪𝑫𝑫 𝑫𝑫

𝑪𝑪 𝑷𝑷
Writing this equation in slope-intercept form, we obtain: 𝑫𝑫 = − 𝑪𝑪 𝑺𝑺 𝑺𝑺 +
𝑫𝑫 𝑪𝑪𝑫𝑫

𝑪𝑪𝑺𝑺
Thus, for extreme point ③ to remain optimal, we must have: − 𝟑𝟑⁄𝟐𝟐 ≤ − ≤ − 𝟕𝟕⁄𝟏𝟏𝟏𝟏
𝑪𝑪𝑫𝑫

To compute the range of optimality for the standard-bag profit contribution, we hold the profit contribution for the
𝑪𝑪
deluxe bag fixed at its initial value 𝑪𝑪𝑫𝑫 = 𝟗𝟗. Doing so in the above expression, we obtain: − 𝟑𝟑⁄𝟐𝟐 ≤ − 𝟗𝟗𝑺𝑺 ≤ − 𝟕𝟕⁄𝟏𝟏𝟏𝟏.

Finally, the following range of optimality for the standard-bag profit contribution is obtained as:

𝟔𝟔. 𝟑𝟑 ≤ 𝑪𝑪𝑺𝑺 ≤13.5

The range of optimality for 𝑪𝑪𝑺𝑺 tells Par’s management that, with other coefficients unchanged, the profit contribution
for the standard bag can be anywhere between $6.30 and $13.50 and the production quantities of 540 standard bags
and 252 deluxe bags will remain optimal. Note, however, that even though the production quantities will not change,
the total profit contribution (value of objective function) will change due to the change in profit contribution per
standard bag.

Similarly, the range of optimality for the deluxe-bag profit contribution can be obtained as:

𝟔𝟔. 𝟔𝟔𝟔𝟔 ≤ 𝑪𝑪𝑫𝑫 ≤14.29

In cases where the rotation of the objective function line about an optimal extreme point causes the objective
function line to become vertical, there will be either no upper limit or no lower limit for the slope as it appears in
𝑪𝑪
the form: − 𝟑𝟑⁄𝟐𝟐 ≤ − 𝑪𝑪 𝑺𝑺 ≤ − 𝟕𝟕⁄𝟏𝟏𝟏𝟏.
𝑫𝑫

The range of optimality for objective function coefficients is only applicable for changes made to one
coefficient at a time. All other coefficients are assumed to be fixed at their initial values. If two or
more objective function coefficients are changed simultaneously, further analysis is necessary to
determine whether the optimal solution will change.
• Right-Hand Sides

Let us now consider how a change in the right-

hand side for a constraint may affect the
feasible region and perhaps cause a change in
the optimal solution to the problem. To
illustrate this aspect of sensitivity analysis, let us
consider what happens if an additional 10
hours of production time become available
in the cutting and dyeing department of Par, Inc.
The right-hand side of the cutting and
dyeing constraint is changed from 630 to
640, and the constraint is rewritten as:

𝟕𝟕� 𝑺𝑺 + 𝑫𝑫 ≤ 𝟔𝟔𝟔𝟔𝟔𝟔.
𝟏𝟏𝟏𝟏

By obtaining an additional 10 hours of cutting

and dyeing time, we expand the feasible region
for the problem, as shown in the figure.
 Application of the graphical solution procedure to the
problem with the enlarged feasible region shows that the
extreme point with 𝑺𝑺 = 𝟓𝟓𝟓𝟓𝟓𝟓. 𝟓𝟓and 𝑫𝑫 = 𝟐𝟐𝟐𝟐𝟐𝟐. 𝟕𝟕𝟕𝟕 now
provides the optimal solution. The new value for the
objective function is 𝟏𝟏𝟏𝟏 𝟓𝟓𝟓𝟓𝟓𝟓. 𝟓𝟓 + 𝟗𝟗 𝟐𝟐𝟐𝟐𝟐𝟐. 𝟕𝟕𝟕𝟕 =
$𝟕𝟕𝟕𝟕𝟕𝟕𝟕𝟕. 𝟕𝟕𝟕𝟕, with an increase in profit of $𝟕𝟕𝟕𝟕𝟕𝟕𝟕𝟕. 𝟕𝟕𝟕𝟕 −
$𝟕𝟕𝟕𝟕𝟕𝟕𝟕𝟕 = $𝟒𝟒𝟒𝟒. 𝟕𝟕𝟕𝟕. Thus, the increased profit occurs at a
rate of $𝟒𝟒𝟒𝟒. 𝟕𝟕𝟕𝟕/𝟏𝟏𝟏𝟏 hours = $𝟒𝟒. 𝟑𝟑𝟑𝟑𝟑𝟑 per hour added.

The change in the value of the optimal solution per unit

increase in the right-hand side of the constraint is called
the dual value. Here, the dual value for the cutting and
dyeing constraint is $4.375; in other words, if we
increase the right-hand side of the cutting and
dyeing constraint by 1 hour, the value of the
objective function will increase by $4.375.
Conversely, if the right-hand side of the cutting
and dyeing constraint were to decrease by 1 hour,
the objective function would go down by $4.375.

The dual value can generally be used to determine what will happen to the value of the objective
function when we make a one-unit change in the right-hand side of a constraint.
• Note that the value of the dual value may be applicable only for small changes in
the right-hand side. As more and more resources are obtained and the right-hand-
side value continues to increase, other constraints will become binding and limit
the change in the value of the objective function.

For example, in the problem for Par, Inc., we would eventually reach a point
where more cutting and dyeing time would be of no value; it would occur at
the point where the cutting and dyeing constraint becomes nonbinding. At
this point, the dual value would equal zero.

• Finally, we note that the dual value for any nonbinding constraint will be zero
because an increase in the right-hand side of such a constraint will affect only the
value of the slack or surplus variable for that constraint.
The dual value is the change in the objective function value per unit
increase in a constraint right-hand side.

Suppose that we now solve a problem involving the minimization of

total cost and that the value of the optimal solution is $100.
Furthermore, suppose that the first constraint is a less-than-or-equal-
to constraint and that this constraint is binding for the optimal
solution. Increasing the right-hand side of this constraint makes the
problem easier to solve. Thus, if the right-hand side of this binding
constraint is increased by one unit, we expect the optimal objective
function value to get better. In the case of a minimization problem,
this means that the optimal objective function value gets smaller.

If an increase in the right hand side makes the optimal objective

function value smaller, the dual value is negative.
 SENSITIVITY ANALYSIS USING SPREADSHEET
Golf Bags Problem

Doors Windows Formulation:

Profit Per Unit 10 9 max 𝑧𝑧 = 10𝑆𝑆 + 9𝐷𝐷
𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑡𝑡𝑡𝑡:
Resources Resources
7⁄ 𝑆𝑆 + 𝐷𝐷 ≤ 630 (Cutting and dyeing)
Resources Used Per Unit Produced Used Available 10

Cutting and dyeing Constraint 0.70 1.00 630 <= 630

1⁄ 𝑆𝑆
2 + 5⁄6 𝐷𝐷 ≤ 600 (Sewing)
Sewing 0.50 0.83 480 <= 600 𝑆𝑆 + 2⁄3 𝐷𝐷 ≤ 708 (Finishing)
1⁄ 𝑆𝑆 + 1⁄4 𝐷𝐷 ≤ 135 (Inspection and
Finishing 1.00 0.67 708 <= 708 10
packaging)
Inspection and packaging 0.10 0.25 117 <= 135
𝑆𝑆, 𝐷𝐷 ≥ 0

Standard Bags (S) Deluxe Bags (D) Total Profit ($)

Units Produced 540 252 7668
 SENSITIVITY REPORT
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Sensitivity analysis.xlsx]Golf Bags
Report Created: 18-08-2022 12.10.23 PM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$13 Units Produced Standard Bags (S) 540 0 10 3.5 3.7
$D$13 Units Produced Deluxe Bags (D) 252 0 9 5.285714286 2.333333333

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$7 Cutting and dyeing Constraint Used 630 4.375 630 52.36363636 134.4
$E$8 Sewing Used 480 0 600 1E+30 120
$E$9 Finishing Used 708 6.9375 708 192 128
$E$10 Inspection and packaging Used 117 0 135 1E+30 18
 REDUCED COST
The reduced cost for a decision variable whose value is 0 in
the optimal solution is: the amount the variable's objective
function coefficient would have to improve (increase for
maximization problems, decrease for minimization problems)
before this variable could assume a positive value.

The reduced cost for a decision variable whose value is > 0 in

the optimal solution is 0.
 ALLOWABLE RANGE
The allowable range for an objective function coefficient is that
range in which if it changes from its current value (without
making any other change in the model) the current solution will
remain optimal.

For example:
Current value of per unit standard bags profit (𝑐𝑐𝑆𝑆 ) is: 10
Allowable increase in 𝑐𝑐𝑆𝑆 : 3.5; So 𝑐𝑐𝑆𝑆 ≤ 10+3.5 =13.5
Allowable decrease in 𝑐𝑐𝑆𝑆 : 3.7; So 𝑐𝑐𝑆𝑆 ≥ 10-3.7 =6.3
Allowable Range for 𝑐𝑐𝑆𝑆 : 6.3 ≤ 𝑐𝑐𝑆𝑆 ≤ 13.5

Similarly, Allowable Range for 𝑐𝑐𝐷𝐷 : 6.66667 ≤ 𝑐𝑐𝐷𝐷 ≤ 14.28571

 SHADOW PRICE/DUAL PRICE
• Dual prices are sometimes called shadow prices, because they tell us how much
we should be willing to pay for additional units of a resource.
• The change in the value of the optimal solution per unit increase in the right-hand
side of the constraint is called the shadow price. In the Sensitivity Report sheet,
the shadow price for the cutting and dyeing constraint is $4.375; in other words,
if we increase the right-hand side of the cutting and dyeing constraint
by 1 hour, the value of the objective function will increase by $4.375.
Conversely, if the right-hand side of the cutting and dyeing constraint
were to decrease by 1 hour, the objective function would go down by
$4.375. This interpretation only holds in a specified allowable range for the
resources.
• Shadow price for a not binding constraint is 0.
• Shadow price for a binding constraint may be negative or positive.
 SHADOW PRICE/DUAL PRICE
For example:
Current value of resource cutting and dyeing (𝒃𝒃𝟏𝟏 ) is : 630 hrs
Allowable increase in 𝒃𝒃𝟏𝟏 is : 52.363636; So 𝒃𝒃𝟏𝟏 ≤ 630+52.363636
=682.363636
Allowable decrease in 𝒃𝒃𝟏𝟏 : 134.4; So 𝒃𝒃𝟏𝟏 ≥ 630-134.4 =495.6
Allowable Range for 𝒃𝒃𝟏𝟏 : 495.6 ≤ 𝒃𝒃𝟏𝟏 ≤ 682.363636
Therefore, if 𝒃𝒃𝟏𝟏 changes in the above defined range, the shadow
price $4.375 has its interpretation valid as defined on previous
slides. If 𝒃𝒃𝟏𝟏 falls outside this range, shadow price will change (have
to re-solve the model to get that).

Similarly, Allowable Range for Sewing (𝑏𝑏2 ): 480 ≤ 𝑏𝑏2 ≤ ∞

Allowable Range for Finishing(𝑏𝑏3 ): 580 ≤ 𝑏𝑏3 ≤ 900
Allowable Range for Inspection and 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝(𝑏𝑏4 ): 117 ≤ 𝑏𝑏4 ≤ ∞
 SENSITIVITY WITH SIMULTANEOUS CHANGES
The 100 Percent Rule for Simultaneous Changes in Objective Function
Coefficients:

 Calculate % of allowable increase/decrease

 If the sum of percentages changes <= 100%, then optimal solution vector is
unchanged.
 If the sum of percentages changes > 100% => can’t say. You have to re-solve!

𝐦𝐦𝐦𝐦𝐦𝐦 𝒛𝒛 = 𝟑𝟑𝟑𝟑𝟑𝟑𝟑𝟑 𝒙𝒙𝟏𝟏 + 𝟓𝟓𝟓𝟓𝟓𝟓𝟎𝟎 𝒙𝒙𝟐𝟐

𝒔𝒔𝒔𝒔𝒔𝒔𝒔𝒔𝒔𝒔𝒔𝒔𝒔𝒔 𝒕𝒕𝒕𝒕:
𝒙𝒙𝟏𝟏 ≤ 𝟒𝟒
𝟐𝟐𝒙𝒙𝟐𝟐 ≤ 𝟏𝟏𝟏𝟏
𝟑𝟑𝒙𝒙𝟏𝟏 + 𝟐𝟐𝒙𝒙𝟐𝟐 ≤ 𝟏𝟏𝟏𝟏
𝒙𝒙𝟏𝟏 , 𝒙𝒙𝟐𝟐 ≥ 𝟎𝟎
 SENSITIVITY WITH SIMULTANEOUS CHANGES
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Wyndor Glass.xlsx]Wyndor
Report Created: 18-08-2022 1.54.36 PM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$12 Batches Produced Doors 2 0 3000 4500 3000
$D$12 Batches Produced Windows 6 0 5000 1E+30 3000

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$7 Plant 1 Used 2 0 4 1E+30 2
$E$8 Plant 2 Used 12 1500 12 6 6
$E$9 Plant 3 Used 18 1000 18 6 6
Case 1: To illustrate, consider the Wyndor problem again, along with the
information provided by the sensitivity report on previous slid. Suppose now that
the estimate of profit per unit on product 1 (𝑃𝑃𝐷𝐷 ) has increased from $3,000 to
$4,500 while the estimate of profit per unit on second product (𝑃𝑃𝑊𝑊 ) has
decreased from $5,000 to $4,000. The calculations for the 100 percent rule now
are

Since the sum of the percentages does not exceed 100 percent, the original
optimal solution (𝑥𝑥1 , 𝑥𝑥2 ) = (2, 6) definitely is still optimal.
Case 2: Now suppose that the estimate of profit per unit on product 1 (𝑃𝑃𝐷𝐷 ) has
increased from $3,000 to $6,000 while the estimate of profit per unit on second
product (𝑃𝑃𝑊𝑊 ) has decreased from $5,000 to $3,000. The calculations for the 100
percent rule now are

Since the sum of the percentages now exceeds 100 percent, the 100 percent rule
says that we can no longer guarantee that (𝑥𝑥1 , 𝑥𝑥2 ) = (2, 6) is still optimal. Now, the
optimal solution has changed to (𝑥𝑥1 , 𝑥𝑥2 ) = (4, 3)
 SENSITIVITY WITH SIMULTANEOUS CHANGES
The 100 Percent Rule for Simultaneous Changes in RHS resource values

Use 100% rule:

 Calculate % of allowable increase/decrease (ignore sign)
 If the sum <= 100%, then shadow prices are unchanged.
 If the sum > 100% => can’t say.You have to re-solve!
RHS vector Type of Allowable % change X1 X2 Obj Value
Change Incr/decr
4 Base (infinity,2) NA 2 6
12 (6,6) 36,000
18 (6,6)

3 Decr 1 1/2 = 50% 1.33 7

14 Incr 2 2/6 =33.33% 3333
18 -- -- Total change = 83.33% <100%. 39000
Hence, current shadow prices are valid.
Z_new = 36000 - 0*1 + 1500*2 = 39000
4 -- -- 4/6 = 66.67% 4 4
8 Decr 4 4/6 = 66.67%
32000
22 Incr 4 Total change = 133.34% >100%.
Hence, current shadow prices are no longer valid.
If you would have computed by old shadow prices:
Z_new = 36000 + (-1500)*4 + 1000*4 = 34000
4/6 = 66.67% 2 8 46000
4/6 = 66.67%
4 -- -- Total change = 133.34% >100%.
16 Incr 4 Hence, current shadow prices are no longer valid.
22 Incr 4 If you would have computed by old shadow prices:
Z_new = 36000 + 1500*4 + 1000*4
= 46000 (this is by chance)