Exercise 1 Anderson Home Electronics (Product mix problem)

Answer report

Sensitivity report

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-(29- 30)
-ไม่ ง -(30.33- 72)
- id -(72- 80)
- IC19- 14/

~(3750- 7500)
- (3940- <1500)
-(1175- 2966.67)
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 3380 <
/3940- 560 =
&
1. What is the impact on profit of a decrease of 560 units in the non-electronic components?

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·
2. What is the impact on profit if we could increase the supply of electronic components by
~4700+400
400 units (to a total of 5,100 units)?

Profi เ ม 80

(180x2

3. What would happen if we could increase the supply of electronic components by 4,000

units (to a total of 8,700 units)?

เ น ว ง 3750-750 0 ไม อ ่ใน วงการเปล่ยนแปลง

ี

4. Refer to the question about getting an additional 400 units of electronic components

(question 2). What would happen if the supplier of these 400 units wanted $8 per unit rather

than the current cost of $7 per unit?

Profit <100 - 800 $

1100X1$ = 400$
3 800- 400:480
Cost =เ นก
= ้นรา

5. Refer to the question about getting an additional 400 units of electronic components

(question 2). What would happen if the supplier of these 400 units wanted $10 per unit rather

than the current cost of $7 per unit?

Profit(100 -
3
800 $
800- 1200--100 X

Cost 4100 <

3= 1200 $ =>> ขาด
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 /2500+258 = 2750 ~

6. Assume that we have an opportunity to get 250 additional hours of assembly time.

However, this time will cost us $15 instead of current $10. Should we take it?
Profit 250x24 = 6000 $

Cost 250
x 5=1250 $
↳ 1000- 1250 = (50$ /

7. If we force the production of MP3 players, what would be the impact on the total profit?

ท ใ ใ กก ไรลด ง 1$ /1

8. According to the sensitivity report, what are products not attractive to be produced? Why?
MP3, ICD ก ไ วลดล
:14 - -8 ↓

9. How profitable must MP3 players become before Anderson would consider producing

them?

ใน วง 29 -30 ช

(419- 64)
10. Assume that there is some uncertainty in the price for Blu-Ray DVD players. For what range

of prices will the current production be optimal? If Blu-Ray DVD players were sold for $106

(instead of $110), what would be Anderson’s new total profit?

Profit 106- 56=50 $

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Exercise 2 Assignment problem

An industrial designer has been awarded a contract to design a label for a new wine. The

company estimates that 150 hours will be required to complete the project. Three of the

company’ s graphics designers are available for assignment to this project: Lisa, a senior

designer and team leader; David, a senior designer; and Sarah, a junior designer. Lisa must be

assigned at least 40% of the total number of hours that are assigned to the two senior

designers (Lisa and David). To provide working experience, Sarah must be assigned at least

15% of the total project time. However, the number of hours assigned to Sarah must not

exceed 25% of the total number of hours that are assigned to the two senior designers. Due

to other project commitments, Lisa has a maximum of 50 hours available to work on this
project. Hour salary rates are £30 for Lisa, £25 for David, and £18 for Sarah. Determine the

number of hours each graphic designer should be assigned to the project in order to minimise
total cost.

1. Formulate this assignment problem as a linear programming (LP) problem

2. Solve the LP problem using Excel Solver. How many hours should each graphic designer be

assigned to the project? What is the total cost?

3. Use the Sensitivity Analysis report to answer the following questions. Each question is

independent of the others

a. Suppose Lisa could be assigned maximum 60 hours to work on this project. What effect

would this change have on the optimal allocation of hours and the cost?

b. Suppose Lisa’s hour salary rate is changed to £28. What effect would this change have

on the optimal allocation of hours and the cost?

c. Suppose the estimated total time required to complete the project changes to 155
hours. What effect would this change have on the cost?
ฝึ
 ↓ใช้ก 100% ในการ
4. Analysis of the impact of simultaneous changes in input data values using the 100% rule เป ่ยน ว

- What happens if more than one RHS or OFC value change simultaneously?
- The 100% rule can be used to check whether simultaneous changes in either OFC

values or RHS values (but not a mixture of the two types of input data), can be analysed

by using the current sensitivity report.

The condition is:

-การ รเป
𝑐ℎ𝑎𝑛𝑔𝑒
≤1
𝑎𝑙𝑙𝑜𝑤𝑎𝑏𝑙𝑒 𝑐ℎ𝑎𝑛𝑔𝑒
ℎ
-การ รเป ยน
From the sensitivity report in Exercise 1,

1. What is the impact on profit if we had 4,200 electronic components available and 2,700
4700- 1200 -- 500 /2500- 2788
hours of assembly time?
=G20
=1500 =- 2.5
20

110 - 3

2. What is the impact if selling price of Blu-ray DVDs drops by $3 per unit and at the same time

selling price of satellite radio tuners increases by $8 per unit?

== 1.48 > /
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Exercise 3 Production problem

The general manager of Coastal States Chemicals and Fertilizers received a letter from the
Cajan Pipeline Company, the primary supplier of natural gas to Coastal States, which notified
Coastal States of the possibility of shortages of natural gas. Coastal States Chemicals and

Fertilizers used natural gas in a number of their products including phosphoric acid, urea,
ammonium phosphate, ammonium nitrate, chlorine, caustic soda, vinyl chloride monomer
and hydrofluoric acid. The manager called a meeting of members of his technical staff to

discuss a contingency plan for allocation of natural gas among the products if a shortage
developed. The objective was to maximise the profit. At this meeting, the data in Table were

presented.

Maximum
Contribution to Natural gas
Capacity production rate
Product profit consumption
(tons per day) (percentage of
($ per ton) (1000 cu. ft. per ton)
capacity)
Phosphoric acid 60 400 80 5.5
Urea 80 250 80 7.0
Ammonium
90 300 90 8.0
phosphate
Ammonium
100 300 100 10.0
nitrate
Chlorine 50 800 60 15.0
Caustic soda 50 1000 60 16.0
Vinyl chloride
65. 500 60 12.0
monomer
Hydrofluoric acid 70 400 80 11.0

Coastal States’ contract with Cajan Pipeline specified a maximum natural gas consumption of

36000 (in thousands) cubic feet per day for all plants. With these data, the technical staff

proceeded to develop a model that would specify changes in the production amount of their
products in response to a natural gas shortage.

1. Develop an LP model for the problem.

2. What impacts will a 20% natural gas shortage have on company profits?

3. Develop the Sensitivity Report for the 20% natural gas shortage model. Use this report to

answer the following questions. Each question is independent of the others.

a. Interpret the shadow prices for the natural gas availability constraint and for the two
constraints that limit the maximum phosphoric acid and chlorine that Coastal States
can produce.

b. The marketing manager believes that due to increased competition they may have to
decrease the unit profit contributions for all products by 3.5% each. What is the impact

of this decrease on the production values? On the total profit?

c. The production manager thinks that they can increase the maximum production rate
for chlorine and vinyl chloride monomer to 80% of capacity. For all other products, they

think they can increase the maximum production rate to 100% of capacity. What would

be the impact of this change on the total profit?

d. The manager thinks they can persuade Coastal’s Mississippi Division to give them 1000

(in thousands) cubic feet of its allotment of natural gas from Cajan Pipeline. However,

due to the Mississippi Division’s pricing contract with Cajan Pipeline, this additional

amount of natural gas will cost Coastal States an additional $1.50 per 1000 cubic feet

(over current costs). Should the manager pursue this option? If so, what is the impact

of this additional gas on the total profit? What is the impact if the manager can
persuade the Mississippi Division to give them 3000 (in thousands) cubic feet of its

allotment of natural gas from Cajan Pipeline?

 Sensitivity analysis for a minimisation problem

( Ingredient mix problem) Burn- Off Diet Drink plans to introduce a miracle drink that will

magically burn fat away. The drink is made up of 4 ingredients, A, B, C, D. Each of them

contains different level of three chemical compounds X, Y, Z. ·

Sensitivity report

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1. What is the impact on cost if Burn-Off insists on using 1 ounce of ingredient B to make the

drink? จะ ะท ให้ cost เพ ม 0.0

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 2. There is some uncertainty in the cost of ingredient C. How sensitive is the current optimal

solution to this cost?

เป ยนแป งใ ในช วง 28.6-0.0 93, 0.6+

3. What do the shadow prices for chemical X and chemical Z imply in this problem?

าเ ่ ม x ภ ท. เ ่ม น
าเ ่ ม 2 ตท.สถ ลง 0.02

Interpretation of “Reduced cost” and “Shadow price”

Maximisation problem Minimisation problem

(e.g. Max Profit) G (e.g. Min Costs)&if
Reduced cost (negative value)& Profit # ~

Reduced cost (positive value) & -

Cost
#

Shadow price (negative value) & -

Cost #

Shadow price (positive value) · Profit ↑

Cost #
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4. Burn-Off can decrease the minimum requirement for chemical X by 5 units (from 280 to
อ 1, 000
ับกฎ % ถลงเห
ตาร *
275), provided that the maximum limit allowed for chemical Z is reduced to 1000 units (i.e.,

reduced by 50 units). Is this trade-off cost-effective for Burn-Off to implement?

(264- 321)
- D 2 ⑩o
( 704- 1097,15)
-
* Lost * Profit

shadow price Shadow price

0.089 -0.02375
570.089 0.437 50 <-
0.02375=- 9.15
↓ ↓

-เ -ต
Cost ! Cost ↓

1.75-0.437 = - ไ ก ไรอ
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