Sensitivity Analysis

The optimal solution of a LPP is based on the

conditions that prevailed at the time the LP model
was formulated and solved. In the real world, the
decision environment rarely remains static and it
is essential to determine how the optimal solution
changes when the parameters of the model are
changed. That is what sensitivity analysis does. It
provides efficient computational techniques to
study the dynamic behaviour of the optimal
solution resulting from making changes in the
parameters of the model.

In studying the sensitivity analysis, we should be

familiar with the lingo that is being used in LPP
situations. A general LPP is of the form
Maximize (or Minimize) z c1 x1 c2 x2 ... cn xn
subject to the constraints

a11 x1 a12 x2 ... a1n xn b1

a21 x1 a22 x2 ... a2 n xn b2
.
am1 x1 am 2 x2 ... amn xn bm
x1 , x2 ,..., xn 0

The RHS constants of the constraints, b1 , b2 ,..., bm

are referred to resources or availabilities of the
problem.
The objective coefficients, c1 , c2 ,..., cn
are referred to as unit profits (or unit costs).
The decision variables, x1 , x2 ,..., xn
are referred to as units of activities 1, 2, , n.

Dual Price of a constraint

This measure actually represents the unit worth
of a resource - that is it gives the contribution to
the objective function resulting from a unit
increase or decrease in the availability of a
resource. In terms of duality theory, the dual
price of a resource (=constraint) i, is precisely the
value of the optimal dual variable yi associated
with the constraint i. (Did you understand why it
is called dual price?). Other non-suggestive
names include shadow prices and simplex
multipliers.

Reduced cost of a variable xj (=activity j)

is defined as
Cost of consumed resources per unit of activity xj
- profit per unit of activity xj
= zj - c j

Changes affecting feasibility

The feasibility of the current optimum solution
may be affected only if
(1) The RHS of the constraints are changed
OR
(2) A new constraint is added to the model.
In both cases, infeasibility occurs when at least
one element of the RHS of the optimal tableau
becomes negative that is, one or more of the
current basic variables become negative.

First we consider the changes in the optimal

solution due to changes in the RHS bi. We note
that the optimal solution is given by
1

xB B b
where b is the old RHS and B is the basic
matrix. Remember B-1 is found in the optimal
tableau below the entries which initially had an
identity submatrix.
1
The optimal value is given by z C B B b
When b is changed to b , the corresponding
new solution and new objective value are got by
replacing b with b .

Example 4.3-2 (Pages 135-136)

TOYCO assembles three types of toys: trains,
trucks and cars using three operations. The daily
limits on the available times for the three
operations are 430, 460, and 420 minutes
respectively. The profits per toy train, truck and
car are $3, $2, and $5 respectively. The assembly
times per train at the three operations are 1, 3, and
1 minute respectively. The corresponding times
per truck and per car are (2, 0, 4) and (1, 2, 0)
minutes respectively. A zero indicates that the
operation is not used.

Letting x1, x2, and x3 represent the daily number of

units assembled of trains, trucks and cars, the LPP
model is:
Maximize

z 3 x1 2 x2 5 x3

subject to

x1 2 x2 x3 430
3 x1

2 x3 460

x1 4 x2

420

x1 , x2 , x3 0
The optimal tableau is given in the next slide.
(Note: x4, x5, and x6 are slack variables there.)

Basic z
z
1

x1
4

x2
0

x3
0

x2

0 -1/4

x3
x6

0
0

0
0

1
0

3/2
2

This is the optimal tableau

x4
1

x5
2

x6
0

Sol
1350

1/2 -1/4

100

0
1

230
20

0
-2

1/2
1

Suppose that TOYCO wants to change

the capacities of the three operations
according to the following cases:

460

(a) 500
400

(b)

500

400

600

300 450
(c) 800 (d) 700


200 350

Use Sensitivity analysis to determine the optimal

solution in each case.
Solution: We note
1 / 2 1 / 4 0

1
C B 2 5 0 ; B 0
1 / 2 0
2
1
1
(b) New Solution is

x2
1 / 2 1 / 4 0
x B 1b 0 1 / 2 0
3

x6
2
1
1

500 150
400 200

600 0

Since this is feasible, it is optimal and the new

optimal value =

3 0 2 150 5 200 1300

(c) New Solution is

x2
1 / 2 1 / 4 0
x B 1b 0 1 / 2 0
3

x6
2
1
1

300
800

200

50

400
400

This is not feasible. So we apply dual simplex

method to restore feasibility. We note
new z = 3 0 2 50 5 400 1900

Basic z
z
1

x2
0

x3
0

x5
x3

0 -1/4
0 3/2
0
2
1
2
0
1
0
1

1
0
0
8
-4
2

0
1
0
0
0
1

x6

x2
x3
x6
z

x1
4

x4
1

x5
2

1/2 -1/4
0
1/2
-2
1
5
0
-2
1
1
0
0

This is the new optimal tableau.

x6
0

Sol
1900

0
0
1
0
0
0

-50
400
400
1500
200
300

200

Feasibility Range of the Elements of the RHS

Another way of looking at the effect of changing
the availabilities of the resources, bi, is to
determine the range for which the current
solution remains feasible.
For example if, in the TOYCO model, b2 is
changed to b2+D2= 460+D2, we want to find the
range of D2 so that the current solution remains
optimal.

When b2 is changed to b2+D2= 460+D2, the new

solution is

1 / 2 1 / 4 0
x2

x B 1b 0
1
/
2
0
3

2
x6
1
1

100
1 / 4 D2

230 1 / 2 D2
20

D2

430

460 D2
420

(current optimal
solution + D2 times the
2nd column of B-1.)

 100 1 / 4 D2

230 1 / 2 D2

20 D2
is feasible if

100 1 / 4 D2 0 or D2 400
230 1 / 2 D2 0 or D2 460
20 D2 0

or D2 20

20 D2 400
Or
Thus current solution remains optimal if RHS of
the 2nd constraint lies between 440 and 860 (the
other RHSs being the same).

Problem 5

Problem Set 4.5B Page 151

HiDec produces two models of electronic gadgets

that use resistors, capacitors, and chips. The
following table summarizes the data of the situation:
Resource

Unit Resources Requirements

Model 1 Model2
Maximum Availability
(units)
(units)
(units)

Resistor

1200

Capacitor
Chips
Unit Profit($)

2
0
3

1
4
4

1000
800

Let x1, x2 be the amounts produced of Models 1 and

2 respectively. Then the above model becomes the
LPP
Maximize z 3 x1 4 x2
subject to

2 x1 3 x2 1200

(Resistors)

2 x1 x2 1000

(Capacitors)

4 x2 800

(Chips)

x1 , x2 0
Taking the slack variables as s1, s2, s3, the optimal
tableau is:

Basic z
z
1

x1
0

x2
0

s1 s2
5/4 1/4

s3
0

Sol
1750

x1

-1/4 3/4

450

s3
x2

0
0

0
0

0
1

-2
2
1/2 -1/2

1
0

400
100

This is the optimal tableau

(a) Determine the status of each resource

Answer: Since s1 = 0 = s2, the resistor and the
capacitor resources are scarce.
Since s3 > 0, the chips resource is abundant.
(b) In terms of the optimal profit, determine the
worth of one resistor, one capacitor and one chip.
Answer: They are respectively y1, y2, y3 the
dual optimal solution and hence are
5/4, 1/4, 0 respectively.

(c) Determine the range of applicability of the dual

prices for each resource.

Resistor: If D1 is the increase in the resource 1,

the new optimal solution is given by
x1
1 / 4 3 / 4 0 1200 D1

1000
s3 B 1b 2
2
1

x2
1 / 2 1 / 2 0
800
450
1 / 4 D1
400 2 D1
100
1 / 2 D1

0 gives 200 D1 200

Similar calculations show that, for a change D2 in

the capacitor, the range of feasibility is given by
200 D2 200
And for a change D3 in the chips, the range of
feasibility is given by D3 400
(d) If the available number of resistors is increased to
1300 units, find the new optimum solution.
The new solution is: Yes, as D1 = 100
25
425 This is feasible
450

x1

s 400
200 and hence

200
3

150 optimal.
x2
100

50
And z = 1875.

(g) A new contractor is offering to sell HiDec

additional resistors at 40 cents each but only if
HiDec would purchase at least 500 units. Should
HiDec accept the offer?