Sensitivity Analysis

 Optimal solutions to LP problems thus far have

been found under what are called deterministic
assumptions.
 This means that we assume complete certainty in
the data and relationships of a problem.
 But in the real world, conditions are dynamic and
changing.
 We can analyze how sensitive a deterministic
solution is to changes in the assumptions of the
model.
 This is called sensitivity analysis, postoptimality
analysis, parametric programming, or optimality
analysis.

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 Sensitivity Analysis
 Sensitivity analysis often involves a series of
what-if? questions concerning constraints,
variable coefficients, and the objective function.
 One way to do this is the trial-and-error method
where values are changed and the entire model is
resolved.
 The preferred way is to use an analytic
postoptimality analysis.
 After a problem has been solved, we determine a
range of changes in problem parameters that will
not affect the optimal solution or change the
variables in the solution.

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 High Note Sound Company
 The High Note Sound Company manufactures
quality CD players and stereo receivers.
 Products require a certain amount of skilled
artisanship which is in limited supply.
 The firm has formulated the following product mix
LP model.

Maximize profit = $50X1 + $120X2

Subject to 2X1 + 4X2 ≤ 80
(hours of
electrician’s time
available)
3X1 + 1X2 ≤ 60
(hours of audio
technician’s time
available)
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X,X ≥0
 High Note Sound Company
The High Note Sound Company Graphical Solution
X2
(receivers)
Maximize profit = $50X1 +$120X2
60 –

– Optimal Solution at Point a

X1 = 0 CD Players
40 – X2 = 20 Receivers
Profits = $2,400
a = (0, 20) –
b = (16, 12)
20 –
Isoprofit Line: $2,400 = 50X1 + 120X2
10 –
Figure 7.16
| | | | | |
0–
10 20 30 40 50 60 X1
c = (20, 0) (CD players)
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 Changes in the
Objective Function Coefficient

 In real-life problems, contribution rates in the

objective functions fluctuate periodically.
 Graphically, this means that although the feasible
solution region remains exactly the same, the
slope of the isoprofit or isocost line will change.
 We can often make modest increases or
decreases in the objective function coefficient of
any variable without changing the current optimal
corner point.
 We need to know how much an objective function
coefficient can change before the optimal solution
would be at a different corner point.

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-5

 Changes in the
Objective Function Coefficient
Changes in the Receiver Contribution Coefficients
X2

40 – Profit Line for 50X1 + 80X2

(Passes through Point b)

30 –
Old Profit Line for 50X1 + 120X2
(Passes through Point a)
20 – b
a Profit Line for 50X1 + 150X2
(Passes through Point a)
10 –

c
| | | | | |
0– 10 20 30 40 50 60 X1
Figure 7.17
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 QM for Windows and Changes in
Objective Function Coefficients
Input and Sensitivity Analysis for High Note Sound
Data Using QM For Windows

Program 7.5A

Program 7.5B
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 Excel Solver and Changes in
Objective Function Coefficients
Excel 2010 Spreadsheet for High Note Sound Company

Program 7.6A

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 Excel Solver and Changes in Objective
Function Coefficients

Excel 2010 Solution and Solver Results Window for

High Note Sound Company

Figure 7.6B
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 Excel Solver and Changes in
Objective Function Coefficients
Excel 2010 Sensitivity Report for High Note Sound
Company

Program 7.6C

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 Changes in the
Technological Coefficients

 Changes in the technological coefficients often

reflect changes in the state of technology.
 If the amount of resources needed to produce a
product changes, coefficients in the constraint
equations will change.
 This does not change the objective function, but
it can produce a significant change in the shape
of the feasible region.
 This may cause a change in the optimal solution.

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-11

 Changes in the
Technological Coefficients
Change in the Technological Coefficients for the
High Note Sound Company

(a) Original Problem (b) Change in Circled (c) Change in Circled

Coefficient Coefficient
X2 X2 X2

60 – 60 – 60 –
Stereo Receivers

3X1 + 1X2 ≤ 60 2 X1 + 1X2 ≤ 60 3X1 + 1X2 ≤ 60

40 – 40 – 40 –
Optimal Still Optimal
a Solution a Optimal Solution
20 – 20 – d 20 –
b 2X1 + 4X2 ≤ 80 2X1 + 4X2 ≤ 80 16 f g 2X1 + 5 X2 ≤ 80
|c | | | e | | | |c | |
0– 20 40 X1 0– 20 30 40 X1 0– 20 40 X1
CD Players
Figure 7.18

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 Changes in Resources or
Right-Hand-Side Values
 The right-hand-side values of the
constraints often represent resources
available to the firm.
 If additional resources were available, a
higher total profit could be realized.
 Sensitivity analysis about resources will
help answer questions about how much
should be paid for additional resources
and how much more of a resource would
be useful.

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 7-13

 Changes in Resources or
Right-Hand-Side Values
 If the right-hand side of a constraint is changed,
the feasible region will change (unless the
constraint is redundant).
 Often the optimal solution will change.
 The amount of change in the objective function
value that results from a unit change in one of the
resources available is called the dual price or dual
value .
 The dual price for a constraint is the improvement
in the objective function value that results from a
one-unit increase in the right-hand side of the
constraint.

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 Changes in Resources or
Right-Hand-Side Values
 However, the amount of possible increase in the
right-hand side of a resource is limited.
 If the number of hours increased beyond the
upper bound, then the objective function would
no longer increase by the dual price.
 There would simply be excess (slack) hours of a
resource or the objective function may change by
an amount different from the dual price.
 The dual price is relevant only within limits.

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 Changes in the Electricians’ Time Resource
for the High Note Sound Company

X2 (a)

60 –

40 – Constraint Representing 60 Hours of

Audio Technician’s Time Resource
a
25 –
b Changed Constraint Representing 100 Hours
20 – of Electrician’s Time Resource

| c | | |
0– 20 40 50 60 X1

Figure 7.19
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 Changes in the Electricians’ Time Resource
for the High Note Sound Company

X2 (b)

60 –

40 – Constraint Representing 60 Hours of

Audio Technician’s Time Resource

Changed Constraint Representing 60 Hours

20 – a of Electrician’s Time Resource
15 –
b
c | | | |
0– 20 30 40 60 X1
Figure 7.19

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 Changes in the Electricians’ Time Resource
for the High Note Sound Company

X2 (c)

60 – Changed Constraint Representing 240 Hours

of Electrician’s Time Resource

40 –

Constraint
Representing
60 Hours of Audio
20 – Technician’s
Time Resource

| | | | | |
0– 20 40 60 80 100 120
X1
Figure 7.19

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 QM for Windows and Changes in
Right-Hand-Side Values
Sensitivity Analysis for High Note Sound Company
Using QM for Windows

Program 7.5B

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 Excel Solver and Changes in
Right-Hand-Side Values
Excel 2010 Sensitivity Analysis for High Note Sound
Company

Program 7.6C

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