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Cheatsheet Midterm

This document summarizes key concepts in linear programming (LP) including: 1) Special cases like infeasibility, unboundedness, redundancy, and alternate optimal solutions. 2) Sensitivity analysis concepts like allowable ranges of objective function coefficients and right-hand side values, shadow prices, and the hundred percent rule for simultaneous changes. 3) Other LP concepts like reduced cost, multiple optimal solutions, and pricing out new variables using opportunity cost.

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89 views2 pages

Cheatsheet Midterm

This document summarizes key concepts in linear programming (LP) including: 1) Special cases like infeasibility, unboundedness, redundancy, and alternate optimal solutions. 2) Sensitivity analysis concepts like allowable ranges of objective function coefficients and right-hand side values, shadow prices, and the hundred percent rule for simultaneous changes. 3) Other LP concepts like reduced cost, multiple optimal solutions, and pricing out new variables using opportunity cost.

Uploaded by

Jackmoe
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Special Cases in LP

Infeasibility - No feasible region because of conflicting constraints


Unboundedness - LP Model does not have a finite solution
Redundancy - a constraint that does not affect the feasible region
Alternate Optimal Solution - LP Problem may have multiple optimal solutions

Note to self - remember not to solve for points outside feasible region or list them as a solution, it will be wrong.

Production Application

D1 + I1 - I0 = P1 ---> Pn - In + In+1 = Dn

Demand for period 1 is usually:


Xm1 or Pm1 however you define;
Xm1 = value + Im1 - Im1-1 (I0 or beginning inventory)
eg. Xm1 = 150 + Im1 - 20
Xm1 - Im1 = 130

Ending inventory constraint for last period.

Multi-period Demand

Draw the continuum. Draw the continuum. Draw the continuum.


Remember the monthly storage leasing question.

Sensitivity Analysis

 Changes in Objective Function Coefficient


 Defines the range of the coefficients in the objective function for which the current solution (value of the
decision variables or changing cells in the optimal solution) will not change.
o eg. C1, the objective function coefficient of x1
o Allowable range = range over which c1 can vary and still maintain optimal
C1 - Allowable decrease ≤ C1 ≤ C1 + Allowable Increase
o Changes in the objective function coefficients values do not affect the size of the feasible region.
 Value of Z
o If a decision variable is 0, unused activity, the value of the objective function will not change.
o If it is a non-zero value, the value of Z will change.
o ∆Z = (Shadow Price)(∆RHS) (See also opportunity cost)
 Changes in the Right-Hand Sides (RHS)
 Defines the range of values for the RHS for which the shadow price is valid and hence for which the new
objective function value can be calculated. (NOT the range for which the current solution will not change.)
o Changes in constraint quantity values = changes in resources
o Graphically: change usually affects the size of the feasible region and often the value of the
optimal solution
o Shadow Price: The value of an additional unit of resources (additional 1 unit of material x will
increase my profit by how much?)
 Marginal profit of additional unit of resource
 Maximum price we are willing to pay for 1 unit of the resource
 Amount by which profit will decrease if availability of the resource associated with the
constraint is reduced by 1 unit
o To find the range over which shadow prices remain valid/range over which the solution remains
feasible
 q1 - allowable decrease ≤ q1 ≤ q1 + allowable increase
o Optimal solution will change when RHS is changed, dependant on the constraint being
binding/non-binding
 HUNDRED PERCENT RULE
o Simultaneous changes in objective function coefficients
o ∑ [ (actual change / allowable change)*100 ] ≤ 100
o If sum does not exceed 100%, the optimal solution will not change.
 Simultaneous Changes in the RHS
 ∑ [ (actual change / allowable change)*100 ] ≤ 100
 If the sum does not exceed 100%, then the shadow prices remain valid (will not change).
 Reduced Cost (unused activity, final value of 0)
o The amount by which the profit contribution of an activity (obj. func. coeff.) needs to be
increased before producing this activity (or by which the cost needs to be reduced)
o Maximization, reduced cost is negative (produce activity, lose x dollars)
o Minimization, reduced cost is positive
 Multiple Optimal Solution
o Zero in the "final value" and "reduced cost" column
o zero in the "allowable increase" or "allowable decrease" of the adjustable cell table
 Pricing Out New Variables
o would it be worthwhile to produce a new product
o Probably going to be more than 1 change, so hundred percent rule
o Opportunity cost = Shadow Price * ∆ in resource on RHS (eg. SP = 33.33, ∆ in Mat 1 = 20 to 19.9,
therefore ∆ = 0.1; 33.33*0.1 = $3.33, opportunity cost)
o Also, Marginal worth of the resources that would be diverted from existing product (3.33) + cost
of making the product
o Opportunity cost > profit contribution, DO NOT PRODUCE

"I must not fear.


Fear is the mind-killer.
Fear is the little-death that brings total obliteration.
I will face my fear.
I will permit it to pass over me and through me.
And when it has gone past I will turn the inner eye to see its path.
Where the fear has gone there will be nothing......Only I will remain."

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