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ABC Automobiles Answer-3

The document presents an optimization problem to maximize profit from production of X3 and X4, with the objective of maximizing profit subject to four constraints on production levels. The optimal solution found using Excel Solver is a production of 1500 units of X3 and 1500 units of X4, resulting in a maximum profit of $12 million. However, producing at this level results in a negative actual profit of -$5000 due to high overhead costs.

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47 views4 pages

ABC Automobiles Answer-3

The document presents an optimization problem to maximize profit from production of X3 and X4, with the objective of maximizing profit subject to four constraints on production levels. The optimal solution found using Excel Solver is a production of 1500 units of X3 and 1500 units of X4, resulting in a maximum profit of $12 million. However, producing at this level results in a negative actual profit of -$5000 due to high overhead costs.

Uploaded by

cyclo tron
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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ABC Automobiles

Answer-3

According to the new overtime values, new objective function and new constraints are formulated as follows :

Objective Function
Max Z = 2400 X3 + 3800X4 - 9.35 Millions USD

Constraints
X3 + 2X4 <= 6000
2X3 + 2X4 <= 6000
2X3 <= 5000
3X4 <= 4500
X3, X4 >= 0

Finding Optimal Solution using Simplex in Excel

Decision Variables X3 X4
Solution 1500 1500
Co-efficient 2400 3800

Objective Function
Maximize 9300000

subject to
Constraints coefficient coefficient of X4 Inequality RHS
of X3
Constraint 1 1 2 <= 6000
Constraint 2 2 2 <= 6000
Constraint 3 2 0 <= 5000
Constraint 4 0 3 <= 4500

Profit = 2400X3+3800X4-9.35 Millions USD = 9300000- 9350000 = - 5000 USD


We are making Negative profit by producing overtime. Hence, it is not advisable to go for overtime production
2000
1000
Microsoft Excel 16.0 Answer Report
Worksheet: [3.xlsx]3
Report Created: 01-01-2023 21:35:51
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Solver Options

Objective Cell (Max)


Cell Name Original Value Final Value
$B$25 Maximize 0 12000000

Variable Cells
Cell Name Original Value Final Value Integer
$C$21 Solution X3 0 1500 Contin
$D$21 Solution X4 0 1500 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$L$29 <= 4500 $L$29<=$F$29 Not Binding 1500
$L$30 <= 6000 $L$30<=$F$30 Binding 0
$L$31 <= 3000 $L$31<=$F$31 Not Binding 2000
$L$32 <= 4500 $L$32<=$F$32 Binding 0
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [3.xlsx]3
Report Created: 01-01-2023 21:35:51

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$21 Solution X3 1500 0 3000 2000 3000
$D$21 Solution X4 1500 0 5000 1E+030 2000

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$L$29 <= 4500 0 6000 1E+030 1500
$L$30 <= 6000 1500 6000 2000 3000
$L$31 <= 3000 0 5000 1E+030 2000
$L$32 <= 4500 666.66666667 4500 4500 3000

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