Optimization with Spreadsheets

Practice problems (Sensitivity Analysis)

Problem 1

Bluegrass farms has been experimenting with a special diet for its racehorses. The feed
components available for the diet are a standard horse feed product, a vitamin-enriched oat
product, and a new vitamin and mineral feed additive. The nutritional values in units per
pound and the costs for the three components are summarized in Table. The minimum daily
diet requirements for each horse are 3 units of ingredient A, 6 units of B, and 4 units of C. In
addition to controlling the weight of the horses, the total daily feed for a horse should not
exceed 6 pounds.
(a) Determine the min-cost mix that satisfies daily diet requirements.
(b) If the minimum requirement of Ingredient A is increased by 1, what would be the
impact on optimal cost?
(c) Suppose Bluegrass is willing to reconsider the total daily feed requirement from 6 to 8
pounds, what is the impact on the optimal cost?
(d) If Bluegrass were to obtain the standard feed for free, would the optimal solution
change?

Problem 2

The program manager for Channel 10 would like to determine the best way to allocate the
time for the 11:00 PM-11:30 PM evening news broadcast. Specifically, she would like to
determine the number of minutes of broadcast time to devote to local news, national news,
weather, and sports. Over the 30-minute broadcast, 10 minutes are set aside for advertising.
The station’s broadcast policy states that at least 15% of the time available should be devoted
to local news coverage; the time devoted to the combination of local news and national news
must be at least 50% of the total broadcast time; the time devoted to the weather segment
must be less than or equal to the time devoted to sports segment; the time devoted to sports
segment be no longer than the total time spent on the local and national news; and at least
20% of the time should be devoted to weather segment. The production costs per minute are
$300 for local news, $200 for national news, $100 for weather, and $100 for sports.
a) Formulate and solve a linear program that can determine how the 20 available
minutes should be used to minimize the total cost of producing the program.
b) Interpret the dual value for the constraint corresponding to the available time. What
advice would you give the station manager given this dual value?
c) Interpret the dual value for the constraint corresponding to the requirement that at
least 15 % of the available time should be devoted to local coverage. What advice
would you give the station manager given this dual value?
d) Interpret the dual value for the constraint corresponding to the requirement that the
time devoted to local and national news must be at least 50% of the total broadcast
time. What advice would you give the station manager given this dual value?
e) Interpret the dual value for the constraint corresponding to the requirement that the
time devoted to the weather segment must be less than or equal to the time devoted to
the sports segment. What advice would you give the station manager given this dual
value?
Problem 3

Gulf Coast Electronics is ready to award contracts to suppliers for providing reservoir
capacitors for use in its electronic devices. For the past several years, Gulf Coast Electronics
has relied on two suppliers for its reservoir capacitors: Able Controls and Lyshenko
Industries. A new firm, Boston Components, has inquired into the possibility of providing a
portion of the reservoir capacitors needed by Gulf Coast. The quality of products provided by
Lyshenko Industries has been extremely high; in fact, only 0.5% of the capacitors provided
by Lyshenko had to be discarded because of quality problems. Able Controls has also had a
high quality level historically, producing an average of only 1% unacceptable capacitors.
Because Gulf Coast Electronics has had no experience with Boston Components, it estimated
Boston Components' defective rate to be 10%. Gulf Coast would like to determine how many
reservoir capacitors should be ordered from each firm to obtain 75,000 acceptable-quality
capacitors to use in its electronic devices. To ensure that Boston Components will receive
some of the contract, management specified that the volume of reservoir capacitors awarded
to Boston Components must be at least 10% of the volume given to Able Controls. In
addition, the total volume assigned to Boston Components, Able Controls, and Lyshenko
Industries should not exceed 30,000, 50,000, and 50,000 capacitors, respectively. Because of
Gulf Coast's long-term relationship with Lyshenko Industries, management also specified that
at least 30,000 capacitors should be ordered from Lyshenko. The cost per capacitor is $2.45
for Boston Components, $2.50 for Able Controls, and $2.75 for Lyshenko Industries.
(a) Formulate and solve a linear program for determining how many reservoir capacitors
should be ordered from each supplier to minimize the total cost of obtaining 75,000
acceptable-quality reservoir capacitors.
(b) Suppose that the quality level for reservoir capacitors supplied by Boston Components is
much better than estimated, What effect, if any, would this quality level have?
(c) Suppose that management is willing to reconsider their requirement that at least 30,000
capacitors must be ordered from Lyshenko Industries. What effect, if any, would this
consideration have?
Problem 4
Problem 5

The original Par, Inc., problem is restated as follows:

Recall that S is the number of standard golf bags produced and D is the number of deluxe
golf bags produced. Suppose that management is also considering producing a lightweight
model designed specifically for golfers who prefer to carry their bags. The design department
estimates that each new lightweight model will require 0.8 hours for cutting and dyeing, 1
hour for sewing, 1 hour for finishing, and 0.25 hours for inspection and packaging. Because
of the unique capabilities designed into the new model, Par Inc.’s management feels they will
realize a profit contribution of $12.85 for each lightweight model produced during the current
production period.
(a) Solve the optimization problem and determine the optimal solution
(b) If the unit contribution of the deluxe bag increased by $1.5, would the solution
continue to be optimal?
(c) Management is planning to cross-train labor to increase the flexibility of deploying
them to different departments. Would this plan be beneficial for the firm?
(d) Suppose that after we have solved the problem, we find a new supplier and can
purchase the leather required for these bags at a lower cost. Leather is an important
component of each of the three types of bags but is used in different amounts in each
type. After factoring in the new cost of leather, the profit margin per bag is found to
be $10.30 for a standard bag, $11.40 for a deluxe bag, and $12.97 for a lightweight
bag. Does the current plan remain optimal?
(e) Suppose that after reviewing the solution, management states that they will not
consider any solution that does not include the production of some deluxe bags.
Management then decides to add the requirement that the number of deluxe bags
produced must be at least 30% of the number of standard bags produced. What is the
new optimal solution? If we relax the minimum 30% requirement by 1 unit, how
much would the profits increase?
Problem 6

Determine the many agents should be assigned to the respective shifts each day to minimize
the total personnel cost for agents.