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MEM506 Ch3

The chapter discusses linear programming and sensitivity analysis. It introduces how computer software can be used to solve linear programming problems using the simplex method. It then provides an example of using Excel and QM for Windows to solve a sample problem about production levels at Beaver Creek Pottery. Sensitivity analysis techniques are also demonstrated to determine how adjustments to variables, constraints, and objective function coefficients impact the optimal solution. Shadow prices are defined as the marginal value of relaxing a constraint.

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72 views32 pages

MEM506 Ch3

The chapter discusses linear programming and sensitivity analysis. It introduces how computer software can be used to solve linear programming problems using the simplex method. It then provides an example of using Excel and QM for Windows to solve a sample problem about production levels at Beaver Creek Pottery. Sensitivity analysis techniques are also demonstrated to determine how adjustments to variables, constraints, and objective function coefficients impact the optimal solution. Shadow prices are defined as the marginal value of relaxing a constraint.

Uploaded by

saleem saleem
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Introduction to Management Science

Thirteenth Edition, Global Edition

Chapter 3
Linear Programming:
Computer Solution and
Sensitivity Analysis

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Learning Objectives

3.1 Computer Solution


3.2 Sensitivity Analysis

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Computer Solution

• Early linear programming used lengthy manual


mathematical solution procedure called the Simplex
Method (See web site Module A).
• Steps of the Simplex Method have been programmed in
software packages designed for linear programming
problems.
• Many such packages available currently.
• Used extensively in business and government.
• Text focuses on Excel Spreadsheets and QM for
Windows.
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Beaver Creek Pottery Example: Excel
Spreadsheet – Data Screen

Exhibit 3.1

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Beaver Creek Pottery Example: “Solver”
Parameter Screen

Exhibit 3.2 Solver parameters

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Beaver Creek Pottery Example: Adding
Model Constraints

Exhibit 3.3 Labor constraint

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Beaver Creek Pottery Example: “Solver”
Settings

Exhibit 3.4 Solution screen

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Beaver Creek Pottery Example: Solution
Screen

Exhibit 3.5 Answer report

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Linear Programming Problem: Standard
Form

• Standard form requires all variables in the constraint


equations to appear on the left of the inequality (or
equality) and all numeric values to be on the right-hand
side.
• Examples:
– x3  x1  x2 must be converted to x3  x1  x2  0
x1
–  2 becomes x1  2( x2  x3 ) and then
( x 2  x3 )
x1   x2   x3  0

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Beaver Creek Pottery Example: QM for
Windows (1 of 4)

Exhibit 3.6 Data entry screen

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Beaver Creek Pottery Example: QM for
Windows (2 of 4)

Exhibit 3.7 Data table

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Beaver Creek Pottery Example: QM for
Windows (3 of 4)

Exhibit 3.8 Model solution

The marginal value is the dollar amount one would be


willing to pay for one additional resource unit.

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Beaver Creek Pottery Example: QM for
Windows (4 of 4)

Exhibit 3.9 Graphical solution

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Beaver Creek Pottery Example (1 of 2)

• Sensitivity analysis determines the effect on the optimal


solution of changes in parameter values of the
objective function and constraint equations.
• Changes may be reactions to anticipated uncertainties in
the parameters or to new or changed information
concerning the model.

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Beaver Creek Pottery Example (2 of 2)

Maximize Z  $40 x1  $50 x2


subject to : x1  2 x2  40
4 x1  3 x2  120
x1, x2  0

Figure 3.1 Optimal solution point

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Beaver Creek Pottery Example: Change x1
Objective Function Coefficient

Maximize Z  $100x1  $50 x2


subject to : x1  2x2  40
4 x1  3 x2  120
x1, x2  0

Figure 3.2 Changing the objective function x1 coefficient

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Beaver Creek Pottery Example: Change x2
Objective Function Coefficient

Maximize Z  $40 x1  $100x 2


subject to : x1  2 x2  40
4 x1  3 x2  120
x1, x2  0

Figure 3.3 Changing the objective function x2 coefficient


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Objective Function Coefficient Ranges:
Excel “Solver” Results Screen

Exhibit 3.10 Solver results screen

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Objective Function Coefficient Ranges: Beaver
Creek Example Sensitivity Report (1 of 2)

Exhibit 3.11

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Objective Function Coefficient Ranges: Beaver
Creek Example Sensitivity Report (2 of 2)

Exhibit 3.12 Beaver Creek Pottery Company Sensitivity


Report

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Changes in Constraint Quantity Values:
Sensitivity Range

• The sensitivity range for a right-hand-side value is the


range of values over which the quantity’s value can
change without changing the solution variable mix,
including the slack variables.
• Recall the Beaver Creek Pottery example. Consider a
change in which the manager can increase labor hours
from 40 to 60.

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Constraint Quantity Value Ranges by Computer:
Excel Sensitivity Range for Constraints (1 of 2)

Exhibit 3.13 Constraint quantity value ranges

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Constraint Quantity Value Ranges by Computer:
QM for Windows Sensitivity Range (2 of 2)

Exhibit 3.14 Sensitivity ranges for constraint quantity


values

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Other Forms of Sensitivity Analysis:
Topics (1 of 4)

• Changing individual constraint parameters


• Adding new constraints
• Adding new variables

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Other Forms of Sensitivity Analysis:
Changing a Constraint Parameter (2 of 4)

Maximize Z = $40 x1  $50 x2


subject to : x1  2 x2  40
4 x1  3 x2  120
x1, x2  0

Figure 3.9 Changing the x1 coefficient in the labor constraint

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Other Forms of Sensitivity Analysis:
Adding a New Constraint (3 of 4)
Adding a new constraint to Beaver Creek Model: 0.20 x1  0.10 x2  5
hours for packaging Original solution: 24 bowls, 8 mugs, $1,360 profit
Exhibit 3.15

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Other Forms of Sensitivity Analysis:
Adding a New Variable (4 of 4)

Adding a new variable to the Beaver Creek model, x3, for a


third product, cups
Maximize Z  $40 x1  50 x2  30 x3
subject to:
x1  2x2  1.2 x3  40 hr of labor
4 x1  3 x2  2 x3  120 lb. of clay

x1, x2 , x3  0
Solving model shows that change has no effect on the
original solution (i.e., the model is not sensitive to this
change).
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Shadow Prices (Dual Variable Values)

• Defined as the marginal value of one additional unit of


resource.
• The sensitivity range for a constraint quantity value is
also the range over which the shadow price is valid.

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Excel Sensitivity Report for Beaver Creek
Pottery: Shadow Prices Example (1 of 2)
Maximize Z  $40 x1  $50 x2 subject to:
x1  2 x2  40 hr of labor
4 x1  3 x2  120 lb. of clay
x1, x2  0
Exhibit 3.16

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Excel Sensitivity Report for Beaver Creek
Pottery: Solution Screen (2 of 2)
Exhibit 3.17

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Example Problem: Problem Statement (1 of 3)
• Two airplane parts: no.1 and no. 2.
• Three manufacturing stages: stamping, drilling, finishing.
• Decision variables: x1 (number of part no. 1 to produce)
x2 (number of part no. 2 to produce)
• Model: Maximize Z  $650 x1  910 x2
subject to:
4 x1  7.5 x2  105 (stamping,hr )
6.2 x1  4.9 x2  90  drilling, hr 
9.1x1  4.1x2  110 (finishing, hr)
x1, x2  0
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Example Problem: Excel Solution (3 of 3)

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