Sensitivity Analysis

Problem Description

The manager of a knitting department has developed the following LP model.

x1 = units of Product 1
x2 = units of Product 2
x3 = units of Product 3

Profit Maximization: ZMax = 7x1 + 3x2 + 9x3

Subject to
Labour: 4x1 + 5x2 + 6x3  360 hours
Machine: 2x1 + 4x2 + 6x3  300 hours
Material: 9x1 + 5x2 + 6x3  600 Kg
x1, x2, x3  0

a) What are the values of x1, x2, x3 and Z in the optimal solution?
b) Why isn’t any Product 2 called for in the optimal solution? How much would the pre-unit
profit of Product 2 have to be in order for it to enter into the optimal solution mix?
c) What is the range of optimality for the profit unit of Product 1?
d) What would the values in the optimal solution be if the objective function coefficient of x1
were to increase by 3?
e) What is the range of feasibility of the labour constraint?
f) What would the values in the optimal solution be if the amount of labour available
decreased by 10 hours?
g) If the manager could obtain additional material, how much more could be used effectively?
What would happen if the manager obtained more than this amount?
h) If it is possible to obtain an additional amount of one of the resources, which one should
be obtained, and how much can be effectively used? Explain.
i) If the manager is able to obtain an additional 100 Kg of material at the usual price, what
impact would that have on optimal value of the objective function?
j) If the manager is able to obtain an additional 100 Kg of material but has to pay a premium
of 5 cents a pound, what will the net profit be?
k) If knitting machines operate for 10 hours a day and one of the machines will be out of
service for two and a half days, what impact will this have on the optimal value of objective
function (Z) value?
l) The manager decreases labour hours 360 to 330 and also added 100 Kg extra material for
knitting. Is there any impact of objective function (Z) value?

2
 Solution:
a) What are the values of x1, x2, x3 and Z in the optimal solution?
Objective Cell (Max)
Original
Cell Name Value Final Value
$D$6 Total Profit 40 588

Variable Cells
Original
Cell Name Value Final Value Integer
$E$4 Nos of Production x1 1 48 Contin
$F$4 Nos of Production x2 2 0 Contin
$G$4 Nos of Production x3 3 28 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$I$9 Labour Constraint 360 $I$9<=$K$9 Binding 0
Not
$I$10 Machine constraint 264 $I$10<=$K$10 Binding 36
$I$11 Material Constraint 600 $I$11<=$K$11 Binding 0

Optimum value of x1 = 48, x2 = 0, x3 = 28. Objective value (Z) = 588

b) Why isn’t any Product 2 called for in the optimal solution? How much would the pre-unit
profit of Product 2 have to be in order for it to enter into the optimal solution mix?

Variable
Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$E$4 Nos of Production x1 48 0 7 6.5 1
$F$4 Nos of Production x2 0 -4.5 3 4.5 Infinity
$G$4 Nos of Production x3 28 0 9 1.5 4.33

The profit is too small (i.e., per unit marginal profit – per unit cost of resource consumes)
for Product 2 to be in the solution, it would have to be at least (3+4.5 =) 7.5 to enter into the
solution which is above the allowable increase as indicated by the sensitivity analysis.

3
c) What is the range of optimality for the profit unit of Product 1?
(7-1) ≤ c1 ≤ (7+6.5) => 6 ≤ c1 ≤ 13.5

d) What would the values in the optimal solution be if the objective function coefficient of x1
were to increase by 3?
If we increase the value of objective function coefficient of x1 were to increase by 3 i.e.,
new c1 = (7 + 3) = 10, within the range of optimality. It will have no effect on the optimal
values of the decision variables; however, the objective function will increase. The optimal
value of decision variables will not change. Hence, x1 = 48, x2 = 0, x3 = 28.
Objective value (Z) = 10x1 + 3x2 + 9x3 = 732

e) What is the range of feasibility of the labour constraint?

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$I$9 Labour Constraint 360 1.3 360 25.71 93.33
$I$10 Machine constraint 264 0 300 Infinity 36
$I$11 Material Constraint 600 0.2 600 210 90

The range of feasibility of labour constraint:

(360-93.33) ≤ b1 ≤ (360 + 25.71) => 266.67 ≤ b1 ≤ 385.71

4
f) What would the values in the optimal solution be if the amount of labour available decreased
by 10 hours?

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$I$9 Labour Constraint 360 1.3 360 25.71 93.33
$I$10 Machine constraint 264 0 300 Infinity 36
$I$11 Material Constraint 600 0.2 600 210 90

The shadow price of a constraint is the amount of change in the optimal objective function
value per unit increase in the right hand side (RHS) of a constraint, assuming all other
coefficients remain constant.

If change of RHS of a constraint is within the range of feasibility, then shadow price of that
constraint does not change but optimal solution and objective function value changes. If
change of RHS of a constraint is outside the range of feasibility, then shadow price of that
constraint change. We must re-optimize the problem.

Decrease of labour hours by 10 is within the allowable decrease of first constraint. Hence
the objective function value will decrease by value (1.3*10 =) 13. New objective function
value = 588-13 = 575.
By resolving the LP again with new available resource for constraint 1 (b1 = 350). New
optimal solution of: x1 = 50, x2 =0, x3 = 25.

5
g) If the manager could obtain additional material, how much more could be used
effectively? What would happen if the manager obtained more than this amount?

Additional material of 210 Kg would be used effectively. Beyond 210 Kg used of additional
material the optimum solution will change.

h) If it is possible to obtain an additional amount of one of the resources, which one should be
obtained, and how much can be effectively used? Explain.

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$I$9 Labour Constraint 360 1.3 360 25.71 93.33
$I$10 Machine constraint 264 0 300 1E+30 36
$I$11 Material Constraint 600 0.2 600 210 90

Shadow price of Labour constraint and Material constraint are 1.3 and 0.2 respectively.
Increase profit by Labour = 1.3*25 = 32.5
Increase profit by Material = 0.2*210 = 42
Hence, addition of material should be considered as first criteria. 210 Kg of addition of
material can be effectively used.

i) If the manager is able to obtain an additional 100 Kg of material at the usual price, what
impact would that have on optimal value of the objective function?

Addition of 100 Kg of material (keeping all others available of resources same) profit will
increase by 0.2*100 = 20. Current net profit = 588 + 20 = 608

6
j) If the manager is able to obtain an additional 100 Kg of material but has to pay a premium
of 5 cents a pound, what will the net profit be?

Addition of 100 Kg of material (keeping all others available of resources same) with a pay
of 5 cents of premium, then profit will increase by (0.2-0.05)*100 = 15.
Current net profit = 588 + 15 = 603

k) If knitting machines operate for 10 hours a day and one of the machines will be out of
service for two and a half days, what impact will this have on the optimal value of Z?
Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$I$9 Labour Constraint 360 1.3 360 25.71 93.33
$I$10 Machine constraint 264 0 300 Infinity 36
$I$11 Material Constraint 600 0.2 600 210 90

Two and half day = 2.5*10 = 25 hours < 36, allowable decrease of machine hours. Hence
range of feasibility does not change. There is no impact for optimal value of Z for two and
half days out of service as shadow price is 0 and feasible region same.

7
l) The manager decreases labour hours 360 to 330 and also added extra 100 Kg material for
knitting. Is there any impact of Z value?
Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$I$9 Labour Constraint 360 1.3 360 25.71 93.33
$I$10 Machine constraint 264 0 300 Infinity 36
$I$11 Material Constraint 600 0.2 600 210 90

Constraint Labour Material

Allowable Change 93.33 210
Change 30 100
% of change 30/93.33 = 32.1% 100/210 = 47.6%
Total change is (32.1+47.6) = 79.7% < 100%. Hence shadow price of labour and material
will not change. Only the optimal value of objective function will change. The amount of
change = 1.3*(-30)+0.2*100 = -39+20 = -19.
New objective function value = 588-19 = 569.

Note: If total change > 100% then we have to re-optimize the LP problem using the new
available resources (bi).