Chapter 7

Quantitative analysis for management

Linear Programming Models:

Graphical and Computer Methods

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 Learning Objectives

After completing this chapter, students will be able to:

1. Understand the basic assumptions and properties of
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linear programming (LP).

2. Graphically solve any LP problem that has only two

variables by both the corner point and isoprofit line
methods.

3. Understand special issues in LP such as infeasibility,

unboundedness, redundancy, and alternative optimal
solutions.

4. Understand the role of sensitivity analysis.

5. Use Excel spreadsheets to solve LP problems.

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 Chapter Outline

7.1 Introduction

7.2 Requirements of a Linear Programming Problem

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7.3 Formulating LP Problems

7.4 Graphical Solution to an LP Problem

7.5 Solving Flair Furniture’s LP Problem using QM for

Windows and Excel

7.6 Solving Minimization Problems

7.7 Four Special Cases in LP

7.8 Sensitivity Analysis

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 Introduction
 Many management decisions involve trying to
make the most effective use of limited resources.
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 Linear programming (LP)

LP is a widely used
mathematical modeling technique designed to help
managers in planning and decision making relative
to resource allocation.
 This belongs to the broader field of mathematical programming.
 In this sense, programming refers to modeling and solving a
problem mathematically.

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 Requirements of a Linear
Programming Problem
 All LP problems have 4 properties in common:
1. All problems seek to maximize or minimize some quantity (the
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objective function).
function

2. Restrictions or constraints that limit the degree to which we can

pursue our objective are present.

3. There must be alternative courses of action from which to choose.

4. The objective and constraints in problems must be expressed in

terms of linear equations or inequalities.

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 Basic Assumptions of LP

 We assume conditions of certainty exist and numbers in

the objective and constraints are known with certainty
and do not change during the period being studied.
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 We assume proportionality exists in the objective and

constraints.

 We assume additivity in that the total of all activities

equals the sum of the individual activities.

 We assume divisibility in that solutions need not be

whole numbers.

 All answers or variables are nonnegative.

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 LP Properties and Assumptions

Table 7.1
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PROPERTIES OF LINEAR PROGRAMS

1. One objective function
2. One or more constraints
3. Alternative courses of action
4. Objective function and constraints are linear
– proportionality and divisibility
5. Certainty
6. Divisibility
7. Nonnegative variables

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 Formulating LP Problems

 Formulating a linear program involves developing a

mathematical model to represent the managerial
problem.
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 The steps in formulating a linear program are:

1. Completely understand the managerial problem being faced.

2. Identify the objective and the constraints.

3. Define the decision variables.

4. Use the decision variables to write mathematical expressions

for the objective function and the constraints.

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 Formulating LP Problems

 One of the most common LP applications is the

product mix problem.
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 Two or more products are produced using limited

resources such as personnel, machines, and raw
materials.

 The profit that the firm seeks to maximize is based on

the profit contribution per unit of each product.

 The company would like to determine how many units

of each product it should produce so as to maximize
overall profit given its limited resources.

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 Flair Furniture Company

 The Flair Furniture Company produces inexpensive tables

and chairs.
 Processes are similar in that both require a certain amount
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of hours of carpentry work and in the painting and

varnishing department.
 Each table takes 4 hours of carpentry and 2 hours of
painting and varnishing.
 Each chair requires 3 of carpentry and 1 hour of painting
and varnishing.
 There are 240 hours of carpentry time available and 100
hours of painting and varnishing.
 Each table yields a profit of $70 and each chair a profit of
$50.

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 Flair Furniture Company Data

The company wants to determine the best

combination of tables and chairs to produce to reach
the maximum profit.
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Table 7.2

HOURS REQUIRED TO
PRODUCE 1 UNIT
(T) (C) AVAILABLE HOURS
DEPARTMENT TABLES CHAIRS THIS WEEK
Carpentry 4 3 240

Painting and varnishing 2 1 100

Profit per unit $70 $50

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 Flair Furniture Company

 The objective is to:

Maximize profit
 The constraints are:
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1. The hours of carpentry time used cannot

exceed 240 hours per week.
2. The hours of painting and varnishing time
used cannot exceed 100 hours per week.
 The decision variables representing the actual
decisions we will make are:
T = number of tables to be produced per week.
C = number of chairs to be produced per week.

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 Flair Furniture Company

 We create the LP objective function in terms of T

and C:
Maximize profit = $70T + $50C
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 Develop mathematical relationships for the two

constraints:
 For carpentry, total time used is:
(4 hours per table)(Number of tables produced)
+ (3 hours per chair)(Number of chairs
produced).
 We know that:
Carpentry time used ≤ Carpentry time available.
4T + 3C ≤ 240 (hours of carpentry time)

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 Flair Furniture Company

 Similarly,
Painting and varnishing time used
≤ Painting and varnishing time available.
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2 T + 1C ≤ 100 (hours of painting and varnishing time)

This means that each table produced

requires two hours of painting and
varnishing time.

 Both of these constraints restrict production

capacity and affect total profit.

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 Flair Furniture Company

The values for T and C must be nonnegative.

T ≥ 0 (number of tables produced is greater
than or equal to 0)
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C ≥ 0 (number of chairs produced is greater

than or equal to 0)

The complete problem stated mathematically:

Maximize profit = $70T + $50C
subject to
4T + 3C ≤240 (carpentry constraint)
2T + 1C ≤100 (painting and varnishing constraint)
T, C ≥ 0 (nonnegativity constraint)

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 Graphical Solution to an LP Problem

 The easiest way to solve a small LP problems is graphically.

 The graphical method only works when there are just two
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decision variables.
 When there are more than two variables, a more complex
approach is needed as it is not possible to plot the solution
on a two-dimensional graph.
 The graphical method provides valuable insight into how
other approaches work.

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 Graphical Representation
of a Constraint

Quadrant Containing All Positive Values

C
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100 –
– This Axis Represents the Constraint T ≥ 0
Number of Chairs

80 –
–
60 –
–
40 – This Axis Represents the
– Constraint C ≥ 0
20 –
–
|– | | | | | | | | | | |
Figure 7.1 0 20 40 60 80 100 T
Number of Tables
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 Graphical Representation of a Constraint

 The first step in solving the problem is to identify

a set or region of feasible solutions.

 To do this we plot each constraint equation on a

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graph.

 We start by graphing the equality portion of the

constraint equations:

4T + 3C = 240

 We solve for the axis intercepts and draw the line.

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 Graphical Representation of a Constraint

 When Flair produces no tables, the carpentry constraint is:

4(0) + 3C = 240
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3C = 240

C = 80
 Similarly for no chairs:

4T + 3(0) = 240

4T = 240

T = 60
 This line is shown on the following graph:

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 Graphical Representation
of a Constraint

Graph of carpentry constraint equation

C
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100 –
–
(T = 0, C = 80)
Number of Chairs

80 –
–
60 –
–
40 –
–
(T = 60, C = 0)
20 –
–
Figure 7.2 |– | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
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 Graphical Representation
of a Constraint
Region that Satisfies the Carpentry Constraint
C
 Any point on or below
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100 – the constraint plot will

– not violate the
restriction.
Number of Chairs

80 –
 Any point above the
–
plot will violate the
60 –
restriction.
–
(30, 40) (70, 40)
40 –
–
20 –
– (30, 20)
|– | | | | | | | | | | |
Figure 7.3 0 20 40 60 80 100 T
Number of Tables
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 Graphical Representation of a Constraint

 The point (30, 40) lies on the plot and exactly

satisfies the constraint
4(30) + 3(40) = 240.
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 The point (30, 20) lies below the plot and satisfies
the constraint
4(30) + 3(20) = 180.
 The point (70, 40) lies above the plot and does not
satisfy the constraint
4(70) + 3(40) = 400.

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 Graphical Representation of a Constraint

Region that Satisfies the Painting and

Varnishing Constraint
C
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100 – (T = 0, C = 100)
–
Number of Chairs

80 –
–
60 –
–
40 –
–
(T = 50, C = 0)
20 –
–
Figure 7.4 |– | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
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 Graphical Representation of a Constraint

 To produce tables and chairs, both departments must

be used.
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 We need to find a solution that satisfies both

constraints simultaneously.

 A new graph shows both constraint plots.

 The feasible region (or area of feasible solutions)

solutions is
where all constraints are satisfied.

 Any point inside this region is a feasible solution.

 Any point outside the region is an infeasible solution.

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 Graphical Representation
of a Constraint
Feasible Solution Region for the Flair
Furniture Company Problem
C
Quantitative analysis for management

100 –
–
Number of Chairs

80 – Painting/Varnishing Constraint
–
60 –
–
40 –
–
Carpentry Constraint
20 – Feasible
Region
–
|– | | | | | | | | | | |
Figure 7.5
0 20 40 60 80 100 T
Number of Tables
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 Graphical Representation
of a Constraint
 For the point (30, 20)
Carpentry 4T + 3C ≤ 240 hours available

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constraint (4)(30) + (3)(20) = 180 hours used

Painting 2T + 1C ≤ 100 hours available
constraint (2)(30) + (1)(20) = 80 hours used


 For the point (70, 40)

Carpentry 4T + 3C ≤ 240 hours available

constraint (4)(70) + (3)(40) = 400 hours used 
Painting 2T + 1C ≤ 100 hours available
constraint (2)(70) + (1)(40) = 180 hours used 

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 Graphical Representation of a Constraint

 For the point (50, 5)

Carpentry 4T + 3C ≤ 240 hours available

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constraint (4)(50) + (3)(5) = 215 hours used

Painting 2T + 1C ≤ 100 hours available
constraint (2)(50) + (1)(5) = 105 hours used 

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 Isoprofit Line Solution Method

 Once the feasible region has been graphed, we need to find the
optimal solution from the many possible solutions.

 The speediest way to do this is to use the isoprofit line method.

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 Starting with a small but possible profit value, we graph the

objective function.

 We move the objective function line in the direction of

increasing profit while maintaining the slope.

 The last point it touches in the feasible region is the optimal

solution.

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 Isoprofit Line Solution Method

 For Flair Furniture, choose a profit of $2,100.

 The objective function is then

$2,100 = 70T + 50C

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 Solving for the axis intercepts, we can draw the graph.

 This is obviously not the best possible solution.

 Further graphs can be created using larger profits.

 The further we move from the origin, the larger the

profit will be.

 The highest profit ($4,100) will be generated when the

isoprofit line passes through the point (30, 40).

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 Isoprofit Line Solution Method

Profit line of $2,100 Plotted for the Flair

C
Furniture Company
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100 –
–
Number of Chairs

80 –
–
60 –
–
(0, 42) $2,100 = $70T + $50C
40 –
–
(30, 0)
20 –
–
|– | | | | | | | | | | |
Figure 7.6
0 20 40 60 80 100 T
Number of Tables
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 Isoprofit Line Solution Method

Four Isoprofit Lines Plotted for the Flair

Furniture Company
C
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100 –
–
$3,500 = $70T + $50C
Number of Chairs

80 –
– $2,800 = $70T + $50C
60 –
– $2,100 = $70T + $50C
40 –
– $4,200 = $70T + $50C
20 –
–
|– | | | | | | | | | | |
Figure 7.7
0 20 40 60 80 100 T
Number of Tables
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 Isoprofit Line Solution Method

Optimal Solution to the Flair Furniture problem

C
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100 –
–
Number of Chairs

80 –
Maximum Profit Line
–
60 – Optimal Solution Point
– (T = 30, C = 40)
40 –
– $4,100 = $70T + $50C
20 –
–
Figure 7.8 |– | | | | | | | | | | |
0 20 40 60 80 100 T
Number of Tables
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 Corner Point Solution Method

 A second approach to solving LP problems employs

the corner point method.
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 It involves looking at the profit at every corner

point of the feasible region.

 The mathematical theory behind LP is that the

optimal solution must lie at one of the corner
points,
points or extreme point,
point in the feasible region.

 For Flair Furniture, the feasible region is a four-

sided polygon with four corner points labeled 1, 2,
3, and 4 on the graph.

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 Corner Point Solution Method

Four Corner Points of the Feasible Region

C
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100 –
2 –
Number of Chairs

80 –
–
60 –
–
3
40 –
–
20 –
–
1 |– | | | | | | | | | | |
Figure 7.9
0 20 40
4 60 80 100 T
Number of Tables
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 Corner Point Solution Method

 To find the coordinates for Point 3 accurately we have to

solve for the intersection of the two constraint lines.
 Using the simultaneous equations method,
method we multiply the
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painting equation by –2 and add it to the carpentry equation

4T + 3C = 240 (carpentry line)
– 4T – 2C = –200 (painting line)
C = 40
 Substituting 40 for C in either of the original equations
allows us to determine the value of T.
4T + (3)(40) = 240 (carpentry line)
4T + 120 = 240
T = 30
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 Corner Point Solution Method

Point 1 : (T = 0, C = 0) Profit = $70(0) + $50(0) = $0

Point 2 : (T = 0, C = 80) Profit = $70(0) + $50(80) =
$4,000
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4
Point : (T = 50, C = 0) Profit = $70(50) + $50(0) =
3
$3,500
Point : (T = 30, C = 40) Profit = $70(30) + $50(40) =
Because
$4,100 Point 3 returns the highest profit, this is
the optimal solution.

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 Slack and Surplus

 Slack is the amount of a resource that is not used. For a less-

than-or-equal constraint:
 Slack = Amount of resource available – amount of resource used.
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 Surplus is used with a greater-than-or-equal constraint to

indicate the amount by which the right hand side of the
constraint is exceeded.
 Surplus = Actual amount – minimum amount.

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 Summary of Graphical Solution Methods

ISOPROFIT METHOD
1. Graph all constraints and find the feasible region.
2. Select a specific profit (or cost) line and graph it to find the slope.
Quantitative analysis for management

3. Move the objective function line in the direction of increasing profit (or
decreasing cost) while maintaining the slope. The last point it touches in the
feasible region is the optimal solution.
4. Find the values of the decision variables at this last point and compute the
profit (or cost).
CORNER POINT METHOD
1. Graph all constraints and find the feasible region.
2. Find the corner points of the feasible reason.
3. Compute the profit (or cost) at each of the feasible corner points.
4. Select the corner point with the best value of the objective function found in
Step 3. This is the optimal solution.

Table 7.4

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 Using Excel’s Solver Command to Solve LP Problems

 The Solver tool in Excel can be used to find

solutions to:
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 LP problems.
 Integer programming problems.
 Noninteger programming problems.
 Solver is limited to 200 variables and 100
constraints.

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 Using Solver to Solve the Flair Furniture Problem

 Recall the model for Flair Furniture is:

Maximize profit = $70T + $50C

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Subject to 4T + 3C ≤ 240
2T + 1C ≤ 100

 To use Solver, it is necessary to enter formulas

based on the initial model.

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 Using Solver to Solve the Flair Furniture Problem

1. Enter the variable names, the coefficients for the

objective function and constraints, and the right-
hand-side values for each of the constraints.
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2. Designate specific cells for the values of the

decision variables.
3. Write a formula to calculate the value of the
objective function.
4. Write a formula to compute the left-hand sides of
each of the constraints.

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 Using Solver to Solve the Flair Furniture Problem

Excel Data Input for the Flair Furniture Example

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Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Program 7.2A

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 Using Solver to Solve the Flair Furniture Problem

Formulas for the Flair Furniture Example

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Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Program 7.2B

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 Using Solver to Solve the Flair Furniture Problem

Excel Spreadsheet for the Flair Furniture Example

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Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Program 7.2C

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 Using Solver to Solve the Flair Furniture Problem

 Once the model has been entered, the following steps can
be used to solve the problem.
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In Excel 2010, select Data – Solver.

If Solver does not appear in the indicated place, see Appendix F

for instructions on how to activate this add-in.

1. In the Set Objective box, enter the cell address for the total profit.
2. In the By Changing Cells box, enter the cell addresses for the
variable values.
3. Click Max for a maximization problem and Min for a minimization
problem.

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 Using Solver to Solve the Flair Furniture
Problem

4. Check the box for Make Unconstrained Variables

Non-negative.
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5. Click the Select Solving Method button and

select Simplex LP from the menu that appears.

6.Click Add to add the constraints.

7.Inthe dialog box that appears, enter the cell

references for the left-hand-side values, the type of
equation, and the right-hand-side values.

8.Click Solve.

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 Using Solver to Solve the Flair
Furniture Problem

Starting Solver
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Figure 7.2D

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 Using Solver to Solve the Flair
Furniture Problem

Solver
Parameters
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Dialog Box

Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Figure 7.2E

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 Using Solver to Solve the Flair
Furniture Problem

Solver Add Constraint Dialog Box

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Figure 7.2F

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 Using Solver to Solve the Flair
Furniture Problem

Solver Results Dialog Box

Quantitative analysis for management

Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Figure 7.2G

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 Using Solver to Solve the Flair
Furniture Problem

Solution Found by Solver

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Figure 7.2H

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 Solving Minimization Problems

 Many LP problems involve minimizing an objective such

as cost instead of maximizing a profit function.
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 Minimization problems can be solved graphically by first

setting up the feasible solution region and then using
either the corner point method or an isocost line
approach (which is analogous to the isoprofit approach
in maximization problems) to find the values of the
decision variables (e.g., X1 and X2) that yield the
minimum cost.

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 Holiday Meal Turkey Ranch

The Holiday Meal Turkey Ranch is considering buying two

different brands of turkey feed and blending them to
provide a good, low-cost diet for its turkeys
Quantitative analysis for management

Let
X1 = number of pounds of brand 1 feed purchased
X2 = number of pounds of brand 2 feed purchased

Minimize cost (in cents) = 2X1 + 3X2

subject to:
5X1 + 10X2 ≥ 90 ounces (ingredient constraint A)
4X1 + 3X2 ≥ 48 ounces (ingredient constraint B)
0.5X1 ≥ 1.5 ounces (ingredient constraint C)
X1 ≥ 0 (nonnegativity constraint)
X2 ≥ 0 (nonnegativity constraint)
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 Holiday Meal Turkey Ranch

Holiday Meal Turkey Ranch data

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COMPOSITION OF EACH POUND

OF FEED (OZ.)
MINIMUM MONTHLY
REQUIREMENT PER
INGREDIENT BRAND 1 FEED BRAND 2 FEED TURKEY (OZ.)
A 5 10 90
B 4 3 48
C 0.5 0 1.5
Cost per pound 2 cents 3 cents
Table 7.5

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 Holiday Meal Turkey Ranch

 Use the corner point method.

 First construct the feasible solution region.

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 The optimal solution will lie at one of the corners as it

would in a maximization problem.

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 Feasible Region for the Holiday
Meal Turkey Ranch Problem

X2
–
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20 – Ingredient C Constraint
Pounds of Brand 2

15 – Feasible Region

a
10 –
Ingredient B Constraint

5– b Ingredient A Constraint
Figure 7.10
| | | | c | |
0–
5 10 15 20 25 X1
Pounds of Brand 1
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 Holiday Meal Turkey Ranch

 Solve for the values of the three corner points.

 Point a is the intersection of ingredient constraints C and

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B.

4X1 + 3X2 = 48

X1 = 3

 Substituting 3 in the first equation, we find X2 = 12.

 Solving for point b with basic algebra we find X1 = 8.4

and X2 = 4.8.

 Solving for point c we find X1 = 18 and X2 = 0.

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 Holiday Meal Turkey Ranch

Substituting these value back into the

objective function we find
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Cost = 2X1 + 3X2

Cost at point a = 2(3) + 3(12) = 42
Cost at point b = 2(8.4) + 3(4.8) = 31.2
Cost at point c = 2(18) + 3(0) = 36

The lowest cost solution is to purchase 8.4 pounds

of brand 1 feed and 4.8 pounds of brand 2 feed for a
total cost of 31.2 cents per turkey.

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 Holiday Meal Turkey Ranch

Graphical Solution to the Holiday Meal Turkey Ranch Problem

Using the Isocost Approach
X2
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–
Feasible Region

20 –
Pounds of Brand 2

15 – 54
¢ =2
Di X
re 1 +
cti 3X
on
of 2 Is
10 – De oc
31 os
.2¢ Copyright ©2012 rc
e as as t Lin
Pearson
=2 Education, Inc. publishing
X Prentice Hall ing e
1 + Co
5– 3X st
2

Figure 7.11 (X1 = 8.4, X2 = 4.8)

| | | | | |
0–
5 10 15 20 25 X1
Pounds of Brand 1
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 Holiday Meal Turkey Ranch

Excel 2010 Spreadsheet for the Holiday Meal Turkey Ranch

problem
Quantitative analysis for management

Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Program 7.4A

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 Holiday Meal Turkey Ranch

Excel 2010 Solution to the Holiday Meal Turkey Ranch

Problem
Quantitative analysis for management

Program 7.4B

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 Four Special Cases in LP

 Four special cases and difficulties arise at times when

using the graphical approach to solving LP problems.
Quantitative analysis for management

 No feasible solution
 Unboundedness
 Redundancy
 Alternate Optimal Solutions

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 Four Special Cases in LP

No feasible solution
 This exists when there is no solution to the problem that
Quantitative analysis for management

satisfies all the constraint equations.

 No feasible solution region exists.
 This is a common occurrence in the real world.
 Generally one or more constraints are relaxed until a solution
is found.

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 Four Special Cases in LP

A problem with no feasible solution

X2
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8–
–
6–
– Region Satisfying
4– Third Constraint
–
2–
–
0– | | | | | | | | | |
Figure 7.12 2 4 6 8 X1
Region Satisfying First Two Constraints

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 Four Special Cases in LP

Unboundedness
 Sometimes a linear program will not have a finite solution.
Quantitative analysis for management

 In a maximization problem, one or more solution variables,

and the profit, can be made infinitely large without violating
any constraints.
 In a graphical solution, the feasible region will be open ended.
 This usually means the problem has been formulated
improperly.

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 Four Special Cases in LP

A Feasible Region That is Unbounded to the Right

X2
Quantitative analysis for management

X1 ≥ 5
15 –

X2 ≤ 10
10 –

Feasible Region
5–
X1 + 2X2 ≥ 15
| | | | |
Figure 7.13 0– 5 10 15 X1

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 Four Special Cases in LP

Redundancy
 A redundant constraint is one that does not affect the feasible
Quantitative analysis for management

solution region.
 One or more constraints may be binding.
 This is a very common occurrence in the real world.
 It causes no particular problems, but eliminating redundant
constraints simplifies the model.

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 Four Special Cases in LP

Problem with a Redundant Constraint

X2

30 –
Quantitative analysis for management

25 –
2X1 + X2 ≤ 30

20 –
Redundant
Constraint
15 –
X1 ≤ 25

10 – X1 + X2 ≤ 20
Feasible
Figure 7.14 5– Region

| | | | | |
0–
5 10 15 20 25 30 X1
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 Four Special Cases in LP

Alternate Optimal Solutions

 Occasionally two or more optimal solutions may exist.
Quantitative analysis for management

 Graphically this occurs when the objective function’s isoprofit

or isocost line runs perfectly parallel to one of the constraints.
 This actually allows management great flexibility in deciding
which combination to select as the profit is the same at each
alternate solution.

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 Four Special Cases in LP
Example of Alternate Optimal Solutions
X2

8–
Quantitative analysis for management

7–
A
6– Optimal Solution Consists of All
Combinations of X1 and X2 Along
5– the AB Segment
4–

3– Isoprofit Line for $8

2–
B Isoprofit Line for $12
1 – Feasible Overlays Line Segment AB
Figure 7.15
Region
0– | | | | | | | |
1 2 3 4 5 6 7 8 X1

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 Sensitivity Analysis

 Optimal solutions to LP problems thus far have been

found under what are called deterministic assumptions.

 This means that we assume complete certainty in the

Quantitative analysis for management

data and relationships of a problem.

 But in the real world, conditions are dynamic and

changing.

 We can analyze how sensitive a deterministic solution is

to changes in the assumptions of the model.

 This is called sensitivity analysis,

analysis postoptimality
analysis,
analysis parametric programming,
programming or optimality
analysis.

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 Sensitivity Analysis

 Sensitivity analysis often involves a series of what-if?

questions concerning constraints, variable coefficients,
and the objective function.
Quantitative analysis for management

 One way to do this is the trial-and-error method where

values are changed and the entire model is resolved.

 The preferred way is to use an analytic postoptimality

analysis.

 After a problem has been solved, we determine a range

of changes in problem parameters that will not affect
the optimal solution or change the variables in the
solution.

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 High Note Sound Company

 product mix LP model. The High Note Sound Company

manufactures quality CD players and stereo receivers.

 Products require a certain amount of skilled artisanship

Quantitative analysis for management

which is in limited supply.

 The firm has formulated the following

Maximize profit = $50X1

+ $120X2
Subject to 2X1

+ 4X2

≤ 80

(hours of electrician’s time

available)
Business analytics research group 3X 7-73
 High Note Sound Company

The High Note Sound Company Graphical Solution

X2
(receivers)
Quantitative analysis for management

60 –

– Optimal Solution at Point a

X1 = 0 CD Players
40 – X2 = 20 Receivers
Profits = $2,400
a = (0, 20) –
b = (16, 12)
20 –
Isoprofit Line: $2,400 = 50X1 + 120X2
10 –
Figure 7.16
| | | | | |
0–
10 20 30 40 50 60 X1
c = (20, 0) (CD players)

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 Changes in the
Objective Function Coefficient

 In real-life problems, contribution rates in the objective functions

fluctuate periodically.

 Graphically, this means that although the feasible solution region

Quantitative analysis for management

remains exactly the same, the slope of the isoprofit or isocost line will
change.

 We can often make modest increases or decreases in the objective

function coefficient of any variable without changing the current optimal
corner point.

 We need to know how much an objective function coefficient can change

before the optimal solution would be at a different corner point.

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 Changes in the
Objective Function Coefficient
Changes in the Receiver Contribution Coefficients

X2
Quantitative analysis for management

40 – Profit Line for 50X1 + 80X2

(Passes through Point b)

30 –
Old Profit Line for 50X1 + 120X2
(Passes through Point a)
20 – b
a Profit Line for 50X1 + 150X2
(Passes through Point a)
10 –

c
| | | | | |
0– 10 20 30 40 50 60 X1
Figure 7.17
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 Excel Solver and Changes in Objective Function
Coefficients
Excel 2010 Spreadsheet for High Note Sound Company
Quantitative analysis for management

Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Program 7.6A

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 Excel Solver and Changes in Objective
Function Coefficients

Excel 2010 Solution and Solver Results Window for High Note Sound
Company
Quantitative analysis for management

Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Figure 7.6B

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 Excel Solver and Changes in Objective
Function Coefficients
Excel 2010 Sensitivity Report for High Note Sound
Company
Quantitative analysis for management

Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Program 7.6C

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 Changes in the
Technological Coefficients

 Changes in the technological coefficients often

reflect changes in the state of technology.
Quantitative analysis for management

 If the amount of resources needed to produce a

product changes, coefficients in the constraint
equations will change.

 This does not change the objective function, but

it can produce a significant change in the shape
of the feasible region.

 This may cause a change in the optimal solution.

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 Changes in the
Technological Coefficients

Change in the Technological Coefficients for the High

Note Sound Company
Quantitative analysis for management

(a) Original Problem (b) Change in Circled (c) Change in Circled

Coefficient Coefficient
X2 X2 X2

60 – 60 – 60 –
Stereo Receivers

3X1 + 1X2 ≤ 60 2 X1 + 1X2 ≤ 60 3X1 + 1X2 ≤ 60

40 – 40 – 40 –
Optimal Still Optimal
a Solution a Optimal Solution
20 – 20 – d 20 –
b
2X1 + 4X2 ≤ 80 2X1 + 4X2 ≤ 80 16 f g 2X1 + 5 X2 ≤ 80
|c | | | e | | | |c | |
0– 20 40 X1 0– 20 30 40 X1 0– 20 40 X1
CD Players
Figure 7.18

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 Changes in Resources or
Right-Hand-Side Values
 The right-hand-side values of the constraints
often represent resources available to the firm.
Quantitative analysis for management

 If additional resources were available, a higher

total profit could be realized.

 Sensitivity analysis about resources will help

answer questions about how much should be paid
for additional resources and how much more of a
resource would be useful.

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 Changes in Resources or Right-
Hand-Side Values

 If the right-hand side of a constraint is changed, the

feasible region will change (unless the constraint is
redundant).
Quantitative analysis for management

 Often the optimal solution will change.

 The amount of change in the objective function value

that results from a unit change in one of the resources
available is called the dual price or dual value .

 The dual price for a constraint is the improvement in

the objective function value that results from a one-unit
increase in the right-hand side of the constraint.

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 Changes in Resources or Right-
Hand-Side Values

 However, the amount of possible increase in the

right-hand side of a resource is limited.
Quantitative analysis for management

 If the number of hours increased beyond the

upper bound, then the objective function would no
longer increase by the dual price.

 There would simply be excess (slack)

slack hours of a
resource or the objective function may change by
an amount different from the dual price.

 The dual price is relevant only within limits.

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 Changes in the Electricians’ Time Resource for the High
Note Sound Company

X2 (a)

60 –
Quantitative analysis for management

40 – Constraint Representing 60 Hours of

Audio Technician’s Time Resource
a
25 –
b Changed Constraint Representing 100 Hours
20 – of Electrician’s Time Resource

| c | | |
0– 20 40 50 60 X1

Figure 7.19

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 Changes in the Electricians’ Time Resource for the High Note
Sound Company

X2 (b)

60 –
Quantitative analysis for management

40 – Constraint Representing 60 Hours of

Audio Technician’s Time Resource

Changed Constraint Representing 60 Hours

20 – a of Electrician’s Time Resource
15 –
b
c | | | |
0– 20 30 40 60 X1
Figure 7.19

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 Changes in the Electricians’ Time Resource for the High Note Sound
Company

X2 (c)

60 –
Quantitative analysis for management

Changed Constraint Representing 240 Hours

of Electrician’s Time Resource

40 –

Constraint
Representing
60 Hours of Audio
20 – Technician’s
Time Resource

| | | | | |
0– 20 40 60 80 100 120
X1
Figure 7.19

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 QM for Windows and Changes in Right-Hand-Side
Values
Sensitivity Analysis for High Note Sound Company Using QM for
Windows
Quantitative analysis for management

Program 7.5B

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 Excel Solver and Changes in Right-Hand-Side
Values
Excel 2010 Sensitivity Analysis for High Note Sound Company
Quantitative analysis for management

Copyright ©2012 Pearson

Education, Inc. publishing as
Prentice Hall

Program 7.6C

7-89
Business analytics research group