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Interpreting The Sensitivity Report

The sensitivity report summarizes how changes to objective function coefficients and right-hand side constraint values would impact the optimal solution and profit. Small changes may not affect the solution but could increase or decrease the profit. Larger changes beyond the allowable amounts could change the optimal solution and substantially impact the profit.

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nishantjain95
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57 views

Interpreting The Sensitivity Report

The sensitivity report summarizes how changes to objective function coefficients and right-hand side constraint values would impact the optimal solution and profit. Small changes may not affect the solution but could increase or decrease the profit. Larger changes beyond the allowable amounts could change the optimal solution and substantially impact the profit.

Uploaded by

nishantjain95
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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INTERPRETING THE SENSITIVITY REPORT

The top protion of the sensitivity report deals with changes to objective function coefficients. Adjustable Cells Cell Name $L$4 Widgets $M$4 Franistans $N$4 Discombobulators Final Value Reduced Objective Allowable Cost Coefficient Increase 0 -3.519906323 155 3.519906323 6 0 149 35.95238095 8 0 175 0.745905707 Allowable Decrease 1E+30 1.847004608 12

Reduced Cost The amount an objective function coefficent must change before we would make any of the product. or, the amount the profit would change if you made at least one unit of the product. $155 was not a high enough profit on widgets to make any. Its profit must increase to $155 + $3.52 or $158.52 before we would make widgets. We are already making franistans and discombulators, so their reduced costs are 0. Allowable Increase and Allowable Decrease The amount an objective function can increase and decrease and the solution of 0 widgets, 6 franistans, and 8 discombobulators remains optimal If the profit on discombobulators decreased from $175 to $160, this is a $15 decrease. This is greater than its Allowable Decrease (12) so the solution will change (and so will the profit). If the profit on franistans increased from $149 to $170, this is a $21 increase. This is less than its Allowable Increase (35.95), so the solution will not change, but the profit would since we are making 6 franistans. The profit would increase by 6($21) = $126. If the profit on widgets increase from $155 to $157, this is a $2 increase. This is less than its Allowable Increase (3.51) so the solution will not change. The profit will not change either because even though the profit on widgets increased, we are making 0 widgets.

The bottom protion of the sensitivity report deals with changes to right hand side coefficients. Constraints Cell Name $P$8 Labor (Hours) $P$9 Steel (Pounds) $P$10 Copper (Pounds) Final Value 60 30 180 Shadow Constraint Allowable Price R.H. Side Increase 15.47131148 60 0.535714286 5.714285714 30 0.737704918 0 250 1E+30 Allowable Decrease 1.978021978 4.426229508 70

Shadow Prices The amount the profit will change given one more unit on the right hand side of the constraint. If the item (like steel and copper) was included in the way the objective function coefficients were determined, the shadow price represents a premium over current prices you would be willing to pay for additional units. If the item (like labor) was not included in the calculation of the objective function coefficients (it was a fixed or sunk cost), the shadow price is the price you would be willing to pay for additional units. If you are currently paying $25 per hour for labor, $12 per pound for steel and $5 per pound for copper, you would be willing to pay up to $15.47 for additional labor hours (sunk cost) you would be willing to pay up to $17.71 ($12 + $5.71) for additional pounds of steel (included cost) you would not be willing to buy any extra copper (you have 70 pounds left over as it is!) Allowable Increase and Allowable Decrease The amount the RHS value can increase and decreae and the shadow prices remain unchanged! If labor hours increased from 60 to 64 hours, this is an increase of 4 hours. This is greater than its Allowable Increase (.5357), so the shadow prices will change -- so will the solution and profit If the number of pounds of steel available decreased from 30 to 27, this is a decrease of 3 pounds. This is less than its Allowable Decrease (4.4262), so the shadow prices will not change. But the solution will change (since you have less steel and you are using all you've got) and the profit will decrease by $5.71 per pound decrease or 3($5.71) = a $17.13 decrease in profit. If the number of pounds of copper decreased from 250 to 200, this is a decrease of 50 pounds. This is less than its Allowable Decrease (70), so the shadow prices will not change. The solution will not change either, you just now have only 20 pounds of copper left over (slack) rather than 70. Since the solution and the objective function coefficients did not change, neither will the profit.

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