Slides by

John
Loucks
St. Edward’s
University

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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

Olympic Bike is introducing two new lightweight

bicycle frames, the Deluxe and the Professional, to be
made from special aluminum and steel alloys. The
anticipated unit profits are $10 for the Deluxe and $15 for
the Professional.
The number of pounds of each alloy needed per
frame is summarized on the next slide.

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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

A supplier delivers 100 pounds of the aluminum alloy

and 80 pounds of the steel alloy weekly.

Aluminum Alloy Steel Alloy

Deluxe 2 3
Professional 4 2

How many Deluxe and Professional frames should

Olympic produce each week?

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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Model Formulation
• Verbal Statement of the Objective Function
Maximize total weekly profit.
• Verbal Statement of the Constraints
Total weekly usage of aluminum alloy < 100 pounds.
Total weekly usage of steel alloy < 80 pounds.
• Definition of the Decision Variables
x1 = number of Deluxe frames produced weekly.
x2 = number of Professional frames produced weekly.

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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Model Formulation (continued)

Max 10x1 + 15x2 (Total Weekly Profit)

s.t. 2x1 + 4x2 < 100 (Aluminum Available)

3x1 + 2x2 < 80 (Steel Available)

x1, x2 > 0

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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Partial Spreadsheet Showing Solution

A B C D
6 Decision Variables
7 Deluxe Professional
8 Bikes Made 15 17.500
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10 Maximized Total Profit 412.500
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12 Constraints Amount Used Amount Avail.
13 Aluminum 100 <= 100
14 Steel 80 <= 80

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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Optimal Solution
According to the output:

x1 (Deluxe frames) = 15
x2 (Professional frames) = 17.5
Objective function value = $412.50

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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Range of Optimality

Question
Suppose the profit on deluxe frames is increased
to $20. Is the above solution still optimal? What is
the value of the objective function when this unit profit
is increased to $20?

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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Sensitivity Report

Variable Cells
Model Final Reduced Objective Allowable Allowable
Variable Name Value Cost Coefficient Increase Decrease
X1 Deluxe 15.000 0.000 10.000 12.500 2.500
X2 Profes. 17.500 0.000 15.000 5.000 8.333

Constraints
Constraint Final Shadow Constraint Allowable Allowable
Number Name Value Price R.H. Side Increase Decrease
1 Alum. 100.000 3.125 100.000 60.000 46.667
2 Steel 80.000 1.250 80.000 70.000 30.000

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted
in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Range of Optimality

Answer
The output states that the solution remains optimal
as long as the objective function coefficient of x1 is
between 7.5 and 22.5. Because 20 is within this
range, the optimal solution will not change. The
optimal profit will change: 20x1 + 15x2 = 20(15) +
15(17.5) = $562.50.

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted
in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Range of Optimality

Question
If the unit profit on deluxe frames were $6 instead
of $10, would the optimal solution change?

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted
in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Range of Optimality

Variable Cells
Model Final Reduced Objective Allowable Allowable
Variable Name Value Cost Coefficient Increase Decrease
X1 Deluxe 15.000 0.000 10.000 12.500 2.500
X2 Profes. 17.500 0.000 15.000 5.000 8.333

Constraints
Constraint Final Shadow Constraint Allowable Allowable
Number Name Value Price R.H. Side Increase Decrease
1 Alum. 100.000 3.125 100.000 60.000 46.667
2 Steel 80.000 1.250 80.000 70.000 30.000

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted
in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Example 2: Olympic Bike Co.

 Range of Optimality

Answer
The output states that the solution remains
optimal as long as the objective function coefficient of
x1 is between 7.5 and 22.5. Because 6 is outside this
range, the optimal solution would change.

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© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted
in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.