Chapter 2:

Linear programing

Ha Thi Xuan Chi, PhD

1
Chapter outline
 Introduction
 Requirements of a Linear Programming Problem
 LP Properties and Assumptions
 Formulating LP Problems
 Graphical Solution to an LP Problem
 Solving Maximization Problems
 Four Special Cases in LP
 Sensitivity Analysis

2
 Requirements of a Linear
Programming Problem

 4 properties :
1. maximize / minimize (the objective function).
2. Restrictions / constraints
3. There must be alternative courses of action from which to
choose.
4. The objective and constraints : linear equations
/inequalities.
Objective: Maximize profit Z = $70T + $50C
Restrictions/ subject to:
4T + 3C ≤ 240 (carpentry constraint)
2T + 1C ≤ 100 (painting and varnishing constraint)
T, C ≥ 0 (nonnegativity constraint)

Copyright © 2012 Pearson Education 7-3

LP Properties and Assumptions (video)
PROPERTIES OF LINEAR PROGRAMS
1. One/single 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
Objective: Maximize profit Z = $70T + $50C
Restrictions/ subject to:
4T + 3C ≤ 240 (carpentry constraint)
Copyright ©
2012 Pearson
2T + 1C ≤ 100 (painting and varnishing constraint)
Education T, C ≥ 0 (nonnegativity constraint) 7-4
 Formulating LP Problems

 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.

Copyright ©
2012 Pearson
Education
7-5
Flair Furniture Company
 The Flair Furniture Company produces
inexpensive tables and chairs.
 Processes are similar in that both require a certain amount 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.
 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.

Copyright © 2012 Pearson Education 7-6

Flair Furniture Company Data
Determine number of tables and chairs to
produce to reach the maximum profit.
HOURS REQUIRED TO
PRODUCE 1 UNIT

AVAILABLE HOURS
DEPARTMENT (T) TABLES (C) CHAIRS THIS WEEK

Carpentry 4 3 240
Painting and
2 1 100
varnishing
Profit per unit $70 $50

Copyright © 2012 Pearson Education 7-7

Flair Furniture Company
Work with your partner
 How many decision variables?

 What is the objective? Express the objective in terms of the

decision variables.

 What are the constraints? Express these in terms of the

decision variables.

 If you have time, try to find the best solution.

8
Flair Furniture Company
 Objective:
 Maximize profit
 Constraints= subject to
 The hours of carpentry time used cannot exceed 240 hours
per week.
 The hours of painting and varnishing time used cannot exceed
100 hours per week.
 Decision variables:
 T = number of tables to be produced per week.
 C = number of chairs to be produced per week

Copyright © 2012 Pearson Education 7-9

Flair Furniture Company
 Maximize profit Z = $70T + $50C
 For carpentry, total time used is:
(4 hours per table) x (Number of tables produced)
+ (3 hours per chair) x (Number of chairs produced).

 Carpentry time used ≤ Carpentry time available.

4T + 3C ≤ 240 (hours of carpentry time)
 Painting and varnishing time used
≤ Painting and varnishing time available.
2 T + 1C ≤ 100 (hours of painting and varnishing time)
 T ≥ 0, C ≥ 0

Copyright © 2012 Pearson Education 7-10

Flair Furniture Company
Maximize profit = $70T + $50C
 subject to:
 4T + 3C ≤ 240 (carpentry constraint)
 2T + 1C ≤ 100 (painting and varnishing constraint)
 T, C ≥ 0 (non-negativity constraint)

Copyright © 2012 Pearson Education 7-11

Example:
• Glass products : windows and glass doors.

• Plant 1: Aluminum frames and hardware : Product 1

• Plant 2: Wood frame: Product 2
• Plant 3: The glass and assembles the products: Product 1 & 2.
• Product 1: An 8-foot glass door with aluminum framing
• Product 2: A 4x6 foot double-hung wood-framed window
• WYNDOR GLASS CO problem: Determine what the production rates should be for
the two products in order to maximize their total profit

12
Example:
• The objective function is
Maximize profit Z = $3000x1 + $5000x2
Subject to the restrictions:
x1 4
2x2 12
3x1 + 2x2  18
x1  0
x2 0.

13
EX:
 The owner of Crackers, Inc. produces both Deluxe (D) and
Classic (C) crackers. She only has 4,800 ounces of sugar,
9,600 ounces of flour, and 2,000 ounces of salt for her next
production run. A box of Deluxe crackers requires 2 ounces
of sugar, 6 ounces of flour, and 1 ounce of salt to produce. A
box of Classic crackers requires 3 ounces of sugar, 8 ounces
of flour, and 2 ounces of salt to produce. Profits are 40 cents
for a box of Deluxe crackers and 50 cents for a box of Classic
crackers.
D C

sugar 2D 3C <= 4,800

flour 6D 8C<= 9,600

salt 1D 2C<= 2,000

profit $40 D $50C

14
Situation-problem-mathematical model (what?
How to build? )- methods (what? How to solve)-
analysis

15
Objective: maximize profit = 40D + 50C
Subject to:
2D + 3C <= 4,800
6D + 8C <= 9,600
D + 2C <= 2,000
D, C >=0

16
EX
 An electronics firm produces two models of pocket
calculators: the A-100 (A) and the B-200 (B). Each model uses
one circuit board, of which there are only 2,500 available for
this week’s production. In addition, the company has
allocated a maximum of 800 hours of assembly time this
week for producing these calculators. Each A-100 requires 15
minutes to produce while each B-200 requires 30 minutes to
produce. The firm forecasts that it could sell a maximum of
4,000 of the A-100s this week and a maximum of 1,000 B-
200s. Profits for the A-100 are $1.00 each and profits for the
B-200 are $4.00 each.

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Objective: maximize profit = A + 4B
Subjective:
A + B <= 2,500
0.25A + 0.5B <= 800
A <= 4000
B <= 1000
A, B >= 0

18
Graphical Method
 Solve LP problem with two decision variables.
 If more than two variables: simplex method.
 Two graphical methods:
 Isoprofit Line (watch video 1)
 Corner points (watch video 2)

Copyright © 2012 Pearson Education 7-19

Graphical Representation of a Constraint
Quadrant Containing All Positive Values
C

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
Copyright © 2012 Pearson Education 7-20
Graphical Representation of a Constraint

 When Flair produces no tables, the

carpentry constraint is:
4(0) + 3C = 240
3C = 240
C = 80
 Similarly for no chairs:
4T + 3(0) = 240
4T = 240
T = 60
 This line is shown on the following graph:
Copyright © 2012 Pearson Education 7-21
Graphical Representation of a Constraint

Graph of carpentry constraint equation

C

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

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Number of Tables 7-22
Graphical Representation of a Constraint
Region that Satisfies the Carpentry Constraint
C
 Any point on or below
100 – the constraint plot will
– not violate the
Number of Chairs
restriction.
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
Copyright © 2012 Pearson Education 7-23
Graphical Representation of a Constraint

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

exactly satisfies the constraint
4(30) + 3(40) = 240.
 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.
Copyright © 2012 Pearson Education 7-24
Graphical Representation of a Constraint
Region that Satisfies the Painting and
Varnishing Constraint
C

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

Copyright © 2012 Pearson Education

Number of Tables 7-25
Graphical Representation of a Constraint
Feasible Solution Region for the Flair
Furniture Company Problem Maximize profit = $70T + $50C
C subject to:
4T + 3C ≤ 240 (carpentry constraint)
100 – 2T + 1C ≤ 100 (painting and varnishing co
– T, C ≥ 0 (nonnegativity cons
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
Copyright © 2012 Pearson Education 7-26
Graphical Representation of a Constraint
For the point (30, 20)
Carpentry 4T + 3C ≤ 240 hours available
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 

Copyright © 2012 Pearson Education 7-27

Graphical Representation of a Constraint
For the point (50, 5)
Carpentry 4T + 3C ≤ 240 hours available
constraint (4)(50) + (3)(5) = 215 hours used 
Painting 2T + 1C ≤ 100 hours available
constraint (2)(50) + (1)(5) = 105 hours used 

Copyright © 2012 Pearson Education 7-28

Isoprofit Line Solution Method
 Start with a small but possible profit value, we
graph the objective function.
 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.

Copyright © 2012 Pearson Education 7-29

Isoprofit Line Solution Method
For Flair Furniture, choose a profit of $2,100.
The objective function is then
 $2,100 = 70T + 50C
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).

Copyright © 2012 Pearson Education 7-30

Isoprofit Line Solution Method
Profit line of $2,100 Plotted for the Flair
C
Furniture Company

100 –
$2,800 = $70T + $50C
C= -70/50T + 2800/ 50
–
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

100 –
–
Number of Chairs $3,500 = $70T + $50C
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
Copyright © 2012 Pearson Education 7-32
Isoprofit Line Solution Method
Optimal Solution to the Flair Furniture problem
C

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
Copyright © 2012 Pearson Education 7-33
Corner Point Solution Method
The profit at every corner point of the feasible
region.
The optimal solution must lie at one of the corner
points, or extreme point, in the feasible region.
(Watch video)

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Corner Point Solution Method
Four Corner Points of the Feasible Region
C

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
Copyright © 2012 Pearson Education 7-35
 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
Point 4 : (T = 50, C = 0) Profit = $70(50) + $50(0) = $3,500
Point 3 : (T = 30, C = 40) Profit = $70(30) + $50(40) = $4,100

Because Point 3 returns the highest profit, this is

the optimal solution.

Copyright © 2012 Pearson Education 7-36

Slack and Surplus
Slack
 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.
Surplus
 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.

Copyright © 2012 Pearson Education 7-37

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.
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.

Copyright © 2012 Pearson Education 7-38

Using Excel’s Solver
The Solver tool in Excel can be used to find
solutions to:
 LP problems.
 Integer programming problems.
 Noninteger programming problems.
Limited to 200 variables and 100 constraints.

Copyright © 2012 Pearson Education 7-39

Using Solver to Solve the Flair Furniture
Problem
Recall the model for Flair Furniture is:
 Maximize profit = $70T + $50C
 Subject to4T + 3C ≤ 240
 2T + 1C ≤ 100
To use Solver, it is necessary to enter formulas
based on the initial model.

Copyright © 2012 Pearson Education 7-40

 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
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)
Copyright © X1 >= ≥ 0 (nonnegativity constraint)
2012 Pearson
Education X2 >=≥ 0 (nonnegativity constraint) 7-41
Holiday Meal Turkey Ranch
Holiday Meal Turkey Ranch data

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

Copyright © 2012 Pearson Education 7-42

Holiday Meal Turkey Ranch
 Use the corner point method.
 First construct the feasible solution region.
 The optimal solution will lie at one of the corners
as it would in a maximization problem.

Copyright © 2012 Pearson Education 7-43

Feasible Region for the Holiday Meal Turkey Ranch
Problem Minimize cost (in cents) = 2X 1 +3
subject to:
X2
5X1 + 10X2 >=≥ 90 ounces
–
4X1 + 3X2 =>≥ 48 ounces
0.5X1 =>≥ 1.5 ounces
20 – Ingredient C Constraint X1 >= ≥ 0 (nonne
Pounds of Brand 2
X2 >=≥ 0 (nonne
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
Copyright © 2012 Pearson Education 7-44
Holiday Meal Turkey Ranch
 Solve for the values of the three corner points.
 Point a is the intersection of ingredient
constraints C and 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.
Copyright © 2012 Pearson Education 7-45
Holiday Meal Turkey Ranch
Substituting these value back into the objective
function we find

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.

Copyright © 2012 Pearson Education 7-46

Holiday Meal Turkey Ranch
• Using the Iso-cost Approach
Minimize cost (in cents) = 2X1 + 3
X2
subject to:
–
Feasible Region 5X1 + 10X2 >=≥ 90 ounces
4X1 + 3X2 =>≥ 48 ounces
20 – 0.5X1 =>≥ 1.5 ounces
Pounds of Brand 2

X1 >= ≥ 0 (nonne
54
15 –
=2 ¢ X2 >=≥ 0 (nonne
Di X
re 1 +
cti 3X
on
of 2 Is
10 – De oc
31 os
.2¢ cr tL
=2 e as ine
X ing
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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Four Special Cases in LP
No feasible solution
Unboundedness
Redundancy
Alternate (Multiple) Optimal Solutions (watch
video)

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Four Special Cases in LP
No feasible solution
 no solution to the problem that 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

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

Copyright © 2012 Pearson Education 7-50

Four Special Cases in LP

Unboundedness
 Have no a finite solution.
 In a maximization problem, one or more solution
variables, and the profit, can be made infinitely
large without violating any constraints.
 The feasible region will be open ended.
 The problem has been formulated improperly.

Copyright © 2012 Pearson Education 7-51

 Four Special Cases in LP
A Feasible Region That is Unbounded to the Right
X2

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
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 –

25 –
2X1 + X2 ≤ 30

20 –
Redundant
Constraint
15 –
X1 ≤ 25

10 – X1 + X2 ≤ 20
Feasible
5– Region

| | | | | |
0–
5 10 15 20 25 30 X1
Copyright © 2012 Pearson Education 7-54
Four Special Cases in LP

Alternate Optimal Solutions (watch video)

 Occasionally two or more optimal solutions may
exist.
 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–

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 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, postoptimality analysis,
parametric programming, or optimality analysis.

Copyright © 2012 Pearson Education 7-57

Sensitivity Analysis
Sensitivity analysis often involves a series of
what-if? questions concerning constraints,
variable coefficients, and the objective function.
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.
Copyright © 2012 Pearson Education 7-58
High Note Sound Company
 The High Note Sound Company manufactures
quality CD players and stereo receivers.
 Products require a certain amount of skilled
artisanship which is in limited supply.
 The firm has formulated the following product mix
LP model.
Maximize profit = $50X1 + $120X2
Subject to 2X1 + 4X2 ≤ 80
(hours of
electrician’s time
available)
3X1 + 1X2 ≤ 60
(hours of audio
technician’s time
available)
Copyright © 2012 Pearson Education 7-59
X,X ≥0
High Note Sound Company
The High Note Sound Company Graphical Solution
X2
(receivers)

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 –
| | | | | |
0–
10 20 30 40 50 60 X1
c = (20, 0) (CD players)
Copyright © 2012 Pearson Education 7-60
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 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.
Copyright © 2012 Pearson Education 7-61
Changes in the
Objective Function Coefficient
Changes in the Receiver Contribution Coefficients
X2 Z = c1X1 + c2X2 = 2400

40 – Profit Line for 50X1 + 80X2

?<= c1<= 60
(Passes through Point b)
?<= c2<= ?
30 –
Old Profit Line for 50X1 + 120X2
(Passes through Point a) make sure Z= 2400
20 – b
a Profit Line for 50X1 + 150X2
(Passes through Point a)
10 –

c
| | | | | |
0– 10 20 30 40 50 60 X1

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 Changes in the
Technological Coefficients
Change in the Technological Coefficients for the
High Note Sound Company

(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

Copyright © 2012 Pearson Education 7-63

Changes in Resources or Right-Hand-Side
Values

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.

Copyright © 2012 Pearson Education 7-64

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).
 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.

Copyright © 2012 Pearson Education 7-65

Changes in Resources or Right-Hand-Side
Values
 However, the amount of possible increase in the right-hand
side of a resource is limited.
 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) 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.

Copyright © 2012 Pearson Education 7-66

 EX: Changes in the Electricians’ Time
Resource for the High Note Sound Company
(a) Original Problem
X2 (a) X2

60 –
60 –

Stereo Receivers
3X1 + 1X2 ≤ b1
40 –
Optimal
Constraint Representing 60 Hours of a Solution
40 –
Audio Technician’s Time Resource 20 – b 2X1 + 4X2 ≤ b2
a c
25 – | | |
b Changed Constraint Representing 100 Hours 0– 20 40 X1
20 – of Electrician’s Time Resource CD Players

| c | | | ?≤ b1?≤
≤?b2 ≤?
0– 20 40 50 60 X1
Optimal Solution
Z=2400
Copyright © 2012 Pearson Education 7-67
 EX: Changes in the Electricians’ Time
Resource for the High Note Sound Company

X2 (b)
X2 (c)
60 –
Changed Constraint
60 – Representing 240 Hours
of Electrician’s Time
Resource
40 – Constraint Representing 60 Hours of
Audio Technician’s Time Resource
40 –

Changed Constraint Representing 60 Hours of

20 – a Electrician’s Time Resource
15 – | | |
20 –| | |
X1
b 0 20 40 60
c | | | | 80 100 120
0– 20 30 40 60 X1 Constraint Representng
– 60 Hours of Audio
Technician’s
Copyright © 2012 Pearson Education Time Resource 7-68
 EX: Changes in the Electricians’ Time
Resource for the High Note Sound Company

Maximize profit = $50X1 + $120X2

Subject to 2X1 + 4X2 ≤ 80
(hours of
electrician’s time
available)
3X1 + 1X2 ≤ 60
(hours of audio
technician’s time
available)
X1, X2 ≥0

Copyright © 2012 Pearson Education 7-69

Changes in Resources or Right-Hand-Side
Values
Sensitivity analysis:
Find sensitive parameters those
making small change in its value
(adding Δ in this case) changes the
optimal solution

70
EX: Changes in Resources or Right-Hand-
Side Values
Shadow price:
The objective function is x2
 Maximize profit Z = $3x1 + $5x2
Subject to : 9 3 x1  2 x2  18
8
 x1  4+1 : 0 Z  36  3 x1  5 x2
7
(2,6) 2 x2  12
  12+1 : 1.5

Number of batches of product 2

2x2 6
 3x1 + 2x2  18 5 x1  4
4
 x1  0
3
 x2  0. 2
1

0 1 2 3 4 5 6 7 x1
Number of batches of product71
1
EX: Changes in Resources or Right-Hand-
Side Values
Shadow price:
On constraint 3:
 If we increase RHS by 1: 3X1 + 2X2  18+1
 The new optimal solution is: X1= 7/3 , X2 =6 and the
new Z1 = 37 .
 The net change in profit = Z1- Z= 37-36 = $1.
 This is called shadow price (marginal value or dual
price) associated with constraint 3.

72
EX: Changes in Resources or Right-Hand-
Side Values
Shadow price:
On constraint 2:
 If we increase RHS by 1: 2X2  13,
 X1= 5/3 , X2 =13/2, Z2= 37.5

The net change in profit = Z2 - Z= 37.5 - 36= $1.5.

The shadow price associated with constraint 2 is

$1.5

73
EX: Changes in Resources or Right-Hand-
Side Values
Shadow price: x2
On constrain 1:
 X1  4+1 : Z3= 36 9 3 x1  2 x2  18
 The net change in profit = 0 Z  36  3x1  5 x2 8
7
 Shadow price = 0 (2,6) 2 x2  12

Number of batches of product 2

6
5 x1  4
4
 What happen if shadow price = 0?
3
2
1

0 1 2 3 4 5 6 7 x1
Number of batches of product 1
Tuesday,
September 09, 74
EX: Changes in Resources or Right-Hand-
Side Values
Shadow price:
Constraint 2, 3: binding constraint
 (shadow price > 0)
Constraint 1: not binding constraint
 (shadow price =0)

What does the Shadow price imply?

 How sensitive of each constraint when change RHS

75
For reference:
How to solve graphical method by excel solver
and QM for window

76