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Sensitivity Analysis in Resource Allocation

The document describes a linear programming problem to maximize profit from producing tables, chairs, and bookcases given resource constraints. It provides the objective function and constraints, solves the problem using the simplex method, and analyzes the sensitivity of the optimal solution to changes in input parameters. The optimal solution is to produce 60 tables and 40 chairs for maximum profit of Rs. 2,600. Shadow prices and allowable ranges for input changes are also calculated to identify conditions where the optimal solution remains valid.

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baliyanrohitb
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8 views16 pages

Sensitivity Analysis in Resource Allocation

The document describes a linear programming problem to maximize profit from producing tables, chairs, and bookcases given resource constraints. It provides the objective function and constraints, solves the problem using the simplex method, and analyzes the sensitivity of the optimal solution to changes in input parameters. The optimal solution is to produce 60 tables and 40 chairs for maximum profit of Rs. 2,600. Shadow prices and allowable ranges for input changes are also calculated to identify conditions where the optimal solution remains valid.

Uploaded by

baliyanrohitb
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

SENSITIVITY

ANALYSIS

Anushree Vij (191131)

Cyriac John (191136)

Rojit Irom (191166)


RESOURCES USAGE (PER UNIT) DAILY
TABLES CHAIRS AVAILABILITY
BOOK CASES

TIMBER 8 4 3 640
(cubic feet)
ASSEMBLY 4 6 2 540
DEPT
(man-hours)
FINISHING 1 1 1 100
DEPT (man-
hours)
Information
PROFIT regarding
30 20resource12
consumption,
availability and profit contribution
CONTRIBUTION
(per unit/Rs)
Let x1 = number of tables used
x2 = number of chairs used
x3 = number of book cases used
Objective function:
Z Max = 30x1 + 20x2 + 12x3
S.t.
8x1 + 4x2 + 3x3 ≤ 640 (area for timber)
4x1 + 6x2 + 2x3 ≤ 540 (man-hours for Assembly
dept)
x1 + x2 + x3 ≤ 100 (man-hours for Finishing Dept)
x1, x2, x3 ≥ 0 (non negative constraint)
Solving by simplex method
Initial Basis solution

S1 goes out and x1 comes in


1st Iteration

S3 goes out and x2 comes in


2nd Iteration

x1*=60, x2 *=40, x3*=0


Max Z*=30(60)+20(40)+12(0)
=1800 + 800 + 0 = Rs 2,600
SHADOW PRICES
Shadow or dual prices are taken as the
negative of the Zj terms in the optimality
table.
Therefore,
S1=-(-2.5) = 2.5
S2=0
S3=-(-10) = 10
The other information available is:
S2 = 60; this means that 60 man hours of assembly dept are still
unused. We can check this from the equations.
C3 -Z3=-5.5; this implies that for 1 extra produce of book cases
the firm will incur a loss of Rs. 5.5
Cost analysis
Variation of Profit Contribution per unit Tables.
Let ∆ C1 and ∆ C2 be the variation in the profit of tables
and chairs respectively
Condition of optimality requires Cj –Zj ≤ 0

If Ck belongs to CB, current solution remains optimal if


Cj* - Zj* ≤ 0, where Cj* - Zj* = Cj –Zj - ∆Ck Ykj

Therefore, Range of ∆Ck , so that the solution remains


optimum is

Max {Cj –Zj / Ykj } ≤ ∆Ck ≤ Min {Cj –Zj / Ykj }


Ykj > 0 Ykj < 0
Cost analysis
For Tables, C1 belongs to CB
Max {-(5/2)/(1/4)} ≤ ∆C1 ≤ Min { (-1/2)/(-1/4), -10/-1)}
Y1j > 0 Y1j < 0

Range for change in profit of tables : -10 ≤ ∆C1 ≤


10

Profit for which the current solution remains


optimal:
30 -10 ≤ C1 ≤ 30 +10
=> 20 ≤ C1 ≤ 40
Cost Analysis
For Chairs, C2 belongs to CB
Max {-(11/2)/(5/4), -10/2} ≤ ∆C2 ≤ Min {
(-5/2)/(1/4}
Ykj > 0 Ykj < 0

Range for change in profit of chairs : -22/5 ≤ ∆C 2 ≤


10

Profit for which the current solution remains optimal:


20 –(22/5) ≤ C2 ≤ 20 +10
=> 78/5 ≤ C2 ≤ 30
Variation in availability of
Resources
Basis Inverse matrix
¼ 0 -1 60
½ 1 -8 and the solution column 60
-¼ 0 2 40
Required range for discrete change in ∆bk

Max { - Xbi / bik } ≤ ∆bk ≤ Min {- Xbi / bik }


bik > 0 bik < 0
Variation in availability of
Resources
For resource 1 i.e. Timber
Max -60 , -60 ≤ ∆b1 ≤ Min -40
¼ ½ -¼

Range for change : -120 ≤ ∆b1 ≤ 160

Range for availability of timber for which solution


remains optimal : 640 -120 ≤ b1 ≤ 640 +160
=> 520 ≤ b1 ≤ 800
Variation in availability of
Resources
For resource 2 i.e. Assembly Department
Max -60 ≤ ∆b2 ≤ ∞

Range for change : -60 ≤ ∆b2 ≤ ∞

Range for availability of Assembly


Department (man- hours) for which solution
remains optimal : -540 - 60 ≤ b2 ≤ ∞
=> 480 ≤ b2 ≤ ∞
Variation in availability of
Resources
For resource 3 i.e. Finishing Department

Max -40 ≤ ∆b3 ≤ Min -60, -60


2 -1 -8

Range for change : -20 ≤ ∆b3 ≤ 7.5

Range for availability of timber for which solution


remains optimal : 100 - 20 ≤ b3 ≤ 100 +7.5
=> 80 ≤ b3 ≤ 107.5
Thank you

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