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MGMT 650
Sensitivity Analysis in LP
Chapter 3
Example
Min
s.t.
6x1 + 9x2
($ cost)
x1 + 2x2 < 8
10x1 + 7.5x2 > 30
x2 > 2
x1, x2 > 0
Value
1.500
2.000
Reduced Cost
0.000
0.000
Constraint
1
2
3
Slack/Surplus
2.500
0.000
0.000
Dual Price
0.000
-0.600
-4.500
Upper Limit
12.000
No Limit
Upper Limit
No Limit
55.000
4.000
Range of Optimality
Question
Suppose the unit cost of x1 is decreased to $4. Is
the current solution still optimal? What is the value
of the objective function when this unit cost is
decreased to $4?
Upper Limit
12.000
No Limit
Upper Limit
No Limit
55.000
4.000
Range of Optimality
Answer
The output states that the solution remains
optimal as long as the objective function
coefficient of x1 is between 0 and 12.
Range of Optimality
Question
How much can the unit cost of x2 be decreased without
concern for the optimal solution changing?
Upper Limit
12.000
No Limit
Upper Limit
No Limit
55.000
4.000
Range of Optimality
Answer
The output states that the solution remains
optimal as long as the objective function coefficient of
x2 does not fall below 4.5.
10
Question
If simultaneously the cost of x1 was raised to $7.5 and the cost
of x2 was reduced to $6, would the current solution remain
optimal?
Answer
If c1 = 7.5, the amount c1 changed is 7.5 - 6 = 1.5.
Range of Feasibility
Question
If the right-hand side of constraint 3 is increased by 1, what will
be the effect on the optimal solution?
Upper Limit
12.000
No Limit
Upper Limit
No Limit
55.000
4.000
12
Value
1.500
2.000
Reduced Cost
0.000
0.000
Constraint
1
2
3
Slack/Surplus
2.500
0.000
0.000
Dual Price
0.000
-0.600
-4.500
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Range of Feasibility
Answer
Reduced Cost
Definition
How much the objective function coefficient of
each variable would have to improve before it
would be possible for that variable to assume a
positive value in the optimal solution
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16
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TV/DVDs
Color TVs
Projection TVs
VCRs
DVD Players
Video Games
Home Computers
$ 6,000
12,000
20,000
14,000
15,000
2,000
32,000
125
150
200
40
40
20
100
8.1%
9.0
11.0
10.2
10.5
14.1
13.2
18
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Problem Formulation
Define Decision Variables
xj = 1 if product line j is introduced;
= 0 otherwise.
where:
Product line 1 = TV/DVDs
Product line 2 = Color TVs
Product line 3 = Projection TVs
Product line 4 = VCRs
Product line 5 = DVD Players
Product line 6 = Video Games
Product line 7 = Home Computers
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Problem Formulation
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Problem Formulation
Define the Constraints
1) Budget:
6x1 + 12x2 + 20x3 + 14x4 + 15x5 + 2x6 + 32x7 < 45
2) Space:
125x1 +150x2 +200x3 +40x4 +40x5 +20x6 +100x7 < 420
3) Stock projection TVs only if stock TV/VCRs or color TVs:
x1 + x2 > x3 or x1 + x2 - x3 > 0
4) Do not stock both VCRs and DVD players:
x4 + x 5 < 1
5) Stock video games if they stock color TV's:
x2 - x6 > 0
6) Introduce at least 3 new lines:
x1 + x 2 + x3 + x4 + x5 + x6 + x7 > 3
7) Variables are 0 or 1:
xj = 0 or 1 for j = 1, , , 7
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Expected return
Introduce
TV/DVDs
Projection TVs
DVD players
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Dell Computers operates a plant in St. Louis; annual capacity = 30000 units
Computers are shipped to regional distribution centers located in Boston, Atlanta and Houston;
anticipated demands = 30,000, 20,000, 20,000 respectively
Because of anticipated increase in demand, plan to increase capacity by constructing a new plant in
one or more locations in Detroit, Columbus, Denver or Kansas City.
Proposed Location
Annual Capacity
Detroit
175,000
10,000
Columbus
300,000
20,000
Denver
375,000
30,000
Kansas City
500,000
40,000
Boston
Atlanta
Houston
Detroit
Columbus
Denver
Kansas City
10
St. Louis
25
Formulation
Minimize
5x11+2x12+3x13+4x21+3x22+4x23+9x31+7x32+5x33+10x41+4x42+2x43
+8x51+4x52+3x53+175000y1+300000y2+375000y3+500000y4
Subject to
x11+x12+x13-10000y1<=0
Detroit capacity
x21+x22+x23-20000y2<=0
Columbus capacity
x31+x32+x33-30000y3<=0
Denver capacity
x41+x42+x43-40000y4<=0
Kansas City capacity
x51+x52+x53 <=30000
St. Louis capacity
x11+x21+x31+x41+x51=30000
Boston demand
x12+x22+x32+x42+x52=20000
Atlanta demand
x13+x23+x33+x43+x53=20000
Houston demand
xij>=0
Non-negativity constraints
y1, y2, y3, y4 = {0,1}
Integrality constraints
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Optimal Solution
27
1
19
11
12
X
2
23
14
8
20
3
20
X
11
20
4
21
12
X
18
5
18
10
9
21
28
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Optimal Solution
Estimated total time
Wedding Gown to Tailor #5
Clown costume to Tailor #1
Southeast Airlines needs to assign crews to cover all of its upcoming flights.
We will focus on assigning 3 crews based in San Francisco to the flights listed below.
Flight
Flight Leg
1 2 3 4 5 6 7 8 9 10
1
SF to LA
SF to Denver
SF to Seattle
LA to Chicago
LA to SF
Chicago to Denver
Chicago to Seattle
Denver to SF
Denver to Chicago
10
Seattle to SF
11
Seattle to LA
Cost (000s)
1
1
3
3
2
6
4
3
1
1
12
11
5
2
Exactly 3 of the feasible sequences need to be chosen such that every flight is covered.
It is permissible to have more than 1 crew per flight, where the extra crews would fly as passengers, but union
contracts require that the extra crews would still need to be paid for their time as if they were working.
Schedule one crew for every feasible sequence to minimize the total cost of the 3 crew assignments that cover
all the flights.
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