Вы находитесь на странице: 1из 16

# EXCEL Solver Interpretation Problems

2. The Wyndor Glass Co. is a glass manufacturer which uses three production plants to
assemble its products. Let x1 and x2 be the number of batches of glass doors and wooden frame
windows to produce each week, respectively. Each product requires different times in the three
plants and there are certain restrictions on available production time at each plant. With this
information and a knowledge of contributions to profit of the two products, management of the
company wishes to determine what quantities of each product they should be producing in order
to maximize profit. The linear programming formulation for the problem and the solution from
Microsoft Excel Premium Solver are provided below.
Maximize Z = 30,000 x1 + 50,000 x2
Subject To 100 x1 400 Plant One Production Capacity
200 x2 1,200 Plant Two Production Capacity
300 x1 + 200 x2 1,800 Plant Three Production Capacity
x1, x2 0
Worksheet: [Wyndor Glass Co.xls]Sheet1
Report Created: 11/03/2008 13:21:49 PM
Result: Solver found a solution. All constraints and optimality conditions are satisfied.
Engine: Standard LP Simplex
Solution Time: 00 Seconds
Iterations: 2
Subproblems: 0
Incumbent Solutions: 0
Target Cell (Max)
Cell Name Original Value Final Value
\$B\$20 Total Profit Amount 0 360000

Cell Name Original Value Final Value
\$B\$12 Optimal Quantity Glass Doors 0 2
\$C\$12 Optimal Quantity Wooden Frame Windows 0 6
Constraints
Cell Name Cell Value Formula Status Slack
\$B\$16 Plant One Production Capacity Amount 200 \$B\$16<=\$D\$6 Not Binding 200
\$B\$17 Plant Two Production Capacity Amount 1200 \$B\$17<=\$D\$7 Binding 0
\$B\$18 Plant Three Production Capacity Amount 1800 \$B\$18<=\$D\$8 Binding 0

## Microsoft Excel 12.0 Sensitivity Report

Worksheet: [Wyndor Glass Co.xls]Sheet1
Report Created: 11/03/2008 13:21:49 PM
Target Cell (Max)
Cell Name Final Value
\$B\$20 Total Profit Amount 360000
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
\$B\$12 Optimal Quantity Glass Doors 2 0 30000 45000 30000
\$C\$12 Optimal Quantity Wooden Frame Windows 6 0 50000 1E+30 30000
Constraints
Cell Name Value Price R.H. Side Increase Decrease
\$B\$16 Plant One Production Capacity Amount 200 0 400 1E+30 200
\$B\$17 Plant Two Production Capacity Amount 1200 150 1200 600 600
\$B\$18 Plant Three Production Capacity Amount 1800 100 1800 600 600
a. A batch of glass doors consists of 200 units and a batch of wooden frame windows consists of 330
units. How many glass doors and wooden frame windows should Wyndor schedule for production each
week? What is the expected profit if they follow this schedule?
x1*=2 Batches x 200 Units/Batch = 400 Glass Doors
x2*=6 Batches x 330 Units/Batch = 1,980 Wooden Frame Windows Z*=360,000
b. Plant One is in Lubbock, TX and unemployment has skyrocketed to the extent that Wyndor can now
increase production capacity with inexpensive labor at or even a bit below the hourly state minimum
None. Plant One capacity is a non-binding constraint with slack of 200 units of capacity. Wyndor is
not using all it currently has. The Plant One Shadow Price = 0 and thus paying anything for
additional capacity will not result in any increase in Z*.
c. Because of a nation-wide sales promotion, Wyndor is projecting that profit for a batch of wooden
frame windows will soon change to \$17,500. What would happen to the production amounts should this
occur? Why? Support your answer well. The range of optimality for the profit for a batch of
wooden frame windows is: 20,000 c2 . Since 17,500 falls outside this range, the current optimal
solution would no longer be optimal and the problem would need to be resolved.
d. Plant Two is in Lima, OH and Wyndor is able to obtain 400 units of additional production capacity at
\$90/unit. Should they indeed secure any of these 400 units? Why or why not? If yes, what would
happen to profit? The Plant Two capacity constraint is binding and has a Shadow Price = \$150, so
yes, we should purchase additional units at \$90/unit. The range of optimality for the Plant Two
capacity constraint right-hand-side is 600 RHS2 1,800. Since the increase of 400 units is < the
Allowable Increase of 600 and thus inside the range we would buy all 400 units of additional
capacity. Profit would increase by (\$150-\$90)x400=\$24,000 to \$384,000.
e. How much production capacity will be used at the plants? According to this analysis, which plants
are ones that Wyndor should examine more closely? Why? Support your answer well.
Plants One, Two, and Three will use 200, 1,200, and 1,800 units of production capacity, respectively.
Wyndor should be more concerned with the two binding constraints and look to increase capacity at
Plants Two and Three.

3. Duke Energy has a new plant in Williamstown, Ohio and is hiring Clerical/Secretarial (CS),
Skilled Technicians (ST), and Line Managers (LM) that cost \$12, \$18, and \$24 per hour,
respectively. For every two STs, at least one CS worker is needed. Ohio regulations require at least
1,000 new hires. To have enough employees to properly operate the plant, at least 400 CSs and at
least 400 STs must be hired. The number of new LMs must exceed or equal 100 to be able to
properly control the facility. The Personnel Department estimates that there are no more than 500
qualified STs willing to apply.
Let xj= The number of level j personnel to hire for the facility, j=1 CS, j=2 ST, j=3 LM

## Min TC = 12x1 + 18x2 + 24x3

Subject To 2x1 x2 0
x1 + x2 + x3 1,000
x1 400
x2 400
x3 100
x2 500
x1, x2, x3 0
Duke Energy
Target Cell (Min)
Original Final
Cell Name Value Value
\$B\$
16 Total Cost 0 15600
Original Final
Cell Name Value Value
\$B\$
7 Clerical/Secretarial 0 500
\$C\$
7 Skilled Technician 0 400
\$D\$
7 Line Managers 0 100
Constraints
Slac
Cell Name Cell Value Formula Status k
\$B\$ Balance Clerical/Secretarial Skilled Not
9 Technician 600 \$B\$9>=0 Binding 600
\$B\$ \$B\$10>=\$
10 Ohio Regulation 1000 F\$3 Binding 0
\$B\$ \$B\$11>=\$ Not
11 Clerical/Secretarial Needs 500 F\$4 Binding 100
\$B\$ \$B\$12>=\$
12 Skilled Technician Needs 400 F\$4 Binding 0
\$B\$ \$B\$13>=\$
13 Line Manager Needs 100 F\$5 Binding 0
\$B\$ \$B\$14<=\$ Not
14 Skilled Technician Available 400 F\$6 Binding 100
Microsoft Excel 12.0 Sensitivity
Report
Fina Reduc Objectiv Allowab Allowab
l ed e le le
Valu Coefficie Increas Decreas
Cell Name e Cost nt e e
\$B\$
7 Clerical/Secretarial 500 0 12 6 12
\$C\$
7 Skilled Technician 400 0 18 1E+30 6
\$D\$
7 Line Managers 100 0 24 1E+30 12

Constraints
l w nt le le
Valu R.H. Increas Decreas
Cell Name e Price Side e e
\$B\$ Balance Clerical/Secretarial Skilled
9 Technician 600 0 0 600 1E+30
\$B\$
10 Ohio Regulation 1000 12 1000 1E+30 100
\$B\$
11 Clerical/Secretarial Needs 500 0 400 100 1E+30
\$B\$
12 Skilled Technician Needs 400 6 400 100 400
\$B\$
13 Line Manager Needs 100 12 100 100 100
\$B\$
14 Skilled Technician Available 400 0 500 1E+30 100
a. How many of each level worker should Duke hire? What will it cost in total for an 8-hour day?
Clerical/Secretarial x1*=500; Skilled Technicians x2*=400; Line Managers x3*=100
Total Cost for 8-Hour Day=\$15,600/Hour x 8 Hours = \$124,800
b. Duke managers suspect the union for CS workers will force wages up. The Personnel
Department projects the increase may be to \$15/hour but the Duke Board wants to be cautious and
assumes they would cost \$21/hour. What would happen to the solution and total cost under each
increase?
Range for the Objective Coefficient for CS: 0c118. If the Personnel Department is correct,
since \$15 is inside the range, the exact same x1*=500, x2*=400, and x3*=100. The Total Cost
will increase by (\$15-\$12)(500)=\$1,500 and will become \$17,100/Hour. If the Duke Board is
correct, since \$21 is outside the range, the current solution is no longer optimal and the problem
must be resolved. All we can say at this point is that Total Cost will increase.
c. Duke thinks they can get the Ohio regulation reduced to 950. What would happen to the solution
and total cost if that occurred (and all other binding constraints could also be addressed at break-
even)? The range for the right-hand-side of the Ohio regulation constraint, the 2nd
constraint, is: 900RHS2. Since 900 is inside this range, we know that the current decision
variables that are positive will all remain positive, but the values will change. Each of the 50
units have a shadow price of \$12, so Total Cost will go down by (\$12)(50)=\$600 to \$15,000/Hour.
d. Duke is being pushed by stockholders to cut total payroll as much as possible by laying off
workers and not meeting all requirements for each level. They want to plan layoffs to affect as few
employees as possible. What level of employee should Duke target first? Second? Explain.
The Shadow prices for constraints 3, 4, and 5 (the lower bounds for the number of each type of
worker) indicates the value of one worker of each type. Since the shadow price for LM=\$12 is the
greatest, for every LM laid off we save that much. Second, the shadow price for ST=\$6 and we
would target them next. Since the CS constraint is non-binding, its shadow price is zero and
getting rid of some of them will not save you anything.
e. Xeus Trade School is soliciting Duke for a grant to train more skilled technicians. What can
Duke determine from the Solver printout regarding this proposal? Currently 500 STs are available.
Duke is only hiring 400 so there is slack and plenty of them they may want to give grants
elsewhere.

## 4. Abscam Manufacturing, a high-quality, high-price producer of tungsten hammers, wishes

to schedule production for the next four months to meet expected demand. Abscam can produce
1,300 hammers per month on regular shift. Using overtime, it may produce up to 500 additional
hammers per month at a unit cost of \$6 per hammer in excess of unit cost for regular production,
\$12. It costs \$3 per month to hold a hammer. Abscams demand is projected to be 1,000, 1,200,
1,700, and 2,000 units for the next four months. The unit penalty cost for unsold items at the end of
the fourth month is \$5. Currently, 200 hammers are in the warehouse. Abscam management wishes
to determine the optimal production schedule to minimize the total costs of production and storage
but still meet the sales demand. The linear program formulation and Microsoft EXCEL Solver
solution for this setting follows. Let xj = The number of hammers to produce in regular shifts
for month j, j=1,2,3,4
yj = The number of hammers to produce in overtime shifts for month j
Ij = The number of hammers in inventory at the end of month j
Minimize C = 12x1+12x2+12x3+12x4+18y1+18y2+18y3+18y4+3I1+3I2+3I3+5I4
Subject To 200 + x1 + y1 1,000 = I1
I1 + x2 + y2 1,200 = I2
I2 + x3 +y3 1,700 = I3
I3 + x4 + y4 2,000 = I4
x1 1,300; x2 1,300; x3 1,300; x4 1,300
y1 500; y2 500; y3 500; y4 500
All xj, yj, and Ij 0
Report
Worksheet: [Abscam Manufacturing.xlsx]Sheet1
Report Created: 05/06/2010
14:21:38 PM
Result: Solver found a solution. All constraints and optimality conditions
are satisfied.
Target Cell (Min)
Final
Cell Name Original Value Value
\$B\$19 Total Cost 0 75300
Final
Cell Name Original Value Value
\$B\$11 x1 0 800
\$C\$11 x2 0 1300
\$D\$11 x3 0 1300
\$E\$11 x4 0 1300
\$F\$11 y1 0 0
\$G\$11 y2 0 0
\$H\$11 y3 0 500
\$I\$11 y4 0 500
\$J\$11 I1 0 0
\$K\$11 I2 0 100
\$L\$11 I3 0 200
\$M\$11 I4 0 0

Constraints
Slac
Cell Name Cell Value Formula Status k
Inventory Balance Month \$B\$14=\$B
\$B\$14 1 800 \$4 Binding 0
Inventory Balance Month \$B\$15=\$B
\$B\$15 2 1200 \$5 Binding 0
Inventory Balance Month \$B\$16=\$B
\$B\$16 3 1700 \$6 Binding 0
Inventory Balance Month \$B\$17=\$B
\$B\$17 4 2000 \$7 Binding 0
\$B\$11<=\$ Not
\$B\$11 x1 800 D\$6 Binding 500
\$C\$11<=\$
\$C\$11 x2 1300 D\$6 Binding 0
\$D\$11<=\$
\$D\$11 x3 1300 D\$6 Binding 0
\$E\$11<=\$
\$E\$11 x4 1300 D\$6 Binding 0
\$F\$11<=\$ Not
\$F\$11 y1 0 E\$6 Binding 500
\$G\$11<=\$ Not
\$G\$11 y2 0 E\$6 Binding 500
\$H\$11<=\$
\$H\$11 y3 500 E\$6 Binding 0
\$I\$11<=\$E
\$I\$11 y4 500 \$6 Binding 0

## Microsoft Excel 12.0 Sensitivity

Report
Worksheet: [Abscam
Manufacturing.xlsx]Sheet1
Report Created: 05/06/2010
14:21:38 PM
Target Cell (Min)
Final
Cell Name Value
\$B\$19 Total Cost 75300
Reduce Allowa Allowa
Final d Objective ble ble
Increa Decrea
Cell Name Value Cost Coefficient se se
\$B\$11 x1 800 0 12 3 0
\$C\$11 x2 1300 0 12 3 1E+30
\$D\$11 x3 1300 0 12 6 1E+30
\$E\$11 x4 1300 0 12 9 1E+30
\$F\$11 y1 0 6 18 1E+30 6
\$G\$11 y2 0 3 18 1E+30 3
\$H\$11 y3 500 0 18 0 1E+30
\$I\$11 y4 500 0 18 3 1E+30
\$J\$11 I1 0 0 3 3 0
\$K\$11 I2 100 0 3 1E+30 0
\$L\$11 I3 200 0 3 1E+30 3
\$M\$11 I4 0 26 5 1E+30 26

Constraints
Constr Allowa
R.H. Increa
Cell Name Value Price Side se Decrease
\$B\$14 Inventory Balance Month 1 800 12 800 500 800
\$B\$15 Inventory Balance Month 2 1200 15 1200 500 0
\$B\$16 Inventory Balance Month 3 1700 18 1700 500 0
\$B\$17 Inventory Balance Month 4 2000 21 2000 500 0
a. Provide a production schedule for hammers.
Month 1 2 3 4
Regular Time Production 800 1,300 1,300 1,300
Overtime Production 0 0 500 500

b. What is the total cost for production only? Total Cost = 75,300
Cost of Inventory = (3)(0)+(3)(100)+(3)(200)+(5)(0) = 900
Total Production Cost = Total Cost Cost of Inventory = 75,300-900 = 74,400

## c. What is the expected inventory at the end of each month?

Month1 I1 = 0; Month 2 I2=100; Month 3 I3=200; Month 4 I4=0
d. If the demand for month 4 changes to 2,200 what can you indicate about the optimal solution and
the total cost? The range of optimality for the Inventory Balance constraint for Month 4 is
2,000RHS42,500. Since 2,200 lies inside the range, the decision variables that are positive will
remain positive and the decision variables=0 will remain=0. Since the shadow price is 21, the
objective function will increase to 75,300+ (21)(200)=79,500.
e. Currently, there is no overtime being scheduled for month 1. What one change in this model
scenario would yield overtime in month 1 occurring? Explain. If the cost of overtime in month 1,
currently \$18, was changed by the reduced cost or more to \$12 or less, then overtime production
in month 1 would occur.
f. Regular production in month 1 is currently 800 units. What is the range of optimality for the
objective coefficient for x1? Explain the implications of this range. 12c115 As long as c1
remains in this range, x1 and all other decision variables will not change but the objective
function will change.

5. Fox Umbrellas, Surrey, England, Makers of the Worlds Finest Umbrellas, have been
keeping Englanders dry since 1868. The following linear programming model will indicate to
Fox the quantity of four different styles of umbrellas (women's, golf, men's, and folding
umbrellas) to stock in order to maximize profit. It is assumed that every one stocked will be sold.
The constraints measure storage space in units, special display racks, demand, and a marketing
restriction, respectively.
Maximize P = 4x1 + 6x2 + 5x3 + 3.5x4
Subject To 2x1 + 3x2 + 3x3 + x4 120
1.5x1 + 2x2 54
2x2 + x3 + x4 72
x2 + x3 12
x1, x2, x3, x4 0

Report
Worksheet: [Fox
Umbrellas.xlsx]Sheet1
Report Created: 05/12/2011
13:50:05 PM
Result: Solver found a solution. All constraints and optimality
conditions are satisfied.
Engine: Standard LP Simplex
Target Cell (Max)
Original Final
Cell Name Value Value
\$B\$20 Total Profit 3.4488E-286 318
Original Final
Cell Name Value Value
\$B\$11 Decision Variables Women's 0 12
\$C\$11 Decision Variables Golf 1.276E-303 0
\$D\$11 Decision Variables Men 6.8976E-287 12
\$E\$11 Decision Variables Folding 1.2761E-303 60
Constraints
Slac
Cell Name Cell Value Formula Status k
\$B\$15<=\$
\$B\$15 Storage Space 120 F\$6 Binding 0
\$B\$16<=\$ Not
\$B\$16 Display Racks 18 F\$7 Binding 36
\$B\$17<=\$
\$B\$17 Demand 72 F\$8 Binding 0
\$B\$18>=\$
\$B\$18 Marketing Restriction 12 G\$9 Binding 0

## Microsoft Excel 12.0 Sensitivity

Report
Worksheet: [Fox
Umbrellas.xlsx]Sheet1
Report Created: 05/12/2011
13:50:05 PM
Target Cell (Max)
Final
Cell Name Value
\$B\$20 Total Profit 318

Reduc Objectiv Allowab Allowab
Final ed e le le
Coefficie Increas Decreas
Cell Name Value Cost nt e e
\$B\$11 Decision Variables Women's 12 0 4 1 2.5
\$C\$11 Decision Variables Golf 0 -0.5 6 0.5 1E+30
\$D\$11 Decision Variables Men 12 0 5 2.5 0.5
\$E\$11 Decision Variables Folding 60 0 3.5 1E+30 0.5
Constraints
Final w nt le le
R.H. Increas Decreas
Cell Name Value Price Side e e
\$B\$15 Storage Space 120 2 120 48 24
\$B\$16 Display Racks 18 0 54 1E+30 36
\$B\$17 Demand 72 1.5 72 24 48
\$B\$18 Marketing Restriction 12 -2.5 12 12 12
a. How many umbrellas of each type should be stocked? How much profit is expected?
x1*=12, x2*=0, x3*=12, x4*=60, P*=318
b. How much space is left unused? How many racks are used?
No space left unused. Only 18 of the 54 racks will be used.
c. By how much can the profit on women's umbrellas increase before the solution would
change? If the profit for womens umbrellas become 5, then the solution would change.
d. By how much can the amount of space increase before there is a change in the shadow or dual
price? If the amount of space becomes 168 then the shadow or dual price is no longer valid
and becomes zero.
e. You are offered an advertisement that should increase the demand constraint from 72 to 86 for
a total cost of \$20. Would you say yes or no? Explain. Yes. First, the increase of 14 units is
within the range for that right-hand-side so the shadow or dual price is applicable for all 14
units. And, since the change in profit of 14*\$1.5=\$21 is greater than the cost of \$20, the
proposition is profitable by \$1.
f. Why is only one reduced cost non-zero? Explain the implications of this non-zero reduced
cost. The reduced cost is the change necessary for the objective function coefficient in order
for that variable to be positive in the final solution. Since only one decision variable is equal to
zero, it is the only one for which the reduced cost can be non-zero. The reduced cost of -0.5 is
an indication that profit for golf umbrellas must be 6.5 before the golf umbrella variable can
become positive.

6. Each week, the Jackson Purchase Press Co. publishes a magazine, a newspaper, an
advertisement mailer, and a prospectus and xj = the number of type j product to produce per week,
j=1, 2, 3, 4, respectively. The following linear programming model has an objective of maximizing
profit. The constraints are a resource constraint for ink availability, a resource constraint for paper
pulp availability, and two constraints from the Marketing Department: one for the minimum number
of magazines and prospectus since they are the most profitable, and one requiring that there be at
least as many total magazines and newspapers as there are total mailers and prospectuses.
Maximize Z = .5 x1 + .28 x2 + .3 x3 + .6 x4
Subject To 3 x1 + 2 x2 + 4 x3 + x4 50,000 Ink Availability
5 x1 + 6 x2 + 2 x3 + 7 x4 120,000 Paper Pulp Availability
x1 + x4 20,000 Magazine & Prospectus Min.
x1 + x2 x3 x4 0 Mag./News >= Mail./Prosp.
x1, x2, x3, x4 0

## Microsoft Excel 12.0 Answer Report

Worksheet: [Jackson Purchase
Press.xlsx]Sheet1
Report Created: 11/16/2008
19:32:25 PM
Result: Solver found a solution. All constraints and optimality
conditions are satisfied.
Engine: Standard LP Simplex
Solution Time: 00 Seconds
Iterations: 6
Subproblems: 0
Incumbent Solutions: 0

## Target Cell (Max)

Original Final
Cell Name Value Value
\$B\$2
2 Total Profit Amount 0 11600

Original Final
Cell Name Value Value
\$B\$1
3 Quantity Magazines 0 18400
\$C\$1
3 Quantity Newspapers 0 0
\$D\$1
3 Quantity Mailers 0 0
\$E\$1
3 Quantity Prospectuses 0 4000

Constraints
Cell Name Cell Value Formula Status Slack
\$B\$1 \$B\$17<=\$
7 Ink Constraint 50000 F\$6 Binding 0
\$B\$1 \$B\$18<=\$
8 Paper Pulp Constraint 120000 F\$7 Binding 0
\$B\$1 \$B\$19>=\$ Not
9 Min. Mag./Prosp. Constraint 22400 F\$8 Binding 2400
\$B\$2 Mag./News.>=Mail./Prosp. \$B\$20>=\$ Not
0 Constraint 14400 F\$9 Binding 14400

## Microsoft Excel 12.0 Sensitivity Report

Worksheet: [Jackson Purchase Press.xlsx]Sheet1
Report Created: 11/16/2008 19:32:26 PM
Target Cell (Max)
Final
Cell Name Value
\$B\$2
2 Total Profit Amount 11600
Reduc Objectiv
Final ed e Allowable Allowable
Coefficie
Cell Name Value Cost nt Increase Decrease
\$B\$1 0.0096153
3 Quantity Magazines 18400 0 0.5 1 85
\$C\$1
3 Quantity Newspapers 0 -0.28 0.28 0.28 1E+30
\$D\$1
3 Quantity Mailers 0 -0.02 0.3 0.02 1E+30
\$E\$1 0.0166666
3 Quantity Prospectuses 4000 0 0.6 67 0.4
Constraints
Final w nt Allowable Allowable
R.H.
Cell Name Value Price Side Increase Decrease
\$B\$1
7 Ink Constraint 50000 0.04 50000 10000 15000
\$B\$1 51428.571
8 Paper Pulp Constraint 120000 0.08 120000 43 20000
\$B\$1
9 Min. Mag./Prosp. Constraint 22400 0 20000 2400 1E+30
\$B\$2 Mag./News.>=Mail./Prosp.
0 Constraint 14400 0 0 14400 1E+30
a. Each product is packed in string with magazines & newspapers each having 24 in one string
pack and mailers & prospectuses each having 20 in a string pack. How many string packs of each
product should be produced? How much profit should Jackson expect each month?
18,400 Magazines/Week yields 766 string pack/Weeks (with 16 leftover magazines/Week).
4,000 Prospectus/Week yields 200 string packs/Week.
Newspapers and Mailers Zero string packs.
\$11,600 Profit/Week yields \$46,400 Profit/Month.
b. How much would the profit for mailers need to be to make mailers profitable for production?
Current profit of \$0.30 would need to be increased by the Reduced Cost of \$0.02 up to \$0.32 or
greater before mailers would be profitable for production.
c. The Purchasing Department found 80,000 units of paper pulp 60,000 units may be obtained
from Westvaco at .06 per unit & another 20,000 units may be purchased for .09 per unit from Mead.
How many additional units should Jackson purchase? What would be the effect upon profit?
The Shadow Price for paper pulp is \$0.08 so Jackson should purchase none from Mead since the
cost of those units is greater. The Westvaco units at \$0.06 per unit should be purchased. Since the
allowable increase is 51,428.57143, they should only buy 51,428 units. The Total Profit for the
model will increase by (\$0.08)(51,428) = \$4,114.24. The Overall Total Profit will be \$4,114.24
(\$0.06)(51,428) = \$3,085.68 = \$1,028.56.

d. Negotiations with Fidelity Investments for the prospectuses has resulted in increased revenues of
.18 per prospectus. With cost remaining constant, what would Jackson do to respond to this
enhancement of revenue? The new profit for a prospectus would be \$0.78 and this outside of
the range of optimality for prospectuses. The model would have to be resolved to find the new
optimum and more prospectuses would be produced.

e. Ernst & Whinney, management consultants for Jackson, have indicated that the Marketing
Department constraints are key for this analysis. What should your detailed response to them be?
Those constraints are non-binding with plenty of surplus and thus are not key for the analysis.

7. Par, Inc. is a small manufacturer of golf equipment and supplies whose management has
decided to move into the market for medium- and high-priced golf bags. Pars distributor is enthusiastic
about the new product line and has agreed to buy all the golf bags Par produces over the next three
months. After a thorough investigation of the steps involved in manufacturing a golf bag, management
determined that each golf bag will require the following operations: 1) cutting and dyeing the material,
2) sewing, 3) finishing (inserting umbrella holder, club separators, etc.), and 4) inspection and
packaging. The linear program for the setting is to maximize profit where xj = the number of type j golf
bag to make in the three-month period, j=1 Standard, j=2 Deluxe.
Maximize P = 10x1 + 9x2
Subject To .7x1 + x2 630 Cutting and Dyeing
.5x1 + 5/6 x2 600 Sewing
x1 + 2/3 x2 708 Finishing
.1x1 + .25 x2 135 Inspection and Packaging
x1, x2 0
Worksheet: [Par Inc.xlsx]Sheet1
Target Cell (Max)
Cell Name Original Value Final Value
\$B\$20 Total Profit Amount 0 7668
Cell Name Original Value Final Value
\$B\$12 Optimal Quantity Standard 0 540
\$C\$12 Optimal Quantity Deluxe 0 252
Constraints
Cell Name Cell Value Formula Status Slack
\$B\$16 Cutting and Dyeing Amount 630 \$B\$16<=\$D\$5 Binding 0
\$B\$17 Sewing Amount 480 \$B\$17<=\$D\$6 Not Binding 120
\$B\$18 Finishing Amount 708 \$B\$18<=\$D\$7 Binding 0
\$B\$19 Inspection & Packaging Amount 117 \$B\$19<=\$D\$8 Not Binding 18
Microsoft Excel 12.0 Sensitivity Report
Target Cell (Max)
Cell Name Final Value
\$B\$20 Total Profit Amount 7668
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
\$B\$12 Optimal Quantity Standard 540 0 10 3.5 3.7
\$C\$12 Optimal Quantity Deluxe 252 0 9 5.285714286 2.333333333
Constraints
Cell Name Value Price R.H. Side Increase Decrease
\$B\$16 Cutting and Dyeing Amount 630 4.375 630 52.36363636 134.4
\$B\$17 Sewing Amount 480 0 600 1E+30 120
\$B\$18 Finishing Amount 708 6.9375 708 192 128
\$B\$19 Inspection & Packaging Amount 117 0 135 1E+30 18
a. How many of each type of bag should Par produce in the three month period? What is the
contribution to total profit of each type of bag?
Standard Bags x1* = 540 Contribution to Profit (540)(10) = \$5,400
Deluxe Bags x2* = 252 Contribution to Profit (252)(9) = \$2,268
b. Par wants to investigate hiring three more workers for the finishing department. Each employee
can work up to 40 hours/week. These workers are coming from other departments and will retain
their current hourly wages+benefits of \$5.98, \$6.21, and \$7.08, respectively, if hired. Should Par
hire any additional workers for the finishing department? If yes, which employees and for how
many hours? (Assume other departments with no slack will also be gaining additional resources.)
Shadow Price for the Finishing Department is \$6.9375. The allowable increase for the three
month period is 192 hours. Since the workers work 40 hours/week, this is 160 hours/month and
480 hours/3-months. So, we would hire the cheapest worker (\$5.98/hour) for 192 hours during
the 3-month period and not hire either of the other two workers.
c. The sewing department has come down with the H1N1 flu and it is feared that 200 hours of time
may be lost in sewing. What would happen to the solution and profit if this is correct?
There are currently 600 hours available for the sewing department. The allowable decrease is
120. Since 200 is beyond the allowable decrease and thus out of the range of 480RHS2, the
current optimal is no longer valid and the problem must be resolved.
d. There is a debate at Par regarding the potential profit for the deluxe model. Some accountants
think it may be undervalued and will actually bring a profit of \$16 per bag while the marketing
department thinks that \$13 per bag is a better estimate. What would happen to the optimal solution
and profit under each of these two scenarios?
The range of optimality for the deluxe model objective coefficient is 6.6666667c24.285714286.
If \$16 per deluxe bag is correct, it is outside the range of optimality, the current solution is no
longer valid and a new solution must be found. If \$13 per deluxe bag is correct, it is inside the
range and the current xj* still hold. The new P*=(540)(10) + (252)(13) = \$8,676
e. How many hours will be utilized in the inspection and packaging department? What is the value
of getting more hours for this department? Explain. 117 hours will be utilized. Since there are
135 hours available in this department and not all of it is being used, the shadow price = \$0 and
there is no value in getting more time for this department.

## Multiple Choice Question Examples

8. A binding constraint for a continuous linear programming model with a unique solution
a. is one that EXCEL Solver found to be difficult to determine.
b. will have a slack or surplus value that is positive.
c. should be determined prior to running the model and all of them deleted.
d. are the only constraints that will result in negative slacks or surpluses.
e. None of the above is correct.

## 22. A constraint with a positive slack value

a. will have a positive shadow or dual price.
b. will have a negative shadow or dual price.
c. will have a shadow or dual price of zero.
d. has no restrictions for its shadow or dual price.
e. should be removed from the model.
f. None of the above is correct.