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# Lecture

MGMT 650
Sensitivity Analysis in LP
Chapter 3

Example

## Consider the following linear program:

Min
s.t.

6x1 + 9x2

(\$ cost)

x1 + 2x2 < 8
10x1 + 7.5x2 > 30
x2 > 2
x1, x2 > 0

## The Management Scientist Output

OBJECTIVE FUNCTION VALUE = 27.000
Variable
x1
x2

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

## The Management Scientist Output (continued)

OBJECTIVE COEFFICIENT RANGES
Variable Lower Limit Current Value
x1
0.000
6.000
x2
4.500
9.000

Upper Limit
12.000
No Limit

## RIGHTHAND SIDE RANGES

Constraint Lower Limit Current Value
1
5.500
8.000
2
15.000
30.000
3
0.000
2.000

Upper Limit
No Limit
55.000
4.000

## According to the output:

x1 = 1.5
x2 = 2.0
Objective function value = 27.00

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?

## The Management Scientist Output

OBJECTIVE COEFFICIENT RANGES
Variable Lower Limit Current Value
x1
0.000
6.000
x2
4.500
9.000

Upper Limit
12.000
No Limit

## RIGHTHAND SIDE RANGES

Constraint Lower Limit Current Value
1
5.500
8.000
2
15.000
30.000
3
0.000
2.000

Upper Limit
No Limit
55.000
4.000

Range of Optimality

The output states that the solution remains
optimal as long as the objective function
coefficient of x1 is between 0 and 12.

## Because 4 is within this range, the optimal

solution will not change.

## However, the optimal total cost will be affected

6x1 + 9x2 = 4(1.5) + 9(2.0) = \$24.00.

Range of Optimality

Question
How much can the unit cost of x2 be decreased without
concern for the optimal solution changing?

## OBJECTIVE COEFFICIENT RANGES

Variable Lower Limit Current Value
x1
0.000
6.000
x2
4.500
9.000

Upper Limit
12.000
No Limit

## RIGHTHAND SIDE RANGES

Constraint Lower Limit Current Value
1
5.500
8.000
2
15.000
30.000
3
0.000
2.000

Upper Limit
No Limit
55.000
4.000

Range of Optimality

The output states that the solution remains
optimal as long as the objective function coefficient of
x2 does not fall below 4.5.

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## Range of Optimality and 100% Rule

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?

If c1 = 7.5, the amount c1 changed is 7.5 - 6 = 1.5.

## The maximum allowable increase is 12 - 6 = 6,

so this is a 1.5/6 = 25% change.

## If c2 = 6, the amount that c2 changed is 9 - 6 = 3.

The maximum allowable decrease is 9 - 4.5 = 4.5,
so this is a 3/4.5 = 66.7% change.

## The sum of the change percentages is 25% + 66.7% = 91.7%.

Since this does not exceed 100% the optimal solution would
not change.
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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?

## OBJECTIVE COEFFICIENT RANGES

Variable Lower Limit Current Value
x1
0.000
6.000
x2
4.500
9.000

Upper Limit
12.000
No Limit

## RIGHTHAND SIDE RANGES

Constraint Lower Limit Current Value
1
5.500
8.000
2
15.000
30.000
3
0.000
2.000

Upper Limit
No Limit
55.000
4.000
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## Range of Feasibility Contd.

OBJECTIVE FUNCTION VALUE = 27.000
Variable
x1
x2

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

## A dual price represents the improvement in the

objective function value per unit increase in the
right-hand side.

## A negative dual price indicates a deterioration

(negative improvement) in the objective, which in
this problem means an increase in total cost
because we're minimizing.

## Since the right-hand side remains within the range

of feasibility, there is no change in the optimal
solution.

## However, the objective function value increases by

\$4.50.
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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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Chapter 8

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## Example: Metropolitan Microwaves

Metropolitan Microwaves, Inc. is planning to expand its
operations into other electronic appliances. The company
has identified seven new product lines it can carry.
Relevant information about each line follows on the next
slide.
Initial Floor Space Exp. Rate
Product Line
Invest. (Sq.Ft.)
of Return
1.
2.
3.
4.
5.
6.
7.

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
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## Example: Metropolitan Microwaves

Metropolitan has decided that they should not stock
projection TVs unless they stock either TV/DVDs or color
TVs.
Also, they will not stock both VCRs and DVD players, and
they will stock video games if they stock color TVs.
Finally, the company wishes to introduce at least three new
product lines.
The company has \$45,000 to invest and
420 sq. ft. of floor space available
Determine Metropolitans optimal expansion policy to
maximize its overall expected return.

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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

## Define the Decision Variables

xj = 1 if product line j is introduced;
= 0 otherwise.

## Define the Objective Function

Maximize total expected return:
Max .081(6000)x1 + .09(12000)x2 + .11(20000)x3
+ .102(14000)x4 + .105(15000)x5 + .141(2000)x6
+ .132(32000)x7

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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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## Integer Programming Application in

Distribution System Design

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

## Develop a model for choosing the best plant locations

Determine the optimal amounts to transport from each plant to each distribution center such that
all demand is satisfied.
Plant Site

Boston

Atlanta

Houston

Detroit

Columbus

Denver

Kansas City

10

St. Louis

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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

## Locate 1 new plant in Kansas City (capacity = 40000) {y4=1}

Supply 30000 from existing St. Louis plant to Boston DC {x51=30000}
Supply 20000 from existing St. Louis plant to Atlanta DC {x42=20000}
Supply 20000 from existing St. Louis plant to Houston DC {x43=20000}

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## Tina's Tailoring has five idle tailors and four custom

garments to make.
The estimated time (in hours) it would take each tailor to
make each garment is shown below.
An 'X' indicates an unacceptable tailor-garment assignment.
Formulate an integer program for determining the tailorgarment assignments that minimize the total estimated time
spent making the four garments.
No tailor is to be assigned more than one garment and each
garment is to be worked on by only one tailor.
Tailor
Garment
Wedding gown
Clown costume
Bullfighter's outfit

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

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## Define the decision variables

xij = 1 if garment i is assigned to tailor j
= 0 otherwise.
Number of decision variables = [(# of garments)(# of
tailors)] - (# of unacceptable assignments) = [4(5)] - 3 = 17
Define the objective function
Minimize total time spent making garments:
Min 19x11 + 23x12 + 20x13 + 21x14 + 18x15 + 11x21
+ 14x22 + 12x24 + 10x25 + 12x31 + 8x32 + 11x33
+ 9x35 + 20x42 + 20x43 + 18x44 + 21x45

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## Exactly one tailor per garment:

1) x11 + x12 + x13 + x14 + x15 = 1
2) x21 + x22 + x24 + x25 = 1
3) x31 + x32 + x33 + x35 = 1
4) x42 + x43 + x44 + x45 = 1
No more than one garment per tailor:
5) x11 + x21 + x31 <= 1
6) x12 + x22 + x32 + x42 <= 1
7) x13 + x33 + x43 <= 1
8) x14 + x24 + x44 <= 1
9) x15 + x25 + x35 + x45 <= 1
Integrality: xij > {0,1} for i = 1, . . ,4 and j = 1, . . ,5
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Optimal Solution
Estimated total time
Wedding Gown to Tailor #5
Clown costume to Tailor #1

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## Airline Crew Scheduling

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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