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QMB TEST No. 4 – SIMPLEX CASE STUDY (TIME = 50 MINUTES)

Interpretation of Optimal Solution
1. A company produces 3 products X, Y & Z. It uses three resources M1, M2 & M3. Capacities of resources are
60, 72 & 100 hrs each. The following solution by simplex method has been obtained. Based on the solution,
answer the following questions.

C 5 10 8 0 0 0
C X B X1 X2 X3 S1 S2 S3
* X2 8 1/3 * * 1/3 -1/6 *
* X3 10 2/3 * * -1/3 5/12 *
* S3 8 -8/3 * * 1/3 17/12 *
Z * * * * * *
∆ C-Z * * * * * *

Questions –
1. Fill all fields with (*).
2. Is this optimal solution?
3. Is it unique solution or alternate solution?
4. Is the solution degenerate?
5. What is the optimal product mix & optimal profit?
6. Which product is not produced & why?
7. Which resources are scarce & which are abundant?
8. What are the shadow prices of resources?

2. A company produces 2 products P1 & P2. It uses 3 resources R1, R2, R3. A simplex solution is given for the
problem. Answer the questions based on the solution.
C 10 12 0 0 0
C X B X1 X2 S1 S2 S3
12 X2 300 0 1 3/5 -2/5 0
10 X1 300 1 0 -2/5 3/5 0
0 S3 0 0 0 -1/5 -1/5 1
Z 10 12 16/5 6/5 0
∆ C-Z 0 0 -16/5 -6/5 0

1. Is this optimal solution?

2. Is there alternate optimal solution?
3. Is this degenerate solution? Explain.
4. Is this infeasible solution?
5. What is the optimal production & optimal profit?
6. Which resources are scarce & abundant? Comment on abundant resources.
7. What are the shadow prices of resources?
8. Which resource should be given priority if company plans to expand production capacity?
9. If a new product can be produced which gives Rs. 9 per unit contribution & its resource requirements
are – 2 units of R1, 3 units of R2, 1 unit of R3. Should it be produced or not?
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