APRIL 24, 2018

OPERATION RESEARCH 1

MOHAMMAD ALFIAN GHIFFARI

02411640000075
Q-CLASS
PROBLEM 1

Decision variables

Let P1 = number of units of product 1 produced each week

P2 = number of units of product 2 produced each week
OT = number of hours of overtime labor used each week
RM = number of units of raw material purchased each week
A1 = dollars spent each week on advertising product 1
A2 = dollars spent each week on advertising product 2

Objective function

Max Z = 15P1 + 8P2 – 6(OT) – 1.5RM – A1 – A2

Subject to:

P1 – 10A1 ≤ 50
P2 – 15A2 ≤ 60
0.75P1 + 0.5P2 ≤ 160 + (OT)
2P1 + P2 ≤ RM
RM ≤ 400
A1 + A2 ≤ 100
1.5P1 + 0.8P2 ≤ 320

Sensitivity report of problem 1

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$3 P1 160 0 15 0.966666667 0.533333333
$C$3 P2 80 0 8 0.266666667 0.483333333
-
$D$3 OT 0 2.133333333 -6 2.133333333 1E+30
$E$3 RM 400 0 -1.5 1E+30 4.5
$F$3 A1 11 0 -1 1 5.333333333
$G$3 A2 1.333333333 0 -1 1 7.25

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$H$5 Value 50 0.1 50 110 876.6666667
$H$6 Value 60 0.066666667 60 20 1315
$H$7 Value 160 3.866666667 160 27.5 2.5
$H$8 Value 0 6 0 6.666666667 55
$H$9 Value 400 4.5 400 6.666666667 55
$H$10 Value 12.33333333 0 100 1E+30 87.66666667
 $H$11 Value 304 0 320 1E+30 16

Answers

a. If the overtime were only $4 per hour, Wivco shouldn’t use it. The change if Wivco use it is $2 and
it is still under the allowable decrease of overtime rate. If it is still used, the solution will not
change and the value of z will be reduced by the overtime.
b. If each unit of product 1 sold for $15.50, the increase is only at $0.50 which is still under the
allowable increase of $0.50 and the current basis is still optimal. The new optimal solution is:
Max Z = 15.50 P1 + 8P2 – 6(OT) – 1.5RM – A1 – A2
= 15.50 (160) + 8 (8)0 – 6 (0) – 1.5 (400) – 11 – 1.333333
= 2,507.667
c. From the sensitivity report of problem 1, it is known that the shadow proce for the raw material
is $ 4.50 that means if Wivco pay an additional unit of raw material for $1.50, Wivco will get $
4.50 profit. Then, for an additional raw material, Wivco pay $ 1.50 + $ 4.50 = $ 6.00.
d. From the sensitivity report, the shadow price for machine time is $0. It means that Wivco will not
pay anything for another hour of machine time.
e. If each worker were required (as part of the regular workweek) to work 45 hours per week (the
increase equal to 5 hours per week) and the number of worker is 4 workers, the b (right hand
side) will increase by 20. Since the allowable increase is 27.50, the optimal value of decision
variable remain unchanged.
The new optimal solution is
Max Z = 2,427.667 + 20 (3.866666667)
= $2505.00033334
f. The new LP:
Let
P1 = number of units of product 1 produced each week
P2 = number of units of product 2 produced each week
OT = number of hours of overtime labor used each week
RM = number of units of raw material purchased each week
A1 = dollars spent each week on advertising product 1
A2 = dollars spent each week on advertising product 2
Objective function
Max Z = 15P1 + 8P2 – 6(OT) – 1.5RM – A1 – A2
Subject to:
P1 – 10A1 ≤ 51
P2 – 15A2 ≤ 60
0.75P1 + 0.5P2 ≤ 160 + (OT)
2P1 + P2 ≤ RM
RM ≤ 400
1 + A2 ≤ 100
1.5P1 + 0.8P2 ≤ 320
 If the right hand side of constraint 1 is increased to 51, the optimal solution is increased from
$2,427.667 into $2,427.767. Therefore, first constraint’s shadow price is 0.1 since the optimal
solution increased by $ 0.1 when the right hand side increased by 1 unit.
g. If Wivco is considering to produce product 3, it will require 2 hours of labor, 1 unit of raw material,
and 2 hours of machine time. The shadow price of each increase in labor hour is $ 3.866666667,
each unit increase of raw material is $ 4.5, and shadow price of machining time is $ 0. The total
gained profit of product 3 is
Total shadow price of product 3 = 2 x $ 3.866666667 + $ 4.5 + $ 0
= $ 12.23333334
Since the shadow price of product 3 is $ 12.23333334 and product 3 price is $ 17, Wivco should
produce product 3 and they will get profit of $ 4.7666666.
h. If each unit of product 2 sold for $10, the increase compared to the initial condition is $ 2. Based
on the sensitivity report of problem 1 the allowable increase of product 1 is $ 0.266666667. since
the increase of $ 2 is greater than the allowable increase, the current basis will not remain
optimal.
PROBLEM 2

Sensitivity report of problem 2

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$3 P1 16.66666667 0 194 28 44
$C$3 P2 50 0 172 37.33333333 1.725490196
$D$3 P3 0 -1.62962963 146 1.62962963 1E+30
$E$3 P4 33.33333333 0 108 8 8.615384615

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$F$5 Value 700 10.51851852 700 14.0625 112.5
$F$6 Value 500 6.222222222 500 9.677419355 46.15384615
$F$7 Value 583.3333333 0 600 1E+30 16.66666667
$F$8 Value 650 7.62962963 650 47.36842105 9.782608696

a. LP of problem 2
Decision variables
P1 = number of product 1 produced per month
P2 = number of product 2 produced per month
P3 = number of product 3 produced per month
P4 = number of product 4 produced per month

Objective function
Max z = 194 P1 + 172 P2 + 146 P3 + 108 P4

Subject to

11 P1 + 7 P2 + 6 P3 + 5 P4 <= 700

4 P1 + 6 P2 + 5 P3 + 4 P4 <= 500

8 P1 + 5 P2 + 4 P3 + 6 P4 <= 600

7 P1 + 8 P2 + 7 P3 + 4 P4 <= 650

The result from Excel’s solver is that Machinco should produce 16.67 product 1, 50
product 2, 0 product 3, and 33.33 product 4. The maximum profit is 15433.33.

b. Based on the sensitivity report of problem 2, the reduced cost of product 3 is 1.62962963. The
price of product 3 should increase more than by 1.62962963 to become optimal.
c. If product 1 is sold for $290, the sales of product 1 will reduced by $10 compared to the previous
sales of $300. The new optimal solution is
 New Max z = 15433.33 – 10 (16.66666667)
= 15,266.6633333
d. Based on the sensitivity report of problem 2, the shadow price for machine 1 is $ 10.51851852
and the shadow price for machine 2 is $ 6.222222222. it means that the maximum amount of
money Machinco should pay for machine 1 is $ 10.51851852 and for machine 2 is $ 6.222222222
for every additional hour.
e. Based on the sensitivity report of problem 2, the shadow price of skilled labor is $ 0 and for
unskilled labor is $ 7.62962963. It means that every hour increase of skilled labor will not change
the result of optimal solution and Machinco should pay less than $ 7.62962963 for an extra hour
of unskilled labor to gain profit. Then, Machinco should pay less than $ 7.62962963 for an extra
hour of labor.
f. The profit of Machinco will not change since the shadow price of skilled labor is $ 0.