The Galaxy LP Model

Decisions variables:
X1 = Weekly production level of Space Rays (in dozens)
X2 = Weekly production level of Zappers (in dozens).

Objective Function:
Weekly profit, to be maximized

The Galaxy Linear Programming Model

Max 8X1 + 5X2
(Weekly profit)
subject to
2X1 + 1X2 1000 (Plastic)
3X1 + 4X2 2400 (Production Time)
X1 + X2 700 (Total production)
X1 - X2 350 (Mix)
Xj> = 0, j = 1,2
(Nonnegativity)

Graphical Analysis the Feasible Region

X2

1000

The Plastic constraint

2X1+X2 1000
Total production constraint:
X1+X2 700 (redundant)

700
500

Production
Time
3X1+4X22400

Infeasible
Production mix
constraint:
X1-X2 350

Feasible
500

700

Interior points. Boundary points. Extreme points.

There are three types of feasible points

X1

 Reduced

cost

Assuming there are no other changes to the input

parameters, the reduced cost for a variable Xj
that has a value of 0 at the optimal solution is:
the amount the variable's objective function coefficient
would have to improve (increase for maximization
problems, decrease for minimization problems) before this
variable could assume a positive value.

RANGE OF INSIGNIFICANCE
Complementary

slackness

At the optimal solution, either the value of a variable is

zero, or its reduced cost is 0.

Sensitivity Analysis of
Right-Hand Side Values

In sensitivity analysis of right-hand sides of constraints we are

interested in the following questions:
Keeping all other factors the same, how much would the
optimal value of the objective function (for example, the
profit) change if the right-hand side of a constraint
changed by one unit? (SHADOW PRICE/DUAL PRICE)
For how many additional or fewer units will this per unit
change be valid? (RANGE OF FEASIBILITY)

Sensitivity Analysis of
Right-Hand Side Values

Any change to the right hand side of a

binding constraint will change the
optimal solution.

Any change to the right-hand side of a

non-binding constraint that is less than
its slack or surplus, will cause no change
in the optimal solution.

Shadow Prices

Assuming there are no other changes to the input

parameters, the change to the objective function
value per unit increase to a right hand side of a
constraint is called the Shadow Price

The shadow price for a nonbinding constraint (one

in which there is positive slack or surplus when
evaluated at the optimal solution) is 0.

Dual Price

A dual price for a right-hand side (or resource

limit) is the amount the objective function will

improve per unit increase in the right-hand side

value of a constraint.

For maximization problems, dual prices and

shadow prices are the same.

For minimization problems, shadow prices are the

negative of dual prices.

Shadow Price
graphical demonstration The Plastic
constraint

X2

When more plastic becomes available

(the plastic constraint is relaxed), the
right hand side of the plastic constraint
increases.

1000

Maximum profit = $4360

500

Maximum profit = $4363.4

Shadow price =
4363.40 4360.00 = 3.40

Production time
constraint

X1
500

Range of Feasibility

Assuming there are no other changes to the

input parameters, the range of feasibility is
The range of values for a right hand side of a
constraint, in which the shadow prices for the
constraints remain unchanged.
In the range of feasibility the objective function
value changes as follows:

Change in objective value

[Shadow price][Cha nge in the right hand side value]

Range of Feasibility
The Plastic
constraint

1000

Production mix
constraint
X1 + X2 700

X2

Increasing the amount of

plastic is only effective until a
new constraint becomes active.

A new active
constraint
500

This is an infeasible solution

Production time
constraint
X1
500

Range of Feasibility
The Plastic
constraint

1000

X2

Note how the profit increases

as the amount of plastic
increases.

500

Production time
constraint
X1
500

Range of Feasibility
X2

Infeasible
solution

1000

Less plastic becomes available

(the plastic constraint is more
restrictive).

The profit decreases

500

A new active
constraint
X1
500

Using Excel Solver Answer Report

Microsoft Excel 9.0 Answer Report
Worksheet: [Galaxy.xls]Galaxy
Report Created: 11/12/2001 8:02:06 PM

Target Cell (Max)

Cell
Name
$D$6 Profit Total

Original Value
4360

Final Value
4360

Adjustable Cells
Cell
Name
Original Value
$B$4 Dozens Space Rays
320
$C$4 Dozens Zappers
360

Final Value
320
360

Constraints
Cell
Name
$D$7 Plastic Total
$D$8 Prod. Time Total
$D$9 Total Total
$D$10 Mix Total

Cell Value
1000
2400
680
-40

Formula
$D$7<=$F$7
$D$8<=$F$8
$D$9<=$F$9
$D$10<=$F$10

Status
Slack
Binding
0
Binding
0
Not Binding
20
Not Binding
390

Using Excel Solver Sensitivity Report

Microsoft Excel Sensitivity Report
Worksheet: [Galaxy.xls]Sheet1
Report Created:
Adjustable Cells
Final Reduced Objective
Allowable Allowable
Cell
Name
Value
Cost
Coefficient
Increase
Decrease
$B$4 Dozens Space Rays
320
0
8
2
4.25
$C$4 Dozens Zappers
360
0
5 5.666666667
1
Constraints
Cell
$D$7
$D$8
$D$9
$D$10

Name
Plastic Total
Prod. Time Total
Total Total
Mix Total

Final Shadow Constraint

Value
Price
R.H. Side
1000
3.4
1000
2400
0.4
2400
680
0
700
-40
0
350

Allowable Allowable
Increase
Decrease
100
400
100
650
1E+30
20
1E+30
390

Allowable Increase/ Decrease entries indicate how much a given

decision variables Objective Coefficient may change, holding all the
other data constant, and still have the same LP solution.

When a coefficient is changed by less than the allowable

amounts, the current optimal solution remains the unique
optimal solution.
For a Max model, when a coefficient is increased by its
allowable amount exactly, there will be an alternative optimal
corner solution with a larger optimal value for the
distinguished variable.

For a MIN model, increasing a coefficient by the allowable

amount exactly will produce an alternative optimum
corner with a lower optimal value for the distinguished
variable.

Solver Infeasible Model

Solver Unbounded solution

Solver Alternate Optimal Solution

Solver does not alert the user to the existence

of alternate optimal solutions.

Many times alternate optimal solutions exist

when the allowable increase or allowable
decrease is equal to zero.

Linear Programming Duality

Theory
Every LP has an associated dual problem. The Dual is
essentially the inverse of the Primal (original
problem).

The optimal dual solution produces the dual price or

shadow price reported in the Lindo/Solver output
reports.

Duality

The Dual
An alternate formulation of a linear programming
problem as either the original problem or its
mirror image, the dual, which can be solved to
obtain the optimal solution.
Its variables have a different economic
interpretation than the original formulation of the
linear programming problem (the primal).
It can be easily used to determine if the addition of
another variable to a problem will change the
optimal.

Formulation of a Dual

Dual
The number of decision variables in the primal is
equal to the number of constraints in the dual.
The number of decision variables in the dual is
equal to the number of constraints in the primal.
Since it is computationally easier to solve problems
with less constraints in comparison to solving
problems with less variables, the dual gives us the
flexibility to choose which problem to solve.

Example

A comparison of these two versions of the

problem will reveal why the dual might be
termed the mirror image of the primal.

Economic Interpretation of Dual

Economic interpretation of dual solution

results
Analysis enables a manager to evaluate the
potential impact of a new product.
Analysis can determine the marginal values of
resources (i.e., constraints) to determine how much
profit one unit of each resource is equivalent to.
Analysis helps the manager to decide which of
several alternative uses of resources is the most
profitable.

Example: Primal and Its Dual

PCs
Printers
Labor available
for production

Production Data for the Making of PCs and Printers by A-1 Clone
Assembly time
Packaging time
per unit (hr.)
per unit (hr.)
Number of items
Profit
(site 1)
(site 2)
to be made
per unit
5
3
X
$50
2
2
Y
$30
220 hours

Primal Problem
Gross profit:
Max GP = 50X + 30Y
st. 5X + 2Y 220
3X + 2Y 180
X, Y 0

180 hours

Dual Problem*
Total opportunity cost:
Min C = 220a + 180p
st.

5a + 3p 50
2a + 2p 30
a, p 0

*John von Neumann proved the Duality Theorem

Coefficient matrix of a dual problem is a

transpose of the primals coefficient matrix
X

2 220
5
3

2
180

50 30 GP

RHS

3
5
2
2

220 180

RHS

50
30

a = opportunity cost of using an additional unit of labor

for the assembly of PCs and printers

p = opportunity cost of using an additional unit of labor

for the packaging of PCs and printers

The solution for the above problem

is:
GP = 2800, X = 20 and Y = 60

a = 2.50 and p = 12.50