Sensitivity analysis in Simplex

method
Grishma Sharma
Sensitivity Analysis
 Graphic Approach Limitation: It involves only two decision variables.

 Consider the following problem:

 A firm produces three products A,B and C, each of which passes

through three departments, Fabrication Finishing and Packaging. Each
unit of product A requires 3,4 and 2; unit of product B requires 5,4
and 4, while each unit of product C requires 2,4 and 5 hrs
respectively in three departments. Every day 60 hrs are available in
fabrication dept, 72 hrs in finishing dept and 100 hrs in packaging
department.
 The unit contribution of product A is Rs 5 of product B is Rs 10 and
C is Rs 8.

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 Let x1, x2 and x3 represent no of units of products A, B and C
respectively.

 Maximize Z= 5x1+10x2+8x3 Contribution

Subject to: 3x1+5x2+2x3<=60 Fabrication hrs
4x1+4x2+4x3 < = 72 Finishing hrs
2x1+4x2+5x3<=100 Packaging hrs
x1,x2 and x3 >= 0

 Introducing slack variables, the L.P.P can be written as

Maximize Z= 5x1+10x2+8x3+0S1+0S2+0S3
Subject to: 3x1+5x2+2x3+S1 = 60
4x1+4x2+4x3 +S2 = 72
2x1+4x2+5x3 + S3 = 100
x1,x2 ,x3,S1,S2 & S3 >= 0

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Simplex Table (1): Non Optimal solution

Cj 5 10 8 0 0 0

Cb Basis X1 X2 X3 S1 S2 S3 B Ratio

0 S1 3 5* 2 1 0 0 60 12

0 S2 4 4 4 0 1 0 72 18

0 S3 2 4 5 0 0 1 100 25

Zj 0 0 0 0 0 0

Cj-Zj 5 10 8 0 0 0

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Simplex Table (2): Non Optimal solution

Cj 5 10 8 0 0 0

Cb Basis X1 X2 X3 S1 S2 S3 B Ratio

10 X2 3/5 1 2/5 1/5 0 0 12 30

0 S2 8/5 0 12/5* -4/5 1 0 24 10

0 S3 -2/5 0 17/5 -4/5 0 1 52 260/17

Zj 6 10 4 2 0 0

Cj-Zj -1 0 4 -2 0 0

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Simplex Table (3): Optimal solution

Cj 5 10 8 0 0 0
Cb Basis X1 X2 X3 S1 S2 S3 B Ratio
10 X2 1/3 1 0 1/3 -1/6 0 8
8 X3 2/3 0 1 -1/3 5/12 0 10
0 S3 -8/3 0 0 1/3 -17/12 1 18
Zj 26 10 8 2/3 5/3 0
Cj-Zj -11/3 0 0 -2/3 -5/3 0

Optimal solution: x1=0, x2 =8, x3 =10.

Thus it calls for producing 8 & 10 units of products B and C each day.
Z= Rs 160
S3 being equal to 18, an equal no of hrs shall remain unutilized in packaging
dept. optimal solution does not require the production of product A.

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Sensitivity Analysis
Changes in objective function coefficient Cj’s:
 First consider the changes in coefficient of decision variables in
objective function, the profit rates in our case, shall influence the
optimal solution.
 In the context of our problem, x1 is not in the solution, it is a non
basic variable, while x2 & x3 are in the basis.
1. Variables included in the solution:
 Consider whether the change of profit per unit of a product, that
is currently being produced, cause a change in the optimal solution
to the problem over a certain range, a change positive or negative
in the unit profit would not cause a change in optimal solution.
 To determine this, we divide the Cj-Zj row values by
corresponding row values in table in respect to variable x2

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Cj-Zj: -11/3 0 0 -2/3 -5/3 0
X2 row: 1/3 1 0 1/3 -1/6 0
Quotient: -11 0 - -2 10 -

 The least positive quotient (10) : how much the profit could
increase w/o changing the solution.
 The least negative (-2): is maximum decrease in profit that would
not cause a change in the solution.
 Accordingly the range of profit is Rs 8 to Rs 20 { coef of x2 is 10,
therefore 10+10= 20 and 10-2 = 8}.
 In case the profit per unit falls below Rs 8 or becomes greater than
Rs 20, the optimal solution would be different, otherwise not.

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In a similar way, profit w.r.to product C, represented by
variable x3.
Cj-Zj: -11/3 0 0 -2/3 -5/3 0
X3 row: 2/3 0 1 -1/3 5/12 0
Quotient: -11/2 - 0 2 -4 -

 For this, the range would be Rs 4 and Rs 10.

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2.Variables not included in the solution:
 X1 is not included in the basis of optimal solution. The Cj-Zj value is
-11/3.
 A unit of product A would cause a loss of Rs 11/3, i.e. is profit
margin of at least 11/3 must be increased in respect of this product
before the firm would decide to include this item in its product mix
in positive terms.
 This increased margin of 11/3 means that the profit margin of
product should be more than Rs 26/3 {= 5+ 11/3} before its
production could be undertaken
 Thus any decrease in unit profit or an increase less than Rs 11/3 in
the profit per unit of this product shall not cause it to be produced
and would result in present solution unchanged.

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Introducing a new product D
 Profit margin of Rs 8, consumes 3 hrs in each of fabrication, finishing
departments, and 2 hrs in packaging dept.
 Should the firm decide for the introduction of this product?
 For product D, the value of hrs required would be Rs 7 calculated as
follows:
3 hrs in fabrication @ Rs 2/3 = Rs 2
3 hrs in finishing @ Rs 5/3 = Rs 5
2 hrs in packaging @ Rs 0 = Rs 0

 Since profit per unit of D is greater than the value of resources

consumed by it, product should be included in the production list of
the firm.

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Changes in bi values : R.H.S Ranging:

 Net contribution (Cj-Zj) values of the variables S1,S2 and S3 which

are equal to 2/3, 5/3 and 0 respectively indicate the shadow prices
or the marginal profitability of these resources.
 Adding one hr in fabrication dept would increases the aggregate
profit by Rs 2/3 while if one hr is reduced in this dept, it would
lower the profit by that amount.
 Similarly adding an hr in the finishing dept will raise the profit by Rs
5/3, while adding an hr in the packaging dept will a leave the profit
unchanged.
 Our problem is to determine the range over which each of the
shadow prices will remain valid. This analysis is sometimes called
R.H.S ranging.

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 Divide bi values in final table into the aij values in that table in
respect of the variable which represents the slack hrs of the dept
for which we want to determine the range.
bi aij bi/aij
8 1/3 24
10 -1/3 -30
18 1/3 54
 Positive quotient determine that how many hrs can be decreased
in the fabrication dept while least negative is how many hrs in this
dept can be increased.
 Therefore with present capacity of 60 hrs, the shadow price of Rs
2/3 will remain valid over the range (60 – 24) =36 to ( 60 + 30) =
90 hrs.
 In similar way, we can obtain the range for finishing dept as well.
This is 48 hrs to 85 hrs.

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 In packaging dept that all hrs in dept are not used, there are 18 hrs
unused.
 At least 18 hrs should be reduced from capacity of this dept before
a shortage would be experienced and no of hrs can be increased
without limit with no consequences on the solution.
 Therefore R.H.S range for time in packaging dept is (100 -18 ) = 82
hrs to infinity.

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Problem: (Tutorial – 5)
 A firm has the choice of producing four similar products P1,P2,P3 & P4 in
any combination. These products have profit rates of Rs 70,65,80 & 75
respectively. They all require two types of raw materials R1 and R2 and two
types of labour L1 and L2. the per unit requirement and availability of
resources every week is given in following table.
Per unit Requirement
Resource P1 P2 P3 P4 Availability
R1 4 4 3 7 90 kg
R2 6 3 5 4 120 kg
L1 5 2 3 3 60 hr
L2 6 5 1 2 100 hr

You are required to determine the optimal product mix for the firm
and carry out the sensitivity analysis for changes in the objective
function coefficients and R.H.S values of the constraints.
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 Let x1, x2, x3 and x4 be the no of units to be produced of the four products respectively.
The LPP can be stated as follows.

Maximize Z= 70x1 + 65x2 + 80x3 + 75x4

Subject to: 4x1 + 4x2 + 3x3 + 7x4 <= 90
6x1 + 3x2 + 5x3 + 4x4 <= 120
5x1 + 2x2 + 3x3 + 3x4 <= 60
6x1 + 5x2 + x3 + 2x4 <= 100
x1, x2, x3, x4 >= 0
 Introducing necessary slack variables, LPP can be written as,
Maximize Z= 70x1 + 65x2 + 80x3 + 75x4 + 0S1 + 0S2 + 0S3 + 0S4
Subject to: 4x1 + 4x2 + 3x3 + 7x4 + S1 = 90
6x1 + 3x2 + 5x3 + 4x4 + S2 = 120
5x1 + 2x2 + 3x3 + 3x4 + S3 = 60
6x1 + 5x2 + x3 + 2x4 + S4 = 100
x1, x2, x3, x4, S1, S2, S3 & S4 >= 0

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Simplex Table (1): Non Optimal solution

Cj 70 65 80 75 0 0 0 0
Cb Basis X1 X2 X3 X4 S1 S2 S3 S4 B Ratio
0 S1 4 4 3 7 1 0 0 0 90 30
0 S2 6 3 5 4 0 1 0 0 120 24
0 S3 5 2 3* 3 0 0 1 0 60 20
0 S4 6 5 1 2 0 0 0 1 100 100
Zj 0 0 0 0 0 0 0 0
Cj - Zj 70 65 80 75 0 0 0 0

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Simplex Table (2): Non Optimal solution

Cj 70 65 80 75 0 0 0 0
Cb Basis X1 X2 X3 X4 S1 S2 S3 S4 B Ratio
0 S1 -1 2* 0 4 1 0 -1 0 30 15
0 S2 -7/3 -1/3 0 -1 0 1 -5/3 0 20 -60
80 X3 5/3 2/3 1 1 0 0 1/3 0 20 30
0 S4 13/3 13/ 0 1 0 0 -1/3 1 80 240/
3 13
Zj 133.33 53. 80 80 0 0 80/3 0
33
Cj - Zj -190/3 35/ 0 -5 0 0 -80/3 0
3

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Simplex Table (3): Optimal solution

Cj 70 65 80 75 0 0 0 0
Cb Basis X1 X2 X3 X4 S1 S2 S3 S4 B
65 X2 -1/2 1 0 2 1/2 0 -1/2 0 15
0 S2 -5/2 0 0 -1/3 1/6 1 -11/6 0 25
80 X3 2 0 1 -1/3 -1/3 0 2/3 0 10
0 S4 13/2 0 0 -23/3 -13/6 0 11/6 1 15
Zj 255/2 65 80 310/3 35/6 0 125/6 0
Cj - Zj -115/2 0 0 -85/3 -35/6 0 -125/6 0

Optimal solution is x1 = 0, x2 = 15, x3 = 10, x4 = 0 and Z = Rs 1775

Further while R1 and L1 would be fully utilized and R2 would remain

unutilized to the extent of 25 kg and L2 would not be used for 15 hrs

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Sensitivity analysis
1. Changes in coefficients in the objective function.
 From the optimal solution it is clear that products P1 and P4 shall not be
produced bcoz every unit of P1 produced will reduce the profit by Rs
115/2, while each unit of P4 will result in a loss of Rs 85/3.
 Thus unless the unit profit of P1 rises by at least Rs 115/2 and similarly
unless the profit for P4 increases by Rs 85/3 at the minimum, it is not
advisable to produce them respectively.
 For products P2 & P3, calculations as follows.
Cj –Zj : -115/2 0 0 -85/3 -35/6 0 -125/6 0
aij coef: -1/2 1 0 2 1/2 0 -1/2 0
Ratio: 115 0 - -85/6 -70/6 - 125/3 -
Allowable increase (Least +ve ratio) = 125/3 = 41.67
Allowable decrease (Least -ve ratio) = 70/6 = 11.67

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Sensitivity analysis
Cj –Zj : -115/2 0 0 -85/3 -35/6 0 -125/6 0
aij coef: 2 0 1 -1/3 -1/3 0 2/3 0
Ratio: -115/4 - 0 85 35/2 - 125/4 -
Allowable increase (Least +ve ratio) = 35/2 = 17.50
Allowable decrease (Least -ve ratio) = 115/4 = 28.75
In other words, the ranges over which the basic would remain
unchanged are:
Product Variabl Current Allowable Allowable Range
e coefficient Increase Decrease

P1 X1 70 57.50 Infinity -∞ to 127.50

P2 X2 65 41.67 11.67 53.33 to 106.67
P3 X3 80 17.50 28.75 51.25 to 97.50
P4 X4 75 28.33 Infinity -∞ to 103.33

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2. Changes in R.H.S Values.

 The relevant ratios for each of slack variables are calculated below:

Variable Ratio for

S1 S2 S3 S4 Bi S1 S2 S3 S4
1/2 0 -1/2 0 15 30 ∞ -30 ∞
1/6 1 -11/6 0 25 150 25 -150/11 ∞
-1/3 0 2/3 0 10 -30 ∞ 15 ∞
-13/6 0 11/6 1 15 -90/13 ∞ 90/11 15

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 From the ratios shown in the last four columns, we can determine the
allowable increase and decrease by selecting respectively least negative
and least positive quantities.
 Accordingly the ranges over which the shadow prices would unchanged
are :
Constraint Current Allowable Allowable Range
RHS Value Increase Decrease

1 90 90/13 30 60 to 1260/13
2 120 ∞ 25 95 to ∞
3 60 150/11 90/11 570/11 to 810/11
4 100 ∞ 15 85 to ∞

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 THANK YOU

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