Linear Programming

ESCAPE - Solution
Questions a) Access the Escape.xls file and run Solver to find the optimal solution. Identify: 1) the target cell, 2) the changing cells, 3) the constraints Please see the ESCAPE solution.xls file.

b)

What is the optimal solution and resulting contribution to profit? Which of the constraints are binding? It is optimal to produce 538.4 Standard and 253.1 Deluxe suitcases. (You could round the numbers to 538 and 253 respectively; however keep in mind that this would slightly change the results of the sensitivity analysis table). This product mix provides a total contribution to profit of 7662 (if you round the quantities to the closest integers, so 538 and 253, the profit becomes 7657). The binding constraints are the Cutting & Colouring and the Finishing processes (from the answer report) we can see that hours used = hours available for these two processes, so they both have zero slack).

c)

Interpret the shadow price for the constraint regarding Cutting &Colouring (4.33). The Cutting &Colouring is binding (we use all available time). If we had an extra unit of capacity total contribution to profit would increase by 4.33. This shadow price holds for an increase in available hours of up to 630+ 51.94 or a decrease of down to 630 - 134.4

d)

What is the impact of a price drop in Deluxe suitcases by 1.5? Explain. In the optimal product mix we produce 253 Deluxe suitcases. If the price of Deluxe suitcases drops by 1.5 then the contribution of these suitcases (objective coefficient) would drop from its current level of 9 to 7.5. By checking the allowable decrease for that variable (1.58) we can see that this change would not result in a change in the product mix which will still remain the same (i.e. we would still produce 253 Deluxe suitcases). Howeve,r the total contribution to profit will decline by 253 * 1.5 = 379.5