OPTIMIZATION MODELS FOR BUSINESS

Assignment 1

DM23239 SAUMYA MILIND KULKARNI

DM23211 ARUNDHATI BANERJEE
DM23438 SHEENA PRAKASH SONKUSARE
DM23224 KRITIKA JAIN
DM23421 NAYAN LAHIRY
DM23262 PAVITHRA BOMMU
FOR BUSINESS DECISION MAKING
(A)

Step 1 What are the decisions to be made?

product mix decision A B

7 3

Step 2 What are the constraints?

A B
1 1 <= 10
3 1 24
1 2 16

Required <= Available

10 10
24 24
13 16
A,B >= 0

Step 3 Objective function

maximize 3 2

3A+2B 27 the optimal solution is at (7,3)

(B) in the objective function, the coefficient changes from 3 to 5

Does the optimal solution change?

Step 1 What are the decisions to be made?

product mix decision A B

7 3

Step 2 What are the constraints?

 A B
1 1 <= 10
3 1 24
1 2 16

Required <= Available

10 10
24 24
13 16
A,B >= 0

Step 3 Objective function

maximize 5 2

5A+2B 41 the optimal solution remains the same at (7,3)

(c ) The coefficient of B changes from 2 to 4, does the optimal solution change?

Step 1 What are the decisions to be made?

product mix decision A B

4 6

Step 2 What are the constraints?

A B
1 1 <= 10
3 1 24
1 2 16

Required <= Available

10 10
18 24
16 16
A,B >= 0

Step 3 Objective function

maximize 3 4

3A+4B 36 the optimal solution is changed at (4,6)

30
eq. 1 A+B<=10 A B
10 0 25
0 10
20
eq. 2 3A+B<=24
A B 15

B
8 0
0 24 10

eq. 3 A+2B<=16 5
A B
16 0 0
0 2 4 6 8
A
e same at (7,3)
 Eq. 1
Eq. 2
Eq. 3

4 6 8 10 12 14 16 18
A
(A)

Step 1 What are the decisions to be made?

AM cases of model A manufactur
AM BM AP BP BM cases of model B manufactur
Product Mix 100 60 0 90 AP cases of model A purchased
BP cases of model B purchased

Step 2 What are the constraints?

AM BM AP BP

Demand for Model A 1 1 = 100

Demand for Model B 1 1= 150
Injection Time Constraint 4 3 <= 600
Assembly Time Constraint 6 8 <= 1080
AM BM AP BP >= 0

Available Required
Demand for Model A 100 = 100
Demand for Model B 150 = 150
Injection Time Constraint 580 <= 600
Assembly Time Constraint 1080 <= 1080

Step 3 Minimise the cost

Z 10 6 14 9
total cost 2170

Therefore, the management should produce 100 units of Model A and 60 units of Model B
and puchace 90 units of model B
The total cost incurred will be $2170.

(B) Which constraints are binding?

the constraints Demand for A, Demand for B, and Asembly Time Constraint are binding.
Answer Report 1'!A1

(C ) What are dual values, interpret each?

Final Shadow
Name Value Price
Demand for Model A 100 12.25
Demand for Model B 150 9
 Injection Time Constraint 580 0
Assembly Time Constraint 1080 -0.375

Each dual value or shadow price indicates the change in the final optimal value of the objective function
when the respective constraint is increased or decreased by 1 unit. For example, if the demand for A becomes
101, the final value of the objective function will become 2170+12.25= 2182.25. Similarly, if the demand for B incre
the final value becomes 2170+9=2179 and if assembly time increases by 1 minute, the optimal solution decreases t

(D) If you could change the right hand side of the constraint by one unitwhich one would you choose and why?

If we can change the right hand side of one constraint by 1 unit then we will choose to
decrease the right hand side of demand for A as it will decrease the overall cost by $12.25 and
the objective function is to minimize the cost.
cases of model A manufactured
cases of model B manufactured
cases of model A purchased
cases of model B purchased
 objective function
e demand for A becomes
arly, if the demand for B increases,
e optimal solution decreases to 2170-0.375=2169.625.

d you choose and why?

(A) Range of optimality for the objective function co-efficients

Name Range of Optimality Objective Coefficient

Lower limit Upper limit
Product Mix AM -1E+030 11.75 10
Product Mix BM 3.666666667 9 6
Product Mix AP 12.25 1E+030 14
Product Mix BP 6 11.33333333 9
If the value of the objective coefficient remains within the range of optimality,
thent the objective coefficient does not change.

(B) Manufacturing cost increase to 11.2 for model A

What is the new optimal solution?

Step 1 What are the decisions to be made? AM cases of model A manu

BM cases of model B manu
AM BM AP BP AP cases of model A purch
Product Mix 100 60 0 90 BP cases of model B purch

Step 2 What are the constraints?

AM BM AP BP

1 1 = 100
1 1= 150
4 3 <= 600
6 8 <= 1080
AM BM AP BP >= 0

Available Required
100 = 100
3.666667 = 150
11 <= 600
29.33333 <= 1080

Step 3 Minimise the cost

Objective function 11.2 6 14 9

total cost 2290
 Thus, we can conclude the the optimal solution will remain the same, i.e. Manufacture 100 units of A, 60 units of B

(C ) Manufacturing cost increase to 11.2 for model A

Manufacturing cost decreases to 5 for model B
How would the optimal sultion change?

Step 1 What are the decisions to be made?

AM BM AP BP
Product Mix 0 135 100 15

Step 2 What are the constraints?

AM BM AP BP

1 0 1 0= 100
0 1 0 1= 150
4 3 0 0 <= 600
6 8 0 0 <= 1080
AM BM AP BP >= 0

Available Required
100 = 100
150 = 150
405 <= 600
1080 <= 1080

Step 3 Minimise the cost

AM BM AP BP
Objective function 11.2 5 14 9
total cost 2210

Therefore, the management should produce 0 units of Model A and 135 units of
Model B at their Newark Plant and purchase 100 units of Model A and 15 units of Model B.
The total cost incurred will be $2210.
 For problem 2

nge of optimality,

cases of model A manufactured

cases of model B manufactured
cases of model A purchased
cases of model B purchased
units of A, 60 units of B and purchase 90 units of B.

15 units of Model B.
 (A)
Step 1 What are the decisions to be made?

Suits Sport coats D1 D2

product mix 100 150 40 0

Step 2 What are the constraints?

suit sport coats D1 D2

cutting time 1.2 0.8 0 0
sewing time 0.7 0.6 0 0
material 6 4 0 0
overtime 0 0 1 1
suits 1 0 0 0
sports coat 0 1 0 0

used available
cutting time 240 <= 240
sewing time 160 <= 180
material 1200 <= 1200
overtime 40 <= 100
suits 100 >= 100
sports coat 150 >= 75

Step 3 Total profit

Suits Sport coats D1 D2
190 150 -15 -10

z 40900

Therefore the optimal solution is to produce 100 suits and 150 sport coats.
The plan for overtime is to do 40 hours of overtime in the cutting operation and note that no overtime is required f
The total profit after deducting overtime is $40900

(B)
Step 1 What are the decisions to be made?

Suits Sport coats D1 D2

product mix 100 150 40 0
 Step 2 What are the constraints?

suit sport coats D1 D2

cutting time 1.2 0.8 0 0
sewing time 0.7 0.6 0 0
material 6 4 0 0
overtime 0 0 1 1
suits 1 0 0 0
sports coat 0 1 0 0

used available
cutting time 240 <= 240
sewing time 160 <= 180
material 1200 <= 1200
overtime 40 <= 100
suits 100 >= 100
sports coat 150 >= 75

Step 3 Total profit

Suits Sport coats D1 D2
210 150 -15 -10

z 42900

Therefore the optimal solution is to produce 100 suits and 150 sport coats.
NO overtime is required for either of the operations
The total profit after deducting overtime is $42900
There is no change in the optimal solution.

(c )
Step 1 What are the decisions to be made?

Suits Sport coats D1 D2 D3

product mix 100 207.142857 85.71429 14.28571 228.5714

Step 2 What are the constraints?

suit sport coats D1 D2 D3(extra length material)

cutting time 1.2 0.8 0 0 0
sewing time 0.7 0.6 0 0 0
material 6 4 0 0 0
overtime 0 0 1 1 0
suits 1 0 0 0 0
 sports coat 0 1 0 0 0
Extra length 0 0 0 0 1

used available
cutting time 285.7143 <= 285.7143
sewing time 194.2857 <= 194.2857
material 1428.571 <= 1428.571
overtime 100 <= 100
suits 100 >= 100
sports coat 207.1429 >= 75
Extra length 228.5714 <= 228.5714

Step 3 Total profit

Suits Sport coats D1 D2 D3
190 150 -15 -10 -8

z 46814.29

Sensitivity report Sensitivity Report Problem 4'!A1

We can see that the overall profit for the firm is increasing.
Therefore, we recommend the company to place a rush order for extra length of material at $8/yard.
According to the above sensitivity report, the maximum allowable decrease for the price of extra material is $25 wh
Since the sign for D3 is negative therefore, the range is read as reversed, therefore, the maximum price that the com

(d) Step 1 What are the decisions to be made?

Suits Sport coats D1 D2

product mix 75 187.5 40 0

Step 2 What are the constraints?

suit sport coats D1 D2

cutting time 1.2 0.8 0 0
sewing time 0.7 0.6 0 0
material 6 4 0 0
overtime 0 0 1 1
suits 1 0 0 0
sports coat 0 1 0 0
Extra length 0 0 0 0

used available
cutting time 240 <= 240
sewing time 165 <= 180
material 1200 <= 1200
overtime 40 <= 100
suits 75 >= 75
sports coat 187.5 >= 75

Step 3 Total profit

Suits Sport coats D1 D2
190 150 -15 -10

z 41775

We see that the dual price for Number of Suits is -$35, which implies that if the right-hand side of this constraint is
the total profit decreases by $35 and conversely if the Number of suits is decreased the profit will increase proporti
Sensitivity Report problem 4D'!A1
Therefore, this change will help to increase the profit and will also change the optimal solution.
no overtime is required for sewing operation.
 at $8/yard.
of extra material is $25 which brings the lower limit of Range of Optimality to $33.
aximum price that the company should be willing to pay is $33.
d side of this constraint is increased by 1,
rofit will increase proportionally.
 Problem 5

(A) Step 1 What are the decisions to be made?

DRB DRW
product mix 1000 800

Step 2 What are the constraints?

DRB DRW
alloy steel 20 25
manufacturin 0.6666666666667 1.666667
assembly tim 1 0.666667

available
alloy steel 40000 <= 40000
manufacturin 2000 <= 2000
assembly tim 1533.3333333333 <= 1600

Step 3 Profit maximization

DRB DRW
200 280

total profit 424000

optimal solution to produce is 1000 DRB and 800 DRW

and the total profit contribution is : $424000

(B)
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$C$18 alloy steel DRB 40000 8.8 40000 909.0909 10000
$C$19 manufacturing time 2000 36 2000 666.6667 95.2381
$C$20 assembly time DRB 1533.333 0 1600 1E+030 66.66667

The steel alloy is available at 2$ per pound

From the above table we can conclude that, 1 unit increase in the alloy increases the Profit by 8.8$
We still have a profit of 6.8$ even if we buy the alloy at 2$ per pound
Our optimal solution will remain unchanged
 We can increase our alloy constraint by 900

(c ) Final Shadow Constraint Allowable Allowable

Cell Name Value Price R.H. Side Increase Decrease
$C$18 alloy steel DRB 40000 8.8 40000 909.0909 10000
$C$19 manufacturing time 2000 36 2000 666.6667 95.2381
$C$20 assembly time DRB 1533.333 0 1600 1E+030 66.66667

We would advise Deegan Industries against it because the available Assembly Time was 1600 hrs. and they have on
The industry is left with some assembly time
Hence they do not need to employ labor on overtime

(D) Final Reduced Objective Allowable Allowable

Cell Name Value Cost Coefficient Increase Decrease
$C$7 product mix DRB 1000 0 200 24 88
$D$7 product mix DRW 800 0 280 220 30

The new reduced price will not change the optimal solution as the price lies in the range of optimality

(E ) Manufacturing time increased by 500 hrs, will the dual value for the manufacturing time constraint change?
500 hrs 30000 min

Final Shadow Constraint Allowable Allowable

Cell Name Value Price R.H. Side Increase Decrease
$C$18 alloy steel DRB 40000 8.8 40000 909.0909 10000
$C$19 manufacturing time 2000 36 2000 666.6667 95.2381
$C$20 assembly time DRB 1533.333 0 1600 1E+030 66.66667

Upon converting the given increase in time to minutes we find that the given increase is 30000 minutes.
From the sensitivity report we can see that the allowable increase for manufacturing time is 40000 minutes
and since the given increment is within the range of feasibility we know that the optimal solution will increaseby $0
For the same increment in constraint RHS, Dual price will not change.
the alloy increases the Profit by 8.8$
bly Time was 1600 hrs. and they have only been able to utilise 1533.34 hrs.

Range of optimality
Lower limit Upper limit
112 224
250 500

in the range of optimality

facturing time constraint change?

Range of feasibility
lower limit upper limit
30000 40909.0909
1904.76190476191 2666.66667
1533.33333333333 1E+030

n increase is 30000 minutes.

ufacturing time is 40000 minutes
t the optimal solution will increaseby $0.6 per minute increased.
Microsoft Excel 16.0 Answer Report
Worksheet: [Assignment Solution 1.xlsx]Problem 2
Report Created: 05-03-2022 13:07:11
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.031 Seconds.
Iterations: 3 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001, Use Automatic Scaling
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

Objective Cell (Min)

Cell Name Original Value Final Value
$C$31 optimal solution Minimise the cost 2170 2170

Variable Cells
Cell Name Original Value Final Value Integer
$C$7 Product Mix AM 100 100 Contin
$D$7 Product Mix BM 60 60 Contin
$E$7 Product Mix AP 0 0 Contin
$F$7 Product Mix BP 90 90 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$C$22 Demand for Model A 100 $C$22=$E$22 Binding 0
$C$23 Demand for Model B 150 $C$23=$E$23 Binding 0
$C$24 Injection Time Constraint 580 $C$24<=$E$24 Not Binding 20
$C$25 Assembly Time Constraint 1080 $C$25<=$E$25 Binding 0
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Book1]Problem 2
Report Created: 04-03-2022 00:39:53

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$7 Product Mix AM 100 0 10 1.75 1E+030
$D$7 Product Mix BM 60 0 6 3 2.333333333
$E$7 Product Mix AP 0 1.75 14 1E+030 1.75
$F$7 Product Mix BP 90 0 9 2.333333333 3

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$C$22 Demand for Model A 100 12.25 100 11.42857143 100
$C$23 Demand for Model B 150 9 150 1E+030 90
$C$24 Injection Time Constraint 580 0 600 1E+030 20
$C$25 Assembly Time Constrain 1080 -0.375 1080 53.33333333 480
Range of Optimality
-1E+030 11.75
3.666667 9
12.25 1E+030
6 11.33333
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment Solution 1.xlsx]Problem 4
Report Created: 05-03-2022 18:35:53

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$84 product mix Suits 100 0 190 18.71428571 1E+030
$D$84 product mix Sport coats 207.1428571 0 150 1E+030 13.78947368
$E$84 product mix D1 85.71428571 0 -15 163.75 125
$F$84 product mix D2 14.28571429 0 -10 142.5 163.75
$G$84 product mix D3 228.5714286 0 -8 8 25

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$C$103 suits used 100 -18.71428571 100 97.36842105 100
$C$104 sports coat used 207.1428571 0 75 132.1428571 1E+030
$C$105 Extra length used 228.5714286 0 0 1E+030 0
$C$99 cutting time used 285.7142857 86.428571429 0 200 33.33333333
$C$100 sewing time used 194.2857143 81.428571429 0 25 80
$C$101 material used 1428.571429 8 0 228.5714286 1E+030
$C$102 overtime used 100 71.428571429 0 1E+030 33.33333333
 Range of Optimality
Lower limit Upper limit
-1E+030 208.714286
136.210526 1E+030
-140 148.75
-173.75 132.5
-33 0
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment Solution 1.xlsx]Problem 5
Report Created: 05-03-2022 19:17:34

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$7 product mix DRB 1000 0 200 24 88
$D$7 product mix DRW 800 0 280 220 30

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$C$18 alloy steel DRB 40000 8.8 40000 909.0909091 10000
$C$19 manufacturing time DRB 2000 36 2000 666.6666667 95.23809524
$C$20 assembly time DRB 1533.333333 0 1600 1E+030 66.66666667
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment Solution 1.xlsx]Problem 4
Report Created: 05-03-2022 18:52:02

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$126 product mix Suits 75 0 190 35 1E+030
$D$126 product mix Sport coats 187.5 0 150 1E+030 23.33333333
$E$126 product mix D1 40 0 -15 15 172.5
$F$126 product mix D2 0 -10 -10 10 1E+030

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$C$141 cutting time used 240 15 0 40 60
$C$142 sewing time used 165 0 0 1E+030 15
$C$143 material used 1200 34.5 0 100 200
$C$144 overtime used 40 0 0 1E+030 60
$C$145 suits used 75 -35 75 75 75
$C$146 sports coat used 187.5 0 75 112.5 1E+030