EXAMPLE 2: A firm is engaged in producing two products A and B.

Each unit of Product A

requires 2 kg of raw material and 4 labor hours for processing, whereas each unit of B requires
3 kg of raw materials and 3 labor hours for the same type. Every week, the firm has an
availability of 60 kg of raw materials and 96 labor hours. One unit of Product A sold yields
$40 and one unit of Product B gives $35 as profit. Formulate this as a Linear Programming
Problem to determine as to how many units of each of the products should be produced per
week so that the firm can earn maximum profit.

SOLUTION:

Obj. Function No. of units Produced per week Variable Constraints Constant
1000 Product A 18 60 <= 60
Product B 8 96 <= 96
18 >= 0
8 >= 0
Table 2.1: Objective Function of Optimum Solution

Sensitivity Analysis:

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$D$2 Product A Variable 18 0 40 6.666666667 16.66666667
$D$3 Product B Variable 8 0 35 25 5

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$2 Product A Constraints 60 3.333333333 60 36 12
$E$3 Product B Constraints 96 8.333333333 96 24 36
$E$4 Constraints 18 0 0 18 1E+30
$E$5 Constraints 8 0 0 8 1E+30
Table 2.2: Sensitivity Analysis of Optimum Solution
Sensitivity Analysis Interpretation

Ranges:

Table 2.3: Sensitivity Analysis Interpretation

Range of Optimality and Feasibility

Figure 2.1: Graph of the Optimum Solution

Figure 2.1 shows the graph of the optimum solution of a firm engaged in producing two
products using a QM Solver for Windows. The results from the objective function as shown in
Table 2.1 were analyzed and interpreted. Product A and B are bounded by the kilograms of raw
materials and the labor hours for processing. To earn the maximum profit, the firm should
produce 18 Product A and 8 Product B which then gives a profit of 1000.
 Based from Table 1.2 which is the result of the sensitivity analysis, it shows that every
one unit increase of Product A increases its profit by 3.333333333 and every unit of Product B
increases it profit by 8.333333333.

Maximum Values but Within the Optimum Solution

Obj. Function No. of units Produced per week Variable Constraints Constant
1320 Product A 12 96 <= 96
Product B 24 120 <= 120
12 >= 0
24 >= 0
Table 2.4: Objective Function Using the Maximum Values

Sensitivity Analysis:

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$10 Product A Variable 12 0 40 6.666666667 16.66666667
$C$11 Product B Variable 24 0 35 25 5

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$10 Product A Constraints 96 3.333333333 96 24 36
$D$11 Product B Constraints 120 8.333333333 120 72 24
$D$12 Constraints 12 0 0 12 1E+30
$D$13 Constraints 24 0 0 24 1E+30
Table 2.5: Sensitivity Analysis Using the Maximum Values
 Range of Optimality and Feasibility

Figure 2.2: Graph of the Optimum Solution Using the Maximum Value

Using the results of allowable increase and decrease of both of the products as shown
in Table 2.5, the maximum values for Constraints 1 and 2 were taken to solve for the firm’s
profit. The sensitivity analysis shows a maximum value of 96 for Constraint 1 and 120 for
Constraint 2. This gives 1320 profit for the firm which is still at the range of optimality and
feasibility as shown in Figure 2.2. The firm then needs to produce 12 Product A rather 18 and
24 Product B instead of 8 as computed in the first case.

Case Exceeding the Range of Sensitivity

Obj. Function No. of units Produced per week Variable Constraints Constant
1353.333333 Product A 7 106 <= 106
Product B 30.6666667 120 <= 120
7 >= 0
30.6666667 >= 0
Table 2.6: Objective Function of a Case Exceeding the Range of Sensitivity
 Sensitivity Analysis:

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$17 Product A Variable 7 0 40 6.666666667 16.66666667
$C$18 Product B Variable 30.66666667 0 35 25 5

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$17 Product A Constraints 106 3.333333333 106 14 46
$D$18 Product B Constraints 120 8.333333333 120 92 14
$D$19 Constraints 7 0 0 7 1E+30
$D$20 Constraints 30.66666667 0 0 30.66666667 1E+30

Table 2.7: Sensitivity Analysis of a Case Exceeding the Range of Sensitivity

Above the Optimal Solution

For this case, the resources are set beyond the range of sensitivity. The solution will
remain optimal as long as the objective function coefficient of Product A lies between the
allowable increase and allowable decrease. In Table 2.7, the objective coefficient of Product A
exceeds the allowable increase and allowable decrease therefore the optimal solution will
change.