Name: Tatta Navya

Roll no.:BA5-50
Camu id:2686
Problem :2.13
Q.) A firm produces three products M, N and P. The products require two raw materials R1and R2. The unit
requirement and total availability of materials is shown here.

Raw material Product Availability

M N P
R1 2 4 3 5960
R2 2 2 5 7000
Unit profit ₹80 ₹120 ₹150

The labour time required to produce a unit of M is twice as that of product N and thrice that of product P.
The labour available is sufficient to produce an equivalent of 1,500 units of product M. The firm has
contract to supply 400 units each of product’s M and N and 800 units of product P and this sets the minimum
production levels of the three products. It is further desired that the production M should be twice as large as
the production of N.
Formulate this as a linear programming problem with the objective function as maximization of total profits.
Sol: let x1,x2 and x3,respectively, be the number of units of products M,N and P to be produced. Using
The LLP may be stated as follows:

MAXIMISE Z=80X1+120X2+150x3

Subject to

2x1+4x2+3x3<=5690

2x1+2x2+5x3<=7000

6x1+3x2+2x3<=9000

x1>=400

x2>=400

x3>=800

x1-2x2=0
 x1 x2 x3
25000
z 80 120 150 0
800 400 920
R1 2 4 3 5960 <= 5960
R2 2 2 5 7000 <= 7000
LABO
UR 6 3 2 7840 <= 9000
1 800 >= 400
1 400 >= 400
1 920 >= 800
1 -2 0 0 = 0

Objective Function:
This is a linear programming problem where the goal is to maximize the objective function. The objective
coefficients are given for three variables (x1, x2, and x3), and their corresponding values are:
 x1=80x1=80
 x2=120x2=120
 x3=150x3=150
The objective function for the linear programming model could be represented
as: 80x1+120x2+150x380x1+120x2+150x3 The total value at the far right (250,000) likely represents the
desired outcome or target value for the objective function (maximum profit, revenue, etc.) when the
variables are optimized.
Constraints:
These represent resource limitations or requirements that must be satisfied during optimization. Here are the
constraints:
1. Resource R1: 2x1+4x2+3x3≤59602x1+4x2+3x3≤5960 This means that the combination of
variables x1, x2, and x3 must use no more than 5960 units of resource R1.
2. Resource R2: 2x1+2x2+5x3≤70002x1+2x2+5x3≤7000 This limits the use of resource R2 to no more
than 7000 units.
3. Labor: 6x1+3x2+2x3≤90006x1+3x2+2x3≤9000 This constraint limits the labor hours required by
the production of x1, x2, and x3 to no more than 9000 hours.
Additional Constraints:
These represent further restrictions on individual variables:
4. Lower Bound on x1: x1≥400x1≥400 This means that x1 must be at least 400.
5. Lower Bound on x2: x2≥400x2≥400 Similarly, x2 must also be at least 400.
6. Lower Bound on x3: x3≥800x3≥800 Here, x3 must be at least 800.
7. Balance Constraint: x1−2x2=0x1−2x2=0 This is a special constraint that links x1 and x2. It means
that x1 must be exactly twice x2 in this case.
Microsoft Excel 16.0 Limits
Report
Worksheet: [OR -
2.13.xlsx]Sheet1
Report Created: 01-12-2024
18:51:40

Objecti
ve
Valu
Cell Name e
$G$ 2500
3 z 00

Variabl Low Object Upp Object

e er ive er ive
Valu Limi Limi
Cell Name e t Result t Result
$B$
4 x1 800 800 250000 800 250000
$C$
4 x2 400 400 250000 400 250000
$D$
4 x3 920 800 232000 920 250000

 Objective Value:
• Objective Cell (G3): The sum of the objective value is the highest profit or value that resulted from the
production process, equal to 250,000. This is the optimal value, which represents the most desirable
outcome possible under the given limitations and variables.
 Variable Values and Sensitivity:
 The report also provides the best possible values for the decision variables, (x1, x2, x3), along with
their lower and upper bounds, which indicate the amount by which their value may change without
affecting the best possible objective value. Each decision variable analysis is given below.
 1. Variable x1:
 Optimal Value: 800 units (this is the maximum number of units of product x1 that should be
produced).
 Lower Limit: 800 units (the minimum value x1 can take without decreasing the objective function's
value below 250,000).
 Upper Limit: 800 units (the maximum value x1 can take before the objective function's value starts
to fall from 250,000).
 Conclusion: The optimal production level for x1 is exactly 800 units, and any deviation from this
value will decrease the total value of the objective function.
 2.Variable x2:
 Optimal Value: 400 units (optimal quantity of product x2).
  Lower Limit: 400 units (minimum value x2 can take without affecting the objective function's
optimal value).
 Upper Limit: 400 units (maximum value x2 can take before the objective function value decreases).
 Interpretation: Similar to x1, the optimal production level for x2 is 400 units, and any change from
this value will result in a lower objective value.
 3.Variable x3:
 Optimal Value: 920 units (ideal quantity of product x3).
 Lower Limit: 800 units (minimum threshold for x3 to uphold the optimal objective function value of
250,000).
 Upper Limit: 920 units (maximum threshold for x3 prior to a decline in the objective function value).
 Interpretation: The value of x3 should be 920 units with no deviation in its range—any deviation less
than 800 units or more than 920 units would lead to the deterioration of the objective function value.
• The production quantities for the products (x1, x2, x3) are now fixed at 800, 400, and 920 units,
respectively.
 The Sensitivity Analysis suggests that none of these products could be changed in their quantities
without spoiling the overall goal maximized at 250,000.
 Any changes to the values of x1, x2, or x3 beyond their limiting values result in a deterioration in the
objective function, implying that such values are crucial to achieve the best possible solution.
Microsoft Excel 16.0
Sensitivity Report
Worksheet: [OR -
2.13.xlsx]Sheet1
Report Created: 01-12-2024
18:51:40

Variable Cells
Fin Objecti Allowabl Allowabl
al Reduced ve e e
Val Coeffici
Cell Name ue Cost ent Increase Decrease
$B$
4 x1 800 0 80 60 50
$C$
4 x2 400 0 120 120 100
$D$ 83.33333
4 x3 920 0 150 333 45

Constraints
Fin Constra Allowabl Allowabl
al Shadow int e e
Val R.H.
Cell Name ue Price Side Increase Decrease
$E$1
0 920 0 800 120 1E+30
$E$1 1.818181 628.5714
1 0 818 0 0 286
$E$5 R1 596 22.72727 5960 405.0793 0
 0 273 651
700 16.36363
$E$6 R2 0 636 7000 0 330
LABO 784
$E$7 UR 0 0 9000 1E+30 1160
$E$8 800 0 400 400 1E+30
$E$9 400 0 400 0 1E+30
Key Findings:
•Optimal Production Levels: Given our current setup, the best production levels are:
•Product 1: 800 units
•Product 2: 400 units
•Product 3: 920 units
These are the quantities that will give us the maximum possible profit, which is $250,000.
Flexibility and Sensitivity:
•Product Adjustments: The good news is that we do have some flexibility when it comes to adjusting the
prices or value of each product, but it's not huge.
• For Product 1: We can increase its price by $60 per unit or decrease it by $50, and our optimal solution
would remain unaffected. Anything above that would require a reappraisal of our production levels.
• For Product 2: We have slightly more room to manoeuvre, whereby we can increase by $120 or decrease
by $100 before requiring us to revise our plan.
•Product 3: This product also has some flexibility—adding up to $83 or subtracting $45 per unit in price
without affecting the total profit.
Resource Constraints:
•Resource 1 (R1) and Resource 2 (R2) are both at capacity at the present time. We are currently using
exactly 5960 units of Resource 1 and 7000 units of Resource 2, and any reduction in either resource would
quickly impact our production and profits.
•More of these resources would help us directly improve our profit. However, we cannot accept a reduction
in them at all.
•The results concerning labor are a bit surprising-for we presently make use of only 7840 of the total work
hours available of 9000. That means a goodly amount of capacity is unused. Reducing labor even to 1160
hours, which is an appreciable cut, will not have changed our current optimal solution. We are, at present,
not employing all the total work hours so there is some scope to either cut down expenses or allocate labor,
as a last resort.
Minimum Production Requirements:
•Products 1 and 2 must have a minimum production of at least 400 units each, which we have already met. If
these minimums are raised, we would need to adjust our production plan.
•Product 3 is produced at 920 units, well above its minimum, and we have some flexibility to make
adjustments in this area as well.
Conclusion
•We’re operating efficiently: We’ve hit the optimal production levels for all products, and increasing or
decreasing their quantities would negatively impact the profit.
• Focus on Resource Management: We do have some flexibility in Labour. There is labor that we can cut that
would not impact the optimal level of output. So we could look there for cost savings. Conversely,
increasing Resource 1 or Resource 2 would directly increase profits so it may be worth it if we can obtain
more of either of these.
• Moderate changes are possible. Even slight changes in product price or production quantity can be possible
without affecting the profit; however, significant adjustments should not be done.

Microsoft Excel 16.0 Answer Report

Worksheet: [OR -2.13.xlsx]Sheet1
Report Created: 01-12-2024 18:51:40
Result: Solver found a solution. All Constraints and optimality
conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.032
Seconds.
Iterations: 6
Subproblems: 0
Solver
Options
Max Time Unlimited, Iterations Unlimited, Precision
0.000001
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume
NonNegative

Objective Cell (Max)

Original Final
Cell Name Value Value
$G$
3 z 0 250000

Variable Cells
Original Final Intege
Cell Name Value Value r
$B$
4 x1 0 800 Contin
$C$
4 x2 0 400 Contin
$D$
4 x3 0 920 Contin

Constraints
Cell Sla
Cell Name Value Formula Status ck
$E$ $E$10>=$ Not
10 920 G$10 Binding 120
$E$ 0 $E$11=$G$ Binding 0
 11 11
$E$ $E$5<=$G
5 R1 5960 $5 Binding 0
$E$ $E$6<=$G
6 R2 7000 $6 Binding 0
$E$ LABO $E$7<=$G Not 116
7 UR 7840 $7 Binding 0
$E$ $E$8>=$G Not
8 800 $8 Binding 400
$E$ $E$9>=$G
9 400 $9 Binding 0
Key Findings:

1. Solution Obtained: The optimization model has found a solution which satisfies all
the constraints and at the same time, attains the maximum objective value of
$250,000. This was achieved in 0.032 seconds using 6 iterations with the Simplex LP
(Linear Programming) method by Solver.

2. Decision Variables:

• Product 1 (x1): 800 units

• Product 2 (x2): 400 units

• Product 3 (x3): 920 units

These are the minimum and maximum production quantities such that the total profit
will be achieved based on all constraints (considering resource availability, labour
hours, and minimum production constraints).

1. The Objective Function:

• In G3, the objective function maximizes the total profit amount (z), and is therefore
successful at $250,000.

2. Decision Variables:

•Product 1 (x1): We will manufacture 800 units of Product 1. This is the amount
arrived at after taking into consideration the limiting factors and maximizing profit.

•Product 2 (x2): We will manufacture 400 units of Product 2. Similarly, this is the
optimum level arrived at.

•Product 3 (x3): We will manufacture 920 units of Product 3.

All of these variables are continuous (meaning we could generate fractional units if
necessary), but they've been determined to be whole numbers based on the
optimization constraints.

Constraints:

1. Production of Product 3 Must be at Least 400 Units

• Constraint on Product 3 (cell E9): The minimum required production of 400 units is
exactly met, and there's no slack-the constraint is "Binding".

2. Resources and Labor:

•Resource 1 (R1) (cell E5): The current utilization of Resource 1 is 5960 units that
exactly coincides with the amount available. This constraint is binding; therefore,
there is no slack available in the usage of Resource 1.

•Resource 2 (R2) (cell E6): In a similar vein, the consumption of Resource 2 is 7000
units that is fully consumed. This constraint is also binding, with no slack available.

•Labour (cell E7): We use 7840 hours of labor, but the labor hours available are 9000.
This constraint is not binding and we have 1160 hours of unused labor. This provides
some flexibility for us to decrease labor hours or to distribute them elsewhere.

3.Other Constraints:

•Minimum Production Requirements for Product 1 (cell E8) and Product 2 (cell E10): It
is prescribed that we must produce 800 units of Product 1 and 400 units of Product 2,
and we are exactly meeting these requirements, meaning no overcapacity. Also, these
constraints are not considered binding because we are fully meeting them.

Conclusion:

This is an optimization model. Here, we have developed the whole efficient production
plan that enhances profit without wasting resources and labors. We can definitely gain
cost efficiency by optimizing our use of labor and extension of resource usage, but this
business, in general, works efficiently to the peak performance levels.