A company produces two products A and B.
Both can be produced in any of the two machines
called old machine and new machine. The following table gives the cost/unit, selling price per
unit, maximum daily demand, daily variable cost budget, etc. for the products. The planning
horizon is 1 day of 480 working minutes.
Product Variable Variable Time/unit Time/unit Max. daily Selling
Cost/unit($) Cost/unit($) (mins) using old (mins) using Demand price
·G
using old
machine
using new
machine
machine new
machine
(units) /unit($)
A 5.00 6.00 1.0 0.9 600 8.00
B 4.50 7.00 1.2 0.8 750 9.00
A, 8
Each machine is available for 480 minutes a day. Daily variable cost budget is $7,200. As a
production planner, Tom Davis has the freedom to decide the type and number of products to
make and which machine to use, in order to maximize daily net contribution (selling price –
variable cost). He is currently formulating a linear programming to solve this problem shown as
follows:
profit =sell- cost
Let X 1 be the number of units per day of product A produced using the old machine
·
8- 5= 3
X 2 be the number of units per day of product A produced using the new machine 2
8-6=
·
X3
be the number of units per day of product B produced using the old machine 9 - 4.5 = 4.5
X 4 be the number of units per day of product B produced using the new machine 9 - 5 = 4
Objective function: Max:
3 X 1 + 2 X 2 + 4 .5 X 3 + 2 X 4 coefficient = profit -
Constraints:
1
1.0 X 1 + 1.2 X 3 ≤ 480 --------
0.9 X 2 + 0.8 X 4 ≤ 480 --------
2
3
X 1 + X 2 ≤ 600 --------
4
X 3 + X 4 ≤ 750 ----------
5 X 1 + 6 X 2 + 4.5 X 3 + 7 X 4 ≤ 7200 --------- 5
Variables are non-negative
Based on printout of the program QM for windows and Excel answer the following
questions
use result from print out
*
<:222.22
a) Tom should produce product A = ...........................units per day using the old machine.
product A = ...........................units per day using the new machine.
400
Xy =
product B = ...........................units per day using the old machine.
constraint
x4 = 350
product B = ...........................units per day using the new machine.
↑ 2944.44
b) Tom will get total daily net contribution equal to ........................................dollars.
7,200 - 1,616.667 = 5503.333
He uses daily variable cost = ...................................dollars
c) Answer the following sub-questions if the following events have occurred (considering each
sub-question separately)
i. If the variable cost per unit of product A using the old machine is increased from $5 to
$6, Tom should change his decision or not? Will this increasing affect the total
daily net contribution? If yes, how?
profit A = 8 - 6 = 2 coeff Xn -> within range optimality -> optimal solution
………………………………………………………………………………………………
not chang
………………………………………………………………………………………………
………………………………………………………………………………………………
not effect be XM = 0 in optimal solution
……………………………………........................................................................................
ii. If the variable cost per unit of product B using the new machine is decreased from $7
to $6, Tom should change his decision or not? Will this decreasing affect the total
daily net contribution? If yes, how?
out of range
coeff 44 15
-6 = 3) >
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
need to cal -> Friend to increas
……………………………………........................................................................................
41 0 -> 10
iii. If Tom would like to produce 10 units of product A using the old machine. Will it
affect the total daily net contribution? If yes, how?
………………………………………………………………………………………………
reduceCost
………………………………………………………………………………………………
………………………………………………………………………………………………
decrease (10- 0) ( 0.9648) = 3.048 dollar
……………………………………........................................................................................
iv. If the max. daily demand of product B is decreased from 750 units to 500 units, Tom
should change his decision or not? Will this decreasing affect the total daily net
contribution? If yes, how?
&HS of constrain &-> check if binding constraint
………………………………………………………………………………………………
+- within the range - able to use dual price
………………………………………………………………………………………………
………………………………………………………………………………………………
Total will be reduce 790- 500) 0.222) = 35.9
by (
……………………………………........................................................................................
v. If the max. daily demand of product A is increased from 600 units to 700 units,Tom
should change his decision or not? Will this increasing affect the total daily net
contribution? If yes, how?
alts of constrain
3 check itnon ##tag
constrain
t
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………………........................................................................................
vi. If the daily variable cost budget is reduced from $7,200 to $6,000, Tom should change
his decision or not? Will this decreasing affect the total daily net contribution? If
yes, how?
&HS of constrain 5 - check if
………………………………………………………………………………………………
non- bindingconstraint
+- within the
………………………………………………………………………………………………
………………………………………………………………………………………………
rangechange +
……………………………………........................................................................................
480 + 4 20
vii. If the new machine is available for 420 minutes, Tom should change his decision or
not? Will it affect the total daily net contribution? If yes, how?
&HS of constrain 2 - check if
……………………………………………………………………………………………… binding constraint
+- within the range - able to use dual price
………………………………………………………………………………………………
………………………………………………………………………………………………
Total will be decrease by <480- 42872.2222) = 133.332
……………………………………........................................................................................
QM Solution
↓
° /
·ข
&
vi binding
Excel Solution
Target Cell (Max)
Cell Name Original Value Final Value
$H$4 Daily Net Contribution 0 2944.444444
Adjustable Cells
Cell Name Original Value Final Value
$B$14 X1 0 0
$C$14 X2 0 222.2222222
$D$14 X3 0 400
$E$14 X4 0 350
Constraints
Cell Name Cell Value Formula Status Slack
$F$7 Constraint 1 480 $F$7<=$H$7 Binding 0
$F$8 Constraint 2 480 $F$8<=$H$8 Binding 0
Not
$F$9 Constraint 3 222.2222222 $F$9<=$H$9 Binding 377.7777778
$F$10 Constraint 4 750 $F$10<=$H$10 Binding 0
Not
$F$11 Constraint 5 5583.333333 $F$11<=$H$11 Binding 1616.666667
Adjustable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$14 X1 0 -0.564814815 3 0.564814815 1E+30
$C$14 X2 222.2222222 0 2 0.25 0.7625
$D$14 X3 400 0 4.5 1E+30 0.677777778
$E$14 X4 350 0 2 0.677777778 0.222222222
Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$F$7 Constraint 1 480 3.564814815 480 420 300
$F$8 Constraint 2 480 2.222222222 480 242.5 200
$F$9 Constraint 3 222.2222222 0 600 1E+30 377.7777778
$F$10 Constraint 4 750 0.222222222 750 250 350
$F$11 Constraint 5 5583.333333 0 7200 1E+30 1616.666667
