OPTIMIZATION MODELS FOR BUSINES

Assignment 1
By: Section 3 Group 11

DM23451 Raghav Bansal

DM23343 Subhro Sankho Das
DM23347 Tushar Mehta
DM23350 Jenish Bhikhubhai Sarvaiya
DM23429 Priyanka Gupta
DM23407 Aniruddh Panikker

INDEX

S. No Problem Link
1 Problem 1 Problem 1
2 Problem 2 and 3 Problem 2 & 3
3 Problem 4 Problem 4
4 Problem 5 Problem 5
BUSINESS DECISION MAKING
PART A.
Equation 1 1A + 1B <= 10 Equation 2 3A + 1B <=24

M (Slope) -1 M (Slope) -3
C (Intercept) 10 C (Intercept) 24

B = -1A + 10 (Slope Intercept Form) B = -3A + 24 (Slope Intercept Form)

A B A B
0 10 0 24
1 9 1 21
2 8 2 18
3 7 3 15
4 6 4 12
5 5 5 9
6 4 6 6
7 3 7 3
8 2 8 0
9 1
10 0

Objective Function:
Maximize (3A + 2B)

The feasable region is bounded between the following points

Point X coordinate Y Coordinate Objective Function

P 0 0 0
Q 8 0 24
R 7 3 27
S 4 6 24
T 0 8 16

Therefore, using the graphical method we get the final solution as (7, 3) and the value of the function at this point i

PART B.
Equation 1 1A + 1B <= 10 Equation 2 3A + 1B <=24
 M (Slope) -1 M (Slope) -3
C (Intercept) 10 C (Intercept) 24

B = -1A + 10 (Slope Intercept Form) B = -3A + 24 (Slope Intercept Form)

A B A B
0 10 0 24
1 9 1 21
2 8 2 18
3 7 3 15
4 6 4 12
5 5 5 9
6 4 6 6
7 3 7 3
8 2 8 0
9 1
10 0

Objective Function:
Maximize (5A + 2B)

The feasable region is bounded between the following points

Point X coordinate Y Coordinate Objective Function

P 0 0 0
Q 8 0 40
R 7 3 41
S 4 6 32
T 0 8 16

Thus, even if the coeeficient of A changes from 3 to 5, the final values remain the same, i.e. (7, 3), however the opti

PART C.

Equation 1 1A + 1B <= 10 Equation 2 3A + 1B <=24

M (Slope) -1 M (Slope) -3
C (Intercept) 10 C (Intercept) 24
 B = -1A + 10 (Slope Intercept Form) B = -3A + 24 (Slope Intercept Form)

A B A B
0 10 0 24
1 9 1 21
2 8 2 18
3 7 3 15
4 6 4 12
5 5 5 9
6 4 6 6
7 3 7 3
8 2 8 0
9 1
10 0

Objective Function:
Maximize (3A + 4B)

The feasable region is bounded between the following points

Point X coordinate Y Coordinate Objective Function

P 0 0 0
Q 8 0 24
R 7 3 33
S 4 6 36
T 0 8 32

Thus, when the coeeficient of B changes from 2 to 4, the final values change, i.e. (7, 3) becomes (4, 6), and the opti
 Equation 3 1A + 2B <=16 Since we are using the graphical method, the graph will be as follo

M (Slope) -0.5
C (Intercept) 8 Graphical Representation of the Problem
25
B = -0.5A + 8 (Slope Intercept Form)

A B
0 8 20
1 7.5
2 7
3 6.5 15
4 6
5 5.5
B
6 5
10
7 4.5
8 4
9 3.5
5
10 3
11 2.5
12 2
13 1.5 0
0 2 4 6 8 10 12
14 1
15 0.5 A
16 0
Equation 1 Equation 2 Equation 3

the function at this point is 27.

Equation 3 1A + 2B <=16 Since we are using the graphical method, the graph will be as follo
 M (Slope) -0.5
C (Intercept) 8
Graphical Representation of the Pro
B = -0.5A + 8 (Slope Intercept Form) 25

A B
0 8 20
1 7.5
2 7
3 6.5 15
4 6
5 5.5

B
6 5
10
7 4.5
8 4
9 3.5
10 3 5

11 2.5
12 2
13 1.5 0
0 2 4 6 8 10 12
14 1
15 0.5 A
16 0
Equation 1 Equation 2 Equation 3

e. (7, 3), however the optimal solution becomes 41.

Equation 3 1A + 2B <=16 Since we are using the graphical method, the graph will be as follo

M (Slope) -0.5
C (Intercept) 8
Graphical Representation of the Pro
25

20
 Graphical Representation of the Pro
B = -0.5A + 8 (Slope Intercept Form) 25

A B
0 8 20
1 7.5
2 7
3 6.5 15
4 6
5 5.5

B
6 5
10
7 4.5
8 4
9 3.5
5
10 3
11 2.5
12 2
13 1.5 0
0 2 4 6 8 10 12
14 1
15 0.5 A
16 0
Equation 1 Equation 2 Equation 3

comes (4, 6), and the optimal solution becomes 36.

method, the graph will be as follows:

resentation of the Problem

A B

8 10 12 14 16 18

Equation 2 Equation 3 A

method, the graph will be as follows:

esentation of the Problem

8 10 12 14 16 18

Equation 2 Equation 3

method, the graph will be as follows:

esentation of the Problem

esentation of the Problem

8 10 12 14 16 18

Equation 2 Equation 3
PROBLEM 2. PART A.
STEP 1 What are the decisions to be made?

AM BM
PRODUCTION DECISION 100 60

STEP 2 What are the constraints to the decision?

Demand for Model A 1 0

Demand for Model B 0 1
Injection Time Constraint 4 3
Assembly Time Constraint 6 8

STEP 3 Objective Function 10 6

TOTAL COST 2170

Therefore, the management should produce 100 units of Model A and 60 units of
Model B at their Newark Plant and purchase 90 units of Model B.
The total cost incurred will be $2170.

PROBLEM 2. PART B.
From the following answer report ---> Answer Report for Problem 2 Part A
we conclude that the constraints Demand for A, Demand for B, and Asembly Time Constraint are binding.

PROBLEM 2. PART C.
From the sensitivity report ---> Sensitivity Report for Problem 2 Part A
we conclude that following are the respective dual values of each constraint:

Name Shadow Price

Demand for Model A USED 12.25
Demand for Model B USED 9
Injection Time Constraint USED 0
Assembly Time Constraint USED -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 2182.25. Similarly, if the demand for B increases,
the final value becomes 2179 and if assembly time increases by 1 minute, the optimal solution decreases to 2169.6

Since the dual value for Injection time is 0, it implies that changing Injection time will not affect the final value
of the objective function.

PROBLEM 2. PART D.
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.

PROBLEM 3. PART A.
From the sensitivity report we get the ranges of optimality for the objective function as follows:

Range
Name Objective Coefficient
Upper Limit
PRODUCTION DECISION AM 10 11.75
PRODUCTION DECISION BM 6 9
PRODUCTION DECISION AP 14 1E+030
PRODUCTION DECISION BP 9 11.33

The above table is interpreted as - if the value of the objective coefficient remains within the upper and lower limit
the values for the optimal solution will remain unchanged.

PROBLEM 3. PART B.
In the above part we calculated the range of optimality. Therefore, if the manufacturing cost for A increases to $11
we can see that it is still within the range of optimality.

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

PROBLEM 3. PART C.
If the manufacturing cost of both A and B changes, the optimal solution will change as per the 100% rule as follows
 Change in A 1.2 Increase
Allowable Increase A 1.75
Change in B 1 Decrease
Allowable Decrease B 2.3333

ΔA/A 0.686
ΔB/B 0.429

ΔA/A + ΔB/B 1.114

Since, ΔA/A + ΔB/B > 1, this implies that the optimal solution will change as follows:

STEP 1 What are the decisions to be made?

AM BM
PRODUCTION DECISION 0 135

STEP 2 What are the constraints to the decision?

Demand for Model A 1 0

Demand for Model B 0 1
Injection Time Constraint 4 3
Assembly Time Constraint 6 8

STEP 3 Objective Function 11.2 5

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.
 AP BP
0 90

USED AVAILABLE
1 0 100 = 100
0 1 150 = 150
0 0 580 <= 600
0 0 1080 <= 1080

14 9

nstraint are binding.

objective function
e demand for A becomes
mand for B increases,
solution decreases to 2169.625.

not affect the final value

Range
Lower Limit
-1E+030
3.67
12.25
6

hin the upper and lower limit of the range,

ng cost for A increases to $11.2

e 100 units of A, 60 units of B and purchase 90 units of B.

per the 100% rule as follows:

AP BP
100 15

USED AVAILABLE
1 0 100 = 100
0 1 150 = 150
0 0 405 <= 600
0 0 1080 <= 1080

14 9
PROBLEM 4. PART A.
STEP 1 What are the decisions to be made?

S SC
PRODUCTION DECISION 100 150

STEP 2 What are the constraints to the decision?

Sewing Time Constraint 0.7 0.6

Cutting Time Constraint 1.2 0.8
Length of Material Constraint 6 4
Total Overtime 0 0
Number of Suits 1 0
Number of Coats 0 1

STEP 3 Objective Function 190 150

TOTAL PROFIT 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 not

The total profit after deducting overtime is $40,900

PROBLEM 4. PART B.

From the sensitivity report ---> Sensitivity Report for Problem 4 Part A
We can see that the upper bound for profit contribution of Suits is $225 and since w
we can conclude that there will be no change in the optimal solution.

PROBLEM 4. PART C.

STEP 1 What are the decisions to be made?

Let D3 be extra length of material

S SC
 PRODUCTION DECISION 100.00 207.14

STEP 2 What are the constraints to the decision?

Sewing Time Constraint 0.7 0.6

Cutting Time Constraint 1.2 0.8
Length of Material Constraint 6 4
Total Overtime 0 0
Number of Suits 1 0
Number of Coats 0 1
Extra Length of Material 0 0

STEP 3 Objective Function 190 150

TOTAL PROFIT 46814.29

According to the Sensitivity Report --> Sensitivity Report for Problem 4 Part C

According to the above sensitivity report and optimization problem, we can see that
Therefore, we recommend the company to place a rush order for extra length of ma
According to the above sensitivity report, the maximum allowable decrease for the
Since the sign for D3 is negative therefore, the range is read as reversed, therefore,

PROBLEM 4. PART D.
From the sensitivity report ---> Sensitivity Report for Problem 4 Part A

We see that the dual price for Number of Suits is -$35, which implies that if the righ
the total profit decreases by $35 and conversely if the Number of suits is decreased

Therefore, this change will help to increase the profit and will also change the optim

STEP 1 What are the decisions to be made?

S SC
PRODUCTION DECISION 75 187.5

STEP 2 What are the constraints to the decision?

Sewing Time Constraint 0.7 0.6

Cutting Time Constraint 1.2 0.8
Length of Material Constraint 6 4
Total Overtime 0 0
Number of Suits 1 0
 Number of Coats 0 1

STEP 3 Objective Function 190 150

TOTAL PROFIT 41775

 D1 D2
40 0

USED AVAILABLE
0 0 160 <= 180
0 0 240 <= 200
0 0 1200 <= 1200
1 1 40 <= 100
0 0 100 >= 100
0 0 150 >= 75

-15 -10

and 150 sport coats.

he cutting operation and note that no overtime is required for sewing operation.

Report for Problem 4 Part A

n of Suits is $225 and since we are increasing the profit to $210
timal solution.

D1 D2 D3
 85.71 14.29 228.57

USED AVAILABLE
0 0 0 194.29 <= 194.2857
0 0 0 285.71 <= 285.7143
0 0 0 1428.57 <= 1428.571
1 1 0 100.00 <= 100
0 0 0 100.00 >= 100
0 0 0 207.14 >= 75
0 0 1 228.57 <= 228.5714

-15 -10 -8

Report for Problem 4 Part C

tion problem, we can see that the overall profit for the firm is increasing.
h order for extra length of material at $8/yard.
m allowable decrease for the price of extra material is $25 which brings the lower limit of Range of Optimality to $33.
read as reversed, therefore, the maximum price that the company should be willing to pay is $33.

Report for Problem 4 Part A

which implies that if the right-hand side of this constraint is increased by 1,

Number of suits is decreased the profit will increase proportionally.

nd will also change the optimal solution. LPP is given below:

D1 D2
40 0

USED AVAILABLE
0 0 165 <= 180
0 0 240 <= 240
0 0 1200 <= 1200
1 1 40 <= 100
0 0 75 >= 75
 0 0 187.5 >= 75

-15 -10
PROBLEM 5. PART A.
STEP 1 What are the decisions to be made?

DRB DRW
PRODUCTION DECISION 1000 800

STEP 2 What are the constraints to the decision?

Amount of alloy steel constraint 20 25

Manufacturing time constraint 40 100
Assembly time constraint 60 40

STEP 3 Objective Function 200 280

TOTAL PROFIT 424000

Therefore the optimal solution is to produce 1000 DRB and 800 DRW.

The total profit after deducting overtime is $424,000

PROBLEM 5. PART B.

From the sensitivity report ---> Sensitivity Report for Problem 5 Part A
Since the allowable increase for Alloy Steel is 909 (approx.) and the shadow price is
Deegan Industries should buy the 500 pounds of steel aloy at $2, as the net profit pe

PROBLEM 5. PART C.

From the sensitivity report ---> Sensitivity Report for Problem 5 Part A

Since assembly time is a binding constraint with shadow price 0, it makes no sense t

PROBLEM 5. PART D.
From the sensitivity report ---> Sensitivity Report for Problem 5 Part A
 The new profit contribution is $175 which is still in range of optimality, therefore, th

PROBLEM 5. PART E.
From the sensitivity report ---> Sensitivity Report for Problem 5 Part A

Upon converting the given increase in time to minutes we find that the given increa
From the sensitivity report we can see that the allowable increase for manufacturin
and since the given increment is within the range of feasibility we know that the opti
For the same increment in constraint RHS, Dual price will not change.
 USED AVAILABLE
40000 <= 40000
120000 <= 120000
92000 <= 96000

and 800 DRW.

Report for Problem 5 Part A

ox.) and the shadow price is $8.8,
aloy at $2, as the net profit per pound added will be $6.8, which is still desirable.

Report for Problem 5 Part A

w price 0, it makes no sense to increase the assembly time as it will not increase the overall profit.

Report for Problem 5 Part A

ge of optimality, therefore, the optimal solution will remain unchanged, although the overall profit will decrease.

Report for Problem 5 Part A

we find that the given increase is 30000 minutes.

le increase for manufacturing time is 40000 minutes
asibility we know that the optimal solution will increaseby $0.6 per minute increased.
ill not change.
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Book1]Problem 2 & 3
Report Created: 2/22/2022 2:28:56 PM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$6 PRODUCTION DECISION AM 100 0 10 1.75 1E+030
$D$6 PRODUCTION DECISION BM 60 0 6 3 2.3333333333
$E$6 PRODUCTION DECISION AP 0 1.75 14 1E+030 1.75
$F$6 PRODUCTION DECISION BP 90 0 9 2.3333333333 3

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$G$11 Demand for Model A USED 100 12.25 100 11.428571429 100
$G$12 Demand for Model B USED 150 9 150 1E+030 90
$G$13 Injection Time Constraint USED 580 0 600 1E+030 20
$G$14 Assembly Time Constraint USED 1080 -0.375 1080 53.333333333 480
 Range of Optimality
Upper Limit Lower Limit
11.75 -1.00E+30
9 3.67
1E+030 12.25
11.33 6

Range of Feasibility
Upper Limit Lower Limit
111.43 0.00E+00
1E+030 60.00
1E+030 580
1133.33 600
Microsoft Excel 16.0 Answer Report
Worksheet: [Book1]Problem 2 & 3
Report Created: 2/22/2022 2:39:32 PM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.015 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$19 TOTAL COST AM 2170 2170

Variable Cells
Cell Name Original Value Final Value Integer
$C$6 PRODUCTION DECISION AM 100 100 Contin
$D$6 PRODUCTION DECISION BM 60 60 Contin
$E$6 PRODUCTION DECISION AP 0 0 Contin
$F$6 PRODUCTION DECISION BP 90 90 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$G$11 Demand for Model A USED 100 $G$11=$I$11 Binding 0
$G$12 Demand for Model B USED 150 $G$12=$I$12 Binding 0
$G$13 Injection Time Constraint USED 580 $G$13<=$I$13 Not Binding 20
$G$14 Assembly Time Constraint USED 1080 $G$14<=$I$14 Binding 0
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment.xlsx]Problem 4
Report Created: 2/23/2022 12:54:09 AM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$6 PRODUCTION DECISION S 100 0 190 35 1E+030
$D$6 PRODUCTION DECISION SC 150 0 150 1E+030 23.333333333
$E$6 PRODUCTION DECISION D1 40 0 -15 15 172.5
$F$6 PRODUCTION DECISION D2 0 -10 -10 10 1E+030

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$G$11 Sewing Time Constraint USED 160 0 0 1E+030 20
$G$12 Cutting Time Constraint USED 240 15 0 40 60
$G$13 Length of Material Constraint USED 1200 34.5 0 133.33333333 200
$G$14 Total Overtime USED 40 0 0 1E+030 60
$G$15 Number of Suits USED 100 -35 100 50 100
$G$16 Number of Coats USED 150 0 75 75 1E+030
 Range
Upper Limit Lower Limit
225 -1E+030
1E+030 126.67
0.00E+00 -187.5
0 -1E+030

Range
Upper Limit Lower Limit
1E+030 140.00
280 180.00
1333.3333333 1000.00
1E+030 -20.00
150 0.00
225 -1E+030
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment.xlsx]Problem 4
Report Created: 3/4/2022 5:15:32 PM

Variable Cells
Final Reduced Objective Allowable
Cell Name Value Cost Coefficient Increase
$C$45 PRODUCTION DECISION S 100 0 190 18.714285714
$D$45 PRODUCTION DECISION SC 207.14285714 0 150 1E+030
$E$45 PRODUCTION DECISION D1 85.714285714 0 -15 163.75
$F$45 PRODUCTION DECISION D2 14.285714286 0 -10 142.5
$G$45 PRODUCTION DECISION D3 228.57142857 0 -8 8

Constraints
Final Shadow Constraint Allowable
Cell Name Value Price R.H. Side Increase
$H$50 Sewing Time Constraint USED 194.28571429 81.428571429 0 25
$H$51 Cutting Time Constraint USED 285.71428571 86.428571429 0 200
$H$52 Length of Material Constraint USED 1428.5714286 8 0 228.57142857
$H$53 Total Overtime USED 100 71.428571429 0 1E+030
$H$54 Number of Suits USED 100 -18.714285714 100 97.368421053
$H$55 Number of Coats USED 207.14285714 0 75 132.14285714
$H$56 Extra Length of Material USED 228.57142857 0 0 1E+030
 Allowable Range of Optimality
Decrease Upper Limit Lower Limit
1E+030 208.714286 -1E+030
13.789473684 1E+030 136.210526
125 148.75 -140
163.75 132.5 -173.75
25 0 -33

Allowable
Decrease
80
33.333333333
1E+030
33.333333333
100
1E+030
0
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment.xlsx]Problem 5
Report Created: 2/24/2022 2:12:09 PM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$6 PRODUCTION DECISION DRB 1000 0 200 24 88
$D$6 PRODUCTION DECISION DRW 800 0 280 220 30

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$11 Amount of alloy steel constraint USED 40000 8.8 40000 909.09090909 10000
$E$12 Manufacturing time constraint USED 120000 0.6 120000 40000 5714.2857143
$E$13 Assembly time constraint USED 92000 0 96000 1E+030 4000
 Range of Optimality
Lower Limit Upper Limit
112 224
250 500

Constraint Range of Feasibility

Type Lower Limit Upper Limit
Non Binding 30000 40909.090909
Non Binding 114285.71429 160000
Binding 92000 1E+030