Dry Creek Wine delivers wine boxes to interested connoisseurs. They offer four gourmet wine assortments: "Four Wines", "Awesome (OSM) Red", "Whites", and "Party Time", each at a different price. Each of the boxes consists of a different combination of wines. The following is the Sensitivity Report obtained from running Dry Creek's optimization model. You are also provided with the information that the "Pinot Bottles" and "Malbec Bottles" constraints are both "<=" constraints, ensuring that the number of bottles delivered cannot exceed the number of bottles available, for each wine variety.

 Suppose Dry Creek can take an action that would increase the right-hand side of either the "Pinot" or the "Malbec" constraint by 50 bottles. Which right-hand side should they prefer increasing?

A partner from Oregon is interested in purchasing 40 bottles of Malbec for a total of $100. Is this a good proposition for Dry Creek?

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Variable Cell Cell Name $C$10 $D$10 $E$10 $F$10 Constraints Cell $C$15 $C$16 $C$17 $C$18 Four Wines OSM Red Whites & A Red Party Time Final Reduced Objective Allowable Allowable Value Cost Coefficient Increase Decrease 40 0 17.5 0 50 0 0 -2.5 Final Shadow Value Price 250 150 180 180 17 18 16 19 Constraint Name R.H. Side Pinot Bottles 250 Malbec Bottles 150 Sauvignon Blanc Bottles 225 Riesling Bottles X2 Table 3 - Sensitivity Report obtained from Dry Creek's optimization model 4 2 0 4 8 10 1 2.5 Allowable Increase 80 100 1E+30 45 1 16 8 1E+30 Allowable Decrease 70 80 X1 80 Variable Cell Cell Name $C$10 $D$10 $E$10 $F$10 Constraints Cell $C$15 $C$16 $C$17 $C$18 Four Wines OSM Red Whites & A Red Party Time Final Reduced Objective Allowable Allowable Value Cost Coefficient Increase Decrease 40 0 17.5 0 50 0 0 -2.5 Final Shadow Value Price 250 150 180 180 17 18 16 19 Constraint Name R.H. Side Pinot Bottles 250 Malbec Bottles 150 Sauvignon Blanc Bottles 225 Riesling Bottles X2 Table 3 - Sensitivity Report obtained from Dry Creek's optimization model 4 2 0 4 8 10 1 2.5 Allowable Increase 80 100 1E+30 45 1 16 8 1E+30 Allowable Decrease 70 80 X1 80

Answer rating: 100% (QA)

To answer the first question we need to look at the shadow prices for the Pinot and Malbec constraints The shadow price for a constraint represents th... View the full answer