Question: 2 ) A company uses three substances A , B , and C to produce three types of products P 1 , P 2 ,

2) A company uses three substances A, B, and C to produce three types of products P1,
P2, and P3. The inputs (and unit profit) for one ounce of each product are shown in
table below.
The current stock information of the three substances are as follows: at most 320
ounces of substance A can be used, at most 150 ounces of substance B can be used,
and at most 120 ounces of substance C can be used to produce the three products. In
order to maximize the profit, the following LP model is developed by the company:
Let x1= ounces of Product P1 produced; x2= ounces of Product P2 produced; and x3
= ounces of Product P3 produced.
The proposed model is solved optimally and a sensitivity analysis regarding to this LP
model is reported in the following part of the question.
a) Calculate all unknowns given in the LINGO output given above (i.e. ounces of
product 1, product 2, and product 3, as well as optimal solution).
b) If profit of product 3 increases to 2.2$, what will be new optimal solution? Will
the basis remain unchanged?
c) What should profit of product 3 be so that the model has multiple optimal
solutions?
d) Which constraints are binding, and which constraints are non-binding? Explain
why?
e) Which variables are basic, and which variables are non-basic? Explain why?
f) What is the range of values for the profit of product P2 for which the current basis
remains optimal?
g) What is the range of values for amount of substance A available for which the
current basis remains optimal?
h) If the amount of substance B available is decreased to 100 ounces, will the
optimal solution change? If yes, what will the new profit be? If no, what is the
highest RHS value of the corresponding constraint which changes current basis?
i) If the amount of substance C available is decreased to 90 ounces, what will the
new profit be? If the amount of substance C available is increased to 350 ounces,
will the current basis remain optimal? Do you think model must be reoptimized?

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