Question: Consider the Big M Co . problem that we set up in Lesson 2 shown to the right with its formulation and optimal solution. There

Consider the Big M Co

.

problem that we set up in Lesson

2

shown to the right with its formulation and optimal solution.

There is some uncertainty about what the unit costs will be for shipping through the various shipping lanes. Therefore, before adopting the optimal solution, management wants additional information about the effect of inaccuracies in estimating these unit costs.

Use Solver to generate the sensitivity report preparatory to addressing the following questions.

Which of the unit shipping costs has the smallest margin for error without invalidating the optimal solution?

Where should the greatest effort be placed in estimating the unit shipping costs?

What is the allowable range for each of the unit shipping costs?

How should the allowable range be interpreted to management?

If the estimates change for more than one of the unit shipping costs, how can you use the sensitivity report to determine whether the optimal solution might change?

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