SENSITIVITY ANALYSIS

Objective: Use technology (Excel with a plugin) to solve an LP Models

Consider the following Maximization LP model

Maximize p = 2x 3y z

subject to x y z <= 3

3x + 4y 2z 10

2x 4y 2

4x y + z 0

x 0, y 0, z 0

Task: Your task is to produce a report using excel plugin (solver). You should include snapshots of your work. To make it more presentable you can use colors to shade the important cells (these skills are very important when it comes to managerial positions). The best way to write a report is to consider that you have to make a person understand this report who has no idea about LP models but they understand the product x, y and z.

Your report should at least answer the following questions. (These 5 questions will guarantee at least 3 points out of 5. Rest will totally depend on how organized and presentable you are in this report. It means there is a lot more than these 5 questions to include in your report!). Wear your creative caps and start thinking!!!!

Q1: What is the optimal solution and what are the outputs that will produce this optimal solution

Q2: Paste the sensitivity report for the above LP Model

Q3: Interpret the bounds (allowable increase and allowable decrease) of coefficients of objective function. It means you have to tell what will happen if we increase or decrease the coefficient of objective function? To what extent is it allowed to increase or decrease? What will happen if you do simultaneous changes?

Q4: Interpret the concept of reduced price

Q5: Interpret the bounds (allowable increase and allowable decrease) of righthand side of constraints. It means you have to tell what will happen if we increase or decrease the right-hand side of constraints? To what extent is it allowed to increase or decrease? What will happen if you do simultaneous changes? (Use Shadow Price)