Question 1

a)
Linear Programming Model
Let X1 be the number of telephone interviews
X2 be the number of personal interviews

Objective:
min. 50X1+70X2
s.t.
80X1+40X2>=3000
80X1>=1000
40X2>=800
X1,X2>=0

b) Cost Interviews Made Number of Interviewers

Telephone Interviewer $50 80 27.5
Personal Interviewer $70 40 20
Total Interviewers
Total Cost $2,775

c) The firm will need to conduct 40 more telephone interviews as the optimal solution of X1 is
27.5 telephone interviewers. Since the number of telephone interviewers can only be
measured by integer values, it needs to be rounded up to 28.

Old number of telephone interviews= 27.5 x 80=2200

New number of telephone interviews= 28 x 80 =2240

d) Cost Interviews Made Number of Interviewers

Telephone Interviewer $50 80 22.5
Personal Interviewer $70 40 30
Total Interviewers
Total Cost $3,225
The optimal solution, X1 and X2, will change from (27.5, 20) to (22.5, 30).

It will cause the total cost to increase from $2775 to $3225.

Since the total number of personal interviews conducted, 1200, falls within the sensitivity range
of 0 to 2000 calls (With reference to Sensitivity Report (For Part d)), therefore it will increase the
total cost by the shadow price of $1.125 per additional unit.
 Decision Variable
Decision Variable Objective
Objective Constraints
Constraints

Total Number
2200 >= 1000
800 >= 800
3000 >= 3000

al solution of X1 is
can only be

Total Number
1800 >= 1000
1200 >= 1200
3000 >= 3000

he sensitivity range
e it will increase the
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment 7_B2_T7_Draft 1.xlsx]Question 1 (Part d)
Report Created: 20/10/2017 9:21:36 AM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$D$14 Telephone Interviewer Number of Interviewers 22.5 0 50 90 50
$D$15 Personal Interviewer Number of Interviewers 30 0 70 1E+030 45

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$14 Telephone Interviewer Total Number 1800 0 1000 800 1E+030
$E$15 Personal Interviewer Total Number 1200 1.125 1200 800 1200
$E$16 Total Interviewers Total Number 3000 0.625 3000 1E+030 800
0 2000
Microsoft Excel 16.0 Answer Report
Worksheet: [Assignment 7_B2_T7_Draft 1.xlsx]Question 1
Report Created: 18/10/2017 11:28:53 AM
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
$B$16 Total Cost Cost 0 2775

Variable Cells
Cell Name Original Value Final Value Integer
$D$13 Telephone Interviewer Number of Interviewers 0 27.5 Contin
$D$14 Personal Interviewer Number of Interviewers 0 20 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$E$13 Telephone Interviewer Total Number 2200 $E$13>=$G$13 Not Binding 1200
$E$14 Personal Interviewer Total Number 800 $E$14>=$G$14 Binding 0
$E$15 Total Interviewers Total Number 3000 $E$15>=$G$15 Binding 0
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment 7_B2_T7_Draft 1.xlsx]Question 1
Report Created: 18/10/2017 11:28:53 AM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$D$13 Telephone Interviewer Number of Interviewers 27.5 0 50 90 50
$D$14 Personal Interviewer Number of Interviewers 20 0 70 1E+030 45

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$13 Telephone Interviewer Total Number 2200 0 1000 1200 1E+030
$E$14 Personal Interviewer Total Number 800 1.125 800 1200 800
$E$15 Total Interviewers Total Number 3000 0.625 3000 1E+030 1200
0 2000
Question 2
a) Linear Optimization Model
Let
X1 be the number of Table Chair
X2 be the number of Easy Chair
X3 be the number of Love Seat
X4 be the number of Coffee Table
X5 be the number of End Table

Objective:
max
30X1+44X2+57X3+55X4+45X5

s.t.
X4<=10
X5<=10
X1+X2+1.3X3+0.5X4+0.5X5<=40
X1+1.2X2+1.5X3+2X4+1.5X5<=80
X1+1.5X2+1.7X3+X4+X5<=60
X1,X2,X3,X4,X5>=0

Table Chair Easy Chair Love Seat Coffee Table End Table
Frame Manufacturing 1 1 1.3 0.5 0.5
Stretching 1 1.2 1.5 2 1.5
Finishing 1 1.5 1.7 1 1
Contributions to Earnings 30 44 57 55 45
Quantity $0 $4 $20 $10 $10
<= <=
10 10
Profit $2,316

c) With Reference to Answer Report (Qn 2), the binding constraints are Frame Manufacturing
hours, Finishing hours, Quantity of Coffee Table and Quantity of End Table.

The non-binding constraint is the Stretching hours.

d)
Shadow price indicates the amount a company would pay for more of a scarce resource.

The stretching hours is not a binding constraint. Even if more stretching hours are available,
there will not be any increase in production, hence no additional earnings, causing the
shadow price to be zero.

e)
With Reference to Sensitivity Report (Qn 2), for every increase in X between the sensitivity
range A TO B, there will be a $C increase in earnings.

The shadow price for the frame manufacturing hour is 42.8. This means that if the right side of
this constraint increase or decrease by an hour and this change is between the sensitivity
range of 36.7 and 40.6, there will be a $42.80 increase/decrease in earnings.
With Reference to Sensitivity Report (Qn 2), for every increase in X between the sensitivity
range A TO B, there will be a $C increase in earnings.

The shadow price for the frame manufacturing hour is 42.8. This means that if the right side of
this constraint increase or decrease by an hour and this change is between the sensitivity
range of 36.7 and 40.6, there will be a $42.80 increase/decrease in earnings.

The shadow price for finishing hour is 0.8. This means that if the right side of this constraint
increase or decrease by an hour, and this change is between the sensitivity range of 59.2 and
65, there will be a $0.80 increase/decrease in earnings.
 Decision Variable
Objective
Constraints

Availability
40 <= 40
69.8 <= 80
60 <= 60

nufacturing

esource.

re available,
ng the

sensitivity

he right side of
sensitivity
 sensitivity

he right side of
sensitivity

s constraint
ge of 59.2 and
Microsoft Excel 16.0 Answer Report
Worksheet: [Assignment 7_B2_T7.xlsx]Question 2
Report Created: 22/10/2017 1:39:20 PM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.016 Seconds.
Iterations: 4 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 (Max)

Cell Name Original Value Final Value
$B$23 Profit Table Chair 2316 2316

Variable Cells
Cell Name Original Value Final Value Integer
$B$20 Quantity Table Chair 0 0 Contin
$C$20 Quantity Easy Chair 4 4 Contin
$D$20 Quantity Love Seat 20 20 Contin
$E$20 Quantity Coffee Table 10 10 Contin
$F$20 Quantity End Table 10 10 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$G$16 Frame Manufacturing 40 $G$16<=$I$16 Binding 0
$G$17 Stretching 69.8 $G$17<=$I$17 Not Binding 10.2
$G$18 Finishing 60 $G$18<=$I$18 Binding 0
$E$20 Quantity Coffee Table 10 $E$20<=$E$22 Binding 0
$F$20 Quantity End Table 10 $F$20<=$F$22 Binding 0
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [Assignment 7_B2_T7.xlsx]Question 2
Report Created: 22/10/2017 1:39:20 PM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$20 Quantity Table Chair 0 -13.6 30 13.6 1E+030
$C$20 Quantity Easy Chair 4 0 44 6.294117647 0.153846154
$D$20 Quantity Love Seat 20 0 57 0.2 6.8
$E$20 Quantity Coffee Table 10 32.8 55 1E+030 32.8
$F$20 Quantity End Table 10 22.8 45 1E+030 22.8

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$G$16 Frame Manufacturing 40 42.8 40 0.588235294 3.333333333 36.66667 40.58824
$G$17 Stretching 69.8 0 80 1E+030 10.2 69.8 infinity
$G$18 Finishing 60 0.8 60 5 0.769230769 59.23077 65
Question 3
Linear Optimization Model
Let
X1 be the number of product 1 produced using machine 1
X2 be the number of product 1 produced using machine 2
X3 be the number of product 2 produced using machine 1
X4 be the number of product 2 produced using machine 2

Objective:
min 1.5X1+2.2X2+0.4X3+4X4

s.t.
0.7X1+0.75X3<=200
0.80X2+0.90X4<=200
0.75X1+1.20X2+0.75X3+X4<=400
X1>=100
X4>=120
X1+X2>=200
X3+X4>=240
X1, X2, X3, X4 >=0

Product 1 Product 2
Machine 1 Machine 2 Machine 1
Machine time 0.70 0.80 0.75
Labor 0.75 1.20 0.75
Unit costs $1.50 $2.20 $0.40
157.1428571429 42.8571428571 120
>=
100
Total Number of Products Produced 200 240
>= >=
200 240

Cost $ 858

The company can minimise the cost producing 158 and 43 product 1 in machine 1 and 2 respectively an
product 2 in Machine 1 and 2 respectively
 Decision Variable
Objective
Constraints

Product 2
Machine 2
0.90 200 <= 200 142.286 <= 200
1.00 142.28571 <= 400
$4.00
120
>=
120
240
>=
240

achine 1 and 2 respectively and 120 and 120