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Sensitivity Report Explained

The document summarizes the interpretation of a sensitivity report for an optimization problem with three constraints: cutting, shaping, and finishing. It explains that the shadow price indicates the effect on the optimal value from a one unit increase or decrease in each constraint. A positive shadow price means the constraint is fully utilized, while a zero shadow price means the constraint is not fully utilized with surplus. The allowable increases and decreases specify the range over which the optimal value would change with changes to the right-hand side of each constraint.

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53 views2 pages

Sensitivity Report Explained

The document summarizes the interpretation of a sensitivity report for an optimization problem with three constraints: cutting, shaping, and finishing. It explains that the shadow price indicates the effect on the optimal value from a one unit increase or decrease in each constraint. A positive shadow price means the constraint is fully utilized, while a zero shadow price means the constraint is not fully utilized with surplus. The allowable increases and decreases specify the range over which the optimal value would change with changes to the right-hand side of each constraint.

Uploaded by

ksp
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Sensitivity Report - Interpretation

Constraints
Cell
$E$7
$E$8
$E$9

Name
Cutting
Shaping
Finishing

Final
Value
140
100
150

Shadow
Price
3.5
0
1

Constraint
R.H. Side
140
120
150

Allowable
Increase
16
1E+30
60

Allowable
Decrease
40
20
40

Constraint 1: cutting RHS = 140


with increase of each additional unit of the constraint 1 (when 140 becomes 141), the max profit goes up by 3.5
units (becomes 640+3.5=643.5)
with decrease of each additional unit of the constraint 1 (when 140 becomes 139), the max profit comes down by
3.5 units (becomes 640-3.5=636.5)
This change (increase/decrease) is valid only for the range (140-40=100, 140+16=156). When RHS = 14040=100, the max value will be = 640-40*3.5 = 500 and when RHS =140+16=156, the max value will be =
640+16*3.5 = 696.
RHS value of Below 100 the max remains 500 and RHS above 156, max value remains 696.
with decrease of each additional unit of the constraint 2, the max profit remains unchanged
with decrease of each additional unit of the constraint 2, the max profit remains
unchanged
with increase of each additional unit of the constraint 3, the max profit increases by 1 unit
with decrease of each additional unit of the constraint 3, the max profit decreases by 1 unit
Final
Value
140
100
150

Shadow
Price
3.5
0
1

Constraint
R.H. Side
140
120
150

Shadow price = +ve, ie, final value = constraint RHS


Ie, the resources/constraints fully utilized
Slack = constraint RHS - final value = 0, hence this constraint is known as binding (see the
answer report)

Shadow price = 0, ie, final value < constraint RHS


Ie, the resources/constraints not fully utilized or there is surplus resource
(So even if you add the value of this constraint, the max will not have any change)
Slack = constraint RHS - final value = 120-100 = 20, hence this constraint is known as not
binding (see the answer report)

Note:
Shadow price = -ve, ie, final value > constraint RHS
Ie, the resources/constraints are inadequate to meet the requirements (scarce)
Slack = -ve , hence this constraint is known as not binding

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