1.

Comfortable Hands is a company which features a product line of winter gloves for the entire
family — men, women, and children. They are trying to decide what mix of these three types of
gloves to produce.
Comfortable Hands’ manufacturing labor force is unionized. Each full-time employee works a
40-hour week. In addition, by union contract, the number of full-time employees can never drop
below 20. Non-union, part-time workers can also be hired with the following union-imposed
restrictions: (1) each part-time worker works 20 hours per week, and (2) there must be at least 2
full-time employees for each part-time employee.
All three types of gloves are made out of the same 100% genuine cowhide leather. Comfortable
Hands has a long term contract with a supplier of the leather, and receives a 5,000 square feet
shipment of the material each week. The material requirements and labor requirements, along
with the gross profit per glove sold (not considering labor costs) is given in the following table:

Glove Material Required Labor Required Gross Profit

(square feet) (minutes) (per pair)

Men’s 2 30 $8

Women’s 1.5 45 $10

Children’s 1 40 $6

Each full-time employee earns $13 per hour, while each part-time employee earns $10 per hour.
Management wishes to know what mix of each of the three types of gloves to produce per
week, as well as how many full-time and how many part-time workers to employ. They would
like to maximize their net profit — their gross profit from sales minus their labor costs.
(a) Formulate a linear programming model for this problem and solve using Excel.
[Hint: The decision variables are the number of gloves of various types to produce, as well as
the number of full-time and part-time employees to employ.]
In sensitivity analysis, define Allowable increase, Allowable decrease, Allowable range, and Shadow
price. List out the allowable ranges for the above LPP.
 entire
types of

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at least 2

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as well as

dow
 Decision Variables
x1 x2 x3 x4 x5 LHS Inequality
2505 0 0 25.05 12.525
Constraints 2 1.5 1 0 0 5010 <=
30 45 40 -2400 -1200 -2.182787E-11 <=
0 0 0 1 25.05 >=
0 0 0 1 -2 3.5527137E-15 >=
1 0 >=
Max
Objective 8 10 6 -520 -200 4509
Change in objective function = -9
-9
RHS

5010 (5000 has been changed to 5010 to illustrate the shadow price; try changing this to 3000 and solving. The sh
0
20
0
100 (this is for verifying reduced cost corresponding to x2)

(this is for verifying shadow price)

ng this to 3000 and solving. The shadow price is no longer = .9*2000)
Variable Cells Variable Cells Table:
Final Reduced Objective AllowableAllowable Allowable Range Reduced Cost: For a de
change required in the
Cell Name Value Cost Coefficient Increase Decrease for Objective Coefficient value of the decision v
$B$3 x1 2500 0 8 1E+030 0.8666666667 7.133333 1E+030 decrease. For a maxim
$C$3 x2 0 -0.65 10 0.65 1E+030 -1E+030 10.65 in terms of decrease in
problem, for x2, it is
$D$3 x3 0 -3.166667 6 3.166667 1E+030 -1E+030 9.166667 10-(-0.649999) = 10.64
$E$3 x4 25 0 -520 86.66667 180 -700 -433.3333
$F$3 x5 12.5 0 -200 173.3333 60 -260 -26.66667
Alternatively, making t
equivalent to introduc
Constraints for a decision variable
Final Shadow Constraint AllowableAllowable Allowable Range change in the value of
Cell Name Value Price R.H. Side Increase Decrease for Constraint R.H. Side of the decision variabl
$G$4 Constra 5000 0.9 5000 1E+030 1000 4000 1E+030
$G$5 LHS 0.00 0.206667 0 15000 1E+030 -1E+030 15000 Allowable Increase: Al
for a given parameter,
$G$6 LHS 25 0 20 5 1E+030 -1E+030 25 parameter without cha
$G$7 LHS 3.55E-15 -24 0 31.25 25 -25 31.25
Allowable Decrease ca
Note: The objective coefficients and the right hand side of constraints are, in general, referred to as parameters. Allowable Range: All o
for a given parameter,
to vary without changi
Points of Observation: In any sensitivity report, you may point out if there are any Sensitive
Parameters, meaning parameters that are sensitive to change. Although this is a subjective
assessment, parameters that have very narrow allowable ranges may be sensitive.
Constraints Table:
Allowable Increase: Al
100% Rule for Simultaneous Changes for Parameters: Calculate the suggested for a given parameter,
increases/decreases as a percentage of the corresponding allowable increases/decreases. If parameter without cha
the sum of all the percentages is less than 100, the optimal solution still holds. Otherwise,
meaning if the sum if more than 100%, there is no guarantee that the optimal solution will Allowable Decrease ca
continue to optimum. Allowable Range: All o
for a given parameter,
to vary without changi
Binding and Non-Binding Constraints: The constraints whose LHS is exactly equal to the RHS
are called Binding Constraints. The rest are called as Non-binding constraints. Shadow Price: For a gi
objective function for
constraint, as long as t

The Reduced Cost for a

corresponding to the n
Variable Cells Table:
Reduced Cost: For a decision variable with zero optimal value, this is the
change required in the objective coefficient, to make the corresponding
value of the decision variable positive. For a minimization problem, it is a
decrease. For a maximization problem, it is an increase. Excel always gives
in terms of decrease in objective coefficient. [Hence, for this particular
problem, for x2, it is
10-(-0.649999) = 10.649999.]

Alternatively, making the value of the decision variable positive, is

equivalent to introducing a new constraint (x2>=1 in our problem). Hence,
for a decision variable with zero optimal value, the reduced cost is also the
change in the value of the objective function for a unit change in the value
of the decision variable.

Allowable Increase: All other constraints and parameters remaining fixed,

for a given parameter, this is the increase allowed in the value of the
parameter without changing the optimal solution.

Allowable Decrease can be defined similarly.

Allowable Range: All other constraints and parameters remaining fixed,
for a given parameter, this is the range in which the parameter is allowed
to vary without changing the optimal solution.

Constraints Table:
Allowable Increase: All other constraints and parameters remaining fixed,
for a given parameter, this is the increase allowed in the value of the
parameter without changing the shadow price.

Allowable Decrease can be defined similarly.

Allowable Range: All other constraints and parameters remaining fixed,
for a given parameter, this is the range in which the parameter is allowed
to vary without changing the shadow price.

Shadow Price: For a given constraint, this is the change in the value of the
objective function for a unit change in the right hand side of the
constraint, as long as the right hand side is within the allowable range.

The Reduced Cost for a decision variable can be seen as the Shadow Price
corresponding to the non-negativity constraint for that variable.