Question

Partial of the Solver Sensitivity Report for the LP model in Problem (3) is provided below. Microsoft Excel 16.0 Sensitivity Report Constraints Final Shadow Constraint Allowable Allowable Cell Name Value Price R.H. Side Increase Decrease $I$9 Component A 4000 11.33 4000 1250 4000 $I$10 Component B 2667 0 3500 1E+30 833 Answer the following questions based this report. (a) If 1,000 additional units of component A are available at a unit cost of $10, should the company take it? Why or why not? (b) If 1,300 additional units of component A are available at a unit cost of $8, should the company take it? Why or why not? (c) What will happen to the total profit if a supply delay results in a reduction of 500 units of component B (i.e., from 3,500 to 3,000 units)? Explain. (d) If the company could buy one more unit of either component A or B, which one would you recommend and why?

Answer 1

Answer:

(a)

If 1000 more units of Component A are available at a unit cost of $10 then company should take it because there is a allowable increase of 1250 units .

(b)

If 1300 more units of Component A are available at a unit cost of $8 then company should not take it because allowable increase is only 1250 and remaining 50 units goes to slack.

(c)

There is no effect on profit if a supply delay result in reduction of 500 units of component B because we have a allowable decrease of 833 units of Component B

(d)

If company could buy one more unit of either component A or component B , then I won't recommend to buy any of the two because by one of Component A we cannot make a product and component B is already in excess.

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