BUSOBA 2321 FINAL 103 ACTUAL QUESTIONS AND ANSWERS WITH COMPLETE SOLUTION

BUSOBA 2321 FINAL 103 ACTUAL QUESTIONS AND
ANSWERS WITH COMPLETE SOLUTION




What question are we trying to answer when performing sensitivity analysis?
Answer - How sensitive is our solution to changes in the assumptions that we
made?


T or F: The optimal solution will not always be at a corner point Answer - False
- it always will be since this is where two constraints are maxed out - more
resources = more production = more optimal


T or F: The assumptions made in our linear program formulation (i.e. how
much profit we will be able to make per unit of a particular product) may
change based on market conditions - which we do not have control over.
Answer - True


Define shadow price Answer - The change in the OBJ FN value if we increase
one constraint by one unit.


By solving for the shadow price of a constrained resource, what question are
we answering? Answer - If we have a additional unit of the constrained
resource available, how much could our OBJ FN value increase by?


How do we know if the addition of a constraing will result in the OBJ FN value
increases, staying the same, or decreasing? Answer - An additional constraint
will never increase the OBJ FN VAL.

,If the constraint is redundant (i.e. it is already being adhered too; there is
another constraint that is more restrictive than this new constraint), our OBJ
FN val wiull remain the same - the feasible region will not change.


If it is not redundant (is not already being adhered to - the addition of this
constraint decreases our feasible region), our OBJ FN val will decrease


What are the two sections of a sensitivity report? Answer - 1. adjustable cells
2. constraints


For what type of constraint (what sign) might slack exist? Answer - maximums;
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For what type of constraint (what sign) might surplus exist? Answer -
Minimums
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Why might the allowable increase of a constraint be infinite? Answer - If slack
already exists - if we already aren't using up all of what we currently have
available, we will never gain anything by increasing the availability of the
resource.


Why might the allowable decrease of a constraint be infinite? Answer - if a
surplus already exists - no matter how much the RHS of the constraint
decreased, no additional value would be added because we are already above
the current minimum - making the minimum lower would not help us.


If surplus exists, what is the allowable increase for the constraint? Answer - the
amount of the surplus

, if the minimum increases to our current amount of production, the constraint
will then be binding and thus the shadow price will become a non-zero value


If surplus exists, what is the allowable decrease for the constraint? Answer -
infinity


If slack exists, what is the allowable increase for the constraint? Answer -
infinity


If slack exists, what is the allowable decrease for the constraint? Answer - the
amount of the slack




decreasing by this amount will mean that we would be using all of the resource
- it would then be binding and the shadow price woudl change


When a constraint is binding, the shadow price is Answer - a non-zero value


When a constraint is not binding, the shadow price is Answer - zero


For what reasons might the optimal solution omit one of the decision variable
(i.e. produce zero) Answer - 1. there is no constraint that requires the
production of that product
2. it has the lowest profit margin


Provide two definitions of reduced cost Answer - 1. The minimum amount by
which the OFC of a DV needs to change to cause that DV to have a nonzero
value (AKA to include it in the optimal solution)