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Problem Statement

To find out the Product mix of Merton Truck that maximizes the profit

Group ANKITA KUMARI (133) K. SIVARAM (149) SATYAPRIYA OJHA (165) SUHANI DOSHI (182)

Decision Variables

x1 = No. of model 101 produced per month


X2 = No. of model 102 produced per month

Objective Function Maximize Z = 39000*x1 + 38000* x2 36000*x1 33000*x2 =3000*x1+5000*x2

Constraints

X1+2*x2 <=4000 (Engine Assembly) 2*x1+2*x2 <= 6000 (Metal Stamping) 2*x1 <= 5000 (Assembly) 3*x2 <= 4500 (Assembly)

1(a)
Optimal Product Mix x1 = 2000, x2 = 1000, z = 11000000, profit = 2400000
Sale Price
Model 101 Model 102 2000 1000 39000 38000 Constraints 4000 6000 4000 3000 1100000 0 2400000 Capacity 4000 6000 5000 4500

z=

Variable Cells Cell Name $B$2 Model 101 $B$3 Model 102 Constraints Cell $D$2 $D$3 $D$4 $D$5 Name Model 101 Constraints Model 102 Constraints Constraints Constraints Final Value 4000 6000 4000 3000 Shadow Price 2000 500 0 0 Constraint R.H. Side 4000 6000 5000 4500 Allowable Increase 500 500 1E+30 1E+30 Allowable Decrease 500 1000 1000 1500 Final Reduced Value Cost 2000 0 1000 0 Objective Coefficient 3000 5000 Allowable Increase 2000 1000 Allowable Decrease 500 2000

1(b)
Referring to the sensitivity report Best product mix remains the same since the allowable increase is 500 for the 1st constraint Extra unit capacity is worth shadow price which is 2000 .

1(c)

Since 100 < 500, the change in z value will be 100* shadow price = 200000, which is 100 times that of part (b)

1(d)
It is the allowable increase in engine assembly capacity from the sensitivity report, i.e. 500

2.

Effectively we are removing the engine assembly capacity constraint and willing to pay the engine assembly related cost to the supplier It can be verified from the sensitivity report that the E.A capacity constraint is binding and will no longer be so if the capacity utilized is increased to 500. Beyond, this other constraints will be binding. So, the increase in z upto this point is 2000* 500 = 100000, the maximum amount that Merton can pay to the supplier. This can also be verified by resolving the model after removing the constraint. The maximum machine hours rented, consequently will be 500 hrs.

3.

Engine Assembly Capacity Requirement of model 103 = (4000/5000) = 4/5 hrs. Metal Stamping Capacity requirement of model 103 = (6000/4000)=6/4 Total Effect on Z by introducing one unit of model 103 is 2000 (4/5 * 2000 + 6/4 * 500) = -350. (a) Merton should not produce the model 103 (b) Contribution of model 103 must be at least 2350.

4.
Optimal Mix x1=1500,x2 = 1500, since its making loss, it should not assemble on overtime.

Model 101 Model 102

Sale Price Constraints Capacity 1500 39000 4500 6000 1500 38000 6000 6000 3000 5000 4500 4500 9300000 -50000

z=

5.
Additional Constraint, x1 3x2 >= 0 Optimal Mix, X1 = 2250, x2 = 750

Sale Price Constraints Capacity Model 101 2250 39000 3750 4000 Model 102 750 38000 6000 6000 4500 5000 2250 4500 0 0 1050000 z= 0 1900000

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