2017 Practice LP Problems 7 – 10 Sensitivity Analysis Answers.docx

# 2017 Practice LP Problems 7 – 10 Sensitivity Analysis Answers.docx

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Practice LP Problems 7 – 10 – Sensitivity Analysis Answers 7. The sensitivity report generated by Solver is provided below. a) A recent analysis of sales from the real estate guide has revealed that demand has fallen. Consequently, several advertisers have indicated that they will either pull or reduce the size of their ads in the real estate guide. Management has estimated that the impact of losing these advertisements could reduce revenues for the real estate guide to \$0.65 per magazine. What impact will this have on the solution and the company’s net advertising profits? A reduction in real estate guide revenues from \$.75 to \$.65 will reduce the profit margin from \$0.5 to \$0.4. Since this is a change in a coefficient in the objective function, this is a Range of Optimality question. The Range for the coefficient is .33 .5 ∞. A new profit margin of \$0.4 falls inside the R of O, therefore the solution will stay the same. The value of Z will change because a coefficient changed. The new value of Z will = \$7640 – (10,000 * .1) = \$7640 - \$1000 = \$6640.

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