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Unformatted text preview: SENSITIVITY ANALYSIS: AN APPLIED APPROACH Effect of changes in objective function coefficients. Effect of changes in RHS coefficients. Shadow Prices. Importance of sensitivity analysis. Saigal (U of M) IOE 310 1 / 6 AN EXAMPLE maximize z = 3 x 1 + 2 x 2 2 x 1 + x 2 100 x 2 + x 2 80 x 1 40 x 1 x 2 where x 1 = number of toy soldiers produced. x 2 = number of toy trains produced. Saigal (U of M) IOE 310 2 / 6 Graphic Solution: Saigal (U of M) IOE 310 3 / 6 CHANGE OF COST COEFFICIENT Let c 1 be the contribution to profit by each soldier, i.e., the coefficient of x 1 . c 1 = 3. Question : How much can c 1 change before the current basis changes? x 2 = 3 2 + constant 2 . The objective function. x 2 = x 1 + 80. The carpentry constraint. c 1 2 < 1. x 2 = 2 x 1 + 100. The finishing constraint. c 1 2 > 2. Thus, the basis will not change if 2 c 1 4....
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 Spring '08
 Saigal

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