Interpreting the simplex tableau- sensitivity analysis, Managerial Accounting

Assignment Help:

INTERPRETING THE SIMPLEX TABLEAU

We can now see that our attention must be directed to reading, interpreting and analyzing the (simplex) results. It is erroneous, however, to assume that only one can interpret the simplex tableau without having adequate knowledge of how and why the simplex method works.

It will be disappointing to you to think that all we can get out of the optimum simplex tableau is a list of variables and their optimum values. The fact is that the simplex tableau is "loaded" with important information, the least of which are the optimum values of the variables. The following list summarizes the information that can be obtained from the simplex tableau, either directly or with simple additional computations.

1. The optimum answer
2. The position of resources
3. The unit value of each resource
4. The sensitivity of the optimum answer to changes in availability of resources, coefficients of the objective function, and usage of resources by activities.

The first three items are readily available in the optimum simplex tableau. The fourth item requires additional computations that are based on the information in the optimum solution.

To demonstrate these items we use the same example, which we repeat here for convenience.

The optimum tableau is specified as:

1596_table.jpg



Maximise:    Z = 3XE + 2X1

Subject to:    XE + 2X1 + S1 = 6

2XE + 2X1 + S2 = 8
-XE + 2X1 + S3 = 1
X1 + S4 = 2

X1, XE, S1, S2, S3, S4 ≥ 0

 


Related Discussions:- Interpreting the simplex tableau- sensitivity analysis

Calculate the overall profit if the offer is accepted, Question : (a) ...

Question : (a) A company manufactures and sells two products A and B. Presently, it sells 600 units of A and 400 units of B at a price of £24 and £19 respectively. The unit

Mgt acc., company jobcosting system

company jobcosting system

Budgetary styles, their definitions and the advantages and disadvantages

their definitions and the advantages and disadvantages

Types of simulation-operational gaining-monte carlo method, Types of Simula...

Types of Simulation 1) Operational Gaining Method: This refers to those situations involving conflict of interest among players or decision makers within the framework o

What are the stages in the performance budgeting, Stages in the performance...

Stages in the performance budgeting The stages in the performance budgeting is enumerated as follows: 1) Establishment of goals objectives and policies: data collection revi

Maximum Price company would pay, Cause Company is planning to invest in a m...

Cause Company is planning to invest in a machine with a useful life of five years and no salvage value. The machine is expected to produce cash flow from operations of $20,000 in e

Financial perspective, Financial Perspective How do we produce value fo...

Financial Perspective How do we produce value for our shareholders? This perspective covers traditional measures e.g. growth, liability, shareholder value. But these are set on

Financial management, discuss the applicability of an operating cycle in ve...

discuss the applicability of an operating cycle in vegetable growing in a low developed country like Uganda- Africa

Transfer pricing-purposes, Transfer Pricing Transfer pricing can contri...

Transfer Pricing Transfer pricing can contribute directly to the process of departmental performance measurement and indirectly to the measurement of product performance. A

Projected balance sheet method, In this method, approximation of various as...

In this method, approximation of various assets here excluding cash and including liabilities are made getting into consideration the transactions in the ensuring period. Afterward

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd