Post-optimal analysis, Operation Research

Assignment Help:

It can be seen from the optimal solution for the foundry problem that two resources, raw material-1 and labor, are exhausted whereas the other two resources, raw material-2 and foundry capacity, remain available. This implies that the availability of raw material-1 and labor are both exerting a restrictive effect on foundry operation and its profitability. Let us suppose, the foundry can buy the raw material-1 in the open market at a cost of Rs.15 per kg, then is it worth buying and increasing its production to make more profit? Similarly, if the foundry can hire extra labor for Rs.15 per day, then is it worth hiring the extra labor?

The above questions can be answered from the (Zj - Cj) values in the final tableau. The (Zj - Cj) value corresponding to variables S1, that is, column 6 is 20. This indicates that the profit can be increased by Rs.20 for a unit increase in the availability of raw material-1. Thus, if one kilogram of raw material-1 costs Rs.15, then by purchasing it and changing the product mix, the foundry can increase its profit by Rs.20 - Rs.15 = Rs.5. Similarly, the (Zj - Cj) value corresponding to the variable SL is 10 and this indicates that for a unit increase in the availability of labor, profit can be increased by Rs.10. Hence, it is worth hiring labor if its cost is less than Rs.10. Similarly, it is worth buying raw material-1 from open market, if its cost is less than Rs.20 per kg.

The information in the final tableau is also useful in studying the effects of the variations in the profit contributions on the product mix.


Related Discussions:- Post-optimal analysis

Markov analysis, The town of Silverton, Colorado, has three gasoline statio...

The town of Silverton, Colorado, has three gasoline stations, Shell, Exxon, and Arco. Customer selection of service stations can be modeled as a Markov process, with the following

Linear programming., The demand of ice cream during the three summer months...

The demand of ice cream during the three summer months (June, July, and August) at All-Flavors Parlor is estimated at 500,600, and 400 20-gallon cartons, respectively. Two wholesal

Scattered responsibility and authority, Scattered Responsibility and Autho...

Scattered Responsibility and Authority: In a big industry responsibility and authority of decisions making is scattered throughout the organization and thus the organization.

Problems based on lpp when feasible region is unbounded, Problems based on ...

Problems based on LPP when feasible region is unbounded.     1.    Minimize z = 3x + 5y subject to constraints  X + y ≥ 2 X + 3y ≥ 3 X, y ≥ 0 script

Linear programming, A paper mill produces two grades of paper viz X and Y. ...

A paper mill produces two grades of paper viz X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper in

U.S. Healthcare Timeline, 500 word summary written in third person on predi...

500 word summary written in third person on predictions of how current healthcare reform polocies will impact the future of healthcare

Case study and statistical methods, Case Study Methods: It is studying the...

Case Study Methods: It is studying the phenomenon event situation or development through a thorough and detailed analysis or intensive study. The case may be an individual a gr

Goal programming, Goal Programming This provides a more realistic model...

Goal Programming This provides a more realistic model. In a modern setting, profit maximization may not be the only objective of a business concern. Other objectives or goals c

Macroeconomic environment in which the business operates, Provide a descrip...

Provide a description of the macroeconomic environment in which the business operates noting: a) The overall 'stability' of the political system/government of the country in whi

endalk

7/4/2013 1:07:39 PM

what is post-optimality

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