Cu, Maria Thea Minnie E.

B.S. Chemical Engineering

1. A company that manufactures three products, A, B, and C using three machines,
M1, M2, and M3, wants to determine the optimal production schedule that
maximizes the total profit. Product A has to be processed by machines M1, M2,
and M3, product B requires M1 and M3, while product C requires M1 and M2.
The unit profits on the three products are $4, $2 and $5, respectively. The
following LP is formulated to determine the optimal product-mix:
Max Z = 4X1 + 2X2 + 5X3
Subject to: X1 + 2 X2 + X3 430 (M1)
3X1 + 2X3 460 (M2)
X1 + 4 X2 450 (M3)
X1 , X 2 , X 3 0
Where X1 , X2 , and X3 are the amounts of products A, B, and C and the constraints
reflect the available capacities of M1, M2 and M3. The computer prints out the following
solution
Optimal Solution
X1 = 0, X2 = 100, X3 = 230 Z = 1350
Shadow Prices
1, 2 and 0 for constraints 1,2 and 3 respectively
Opportunity Costs 3, 0, 0 for variables X1 , X2 , X3 respectively
RANGES ON OBJECTIVE FUNCTION COEFFICIENTS
VARIABLE LOWER LIMIT
PRESENT VALUE UPPER LIMIT
X1
-
4.0
7.0
X2
0
2.0
10.0
X3
3.0
RANGES ON RHS CONSTRAINTS:
ROW
LOWER LIMIT
1
230
2
410
3
400

5.0

PRESENT VALUE UPPER LIMIT

430
455
460
860
450

Using the above information, answer the following questions: (10 points each)

a. Because of an increase in the cost of raw material used for product C, its unit
profit drops to $4. Determine the new optimal solution and maximum profit.

Max Z
Optimal
Solution
S.T.

A
x1
4

B
C
x2
x3
Variable
2
5
Cells

100 230

1
3
1

Profit

Fina Reduc Objectiv

1350 l
ed
e
Cell Nam ValuLHS Cost
Coefficie
RHS
e
e
nt
2
1
<=
430 430
$C$ x1
0
-3
4
04
2
<=
460 460
4$D$ 0x2 <= 100400 4500
2
4
$E$ x3
230
0
x1
x2
x3
Profit 5
4
Max Z
4
2
4
Optimal
Solution
S.T.

100 230

Allowa
ble
Increas
e
3

Allowa
ble
Decrea
se
1E+30

8
2
1E+30
2

1120

When the
unit profit of product
LHS RHS
C drops to
$4, its new optimal
1
2
1
<=
430 430
solution
would be the same
3
0
2
<=
460 460
because
its
allowable
1
4
0
<=
400 450
decrease
is
$2
but
the
maximum profit will decrease due to the decrease in its unit profit.

b. Suppose it is possible to increase the capacity of one of the machines which one
would you recommend for expansion and why?

I would recommend machine 2. Based on the given shadow prices, machine 2

has the highest shadow price which is $2. This means that when its capacity is
increased the machine 2 will give the highest maximum profit. The increase in
the maximum profit when machine 2 is increased will double compare to the
increase in the maximum profit of machine 1.

c. Due to an improvement in product design, the unit profit on product A can be

increased to $6. Is it worthwhile producing product A now? Explain.

Max Z
Optimal
Solutio
n
S.T.

A
x1
6

B
x2
2

C
x3
5

Profit

100

230

1350

1
3
1

2
0
4

1
2
0

<=
<=
<=

LHS
430
460
400

RHS
430
460
450

It is worthwhile producing product A but increasing its unit profit to $6 will make
the optimal solution and maximum profit the same because its allowable increase
is $3.

d. Suppose the capacity of machine 2 can be increased by another 200 minutes at

a cost of $250. Is it economical to do so?

Max Z
Optimal
Solutio
n
S.T.

A
x1
4

B
x2
2

C
x3
5

Profit

50

330

1750

1
3
1

2
0
4

1
2
0

<=
<=
<=

LHS
430
660
200

RHS
430
660
450

It is economical to increase the capacity of machine 2 by another 200 minutes

because the maximum profit will increase to $1750 but $250 must be deducted
making it $1500 which makes it still economical.

e.

Because of an increase in cost of energy for operating the machines, the unit
profits of A, B, and C decrease by $2, $0.50 and $1 respectively. How will it
affect the optimal solution and maximum profit?

Max Z
Optimal
Solutio
n
S.T.

A
x1
2

B
x2
1.5

C
x3
4

Profit

100

230

1070

1
3
1

2
0
4

1
2
0

<=
<=
<=

LHS
430
460
400

RHS
430
460
450

Decreasing the unit profits of A, B, and C will make the production the same but
the maximum profit will decrease from $1350 to $1070 making it not economical.