SENSITIVITY ANALYSIS

1. The presence of a slack (Si) variable with non-zero value in the simplex table
represents the unutilized or idle resource of the ≤ constraint.

2. The negative index under a slack variable (Si) referred to as shadow price
a. The absolute value of this index (Cj-Zj) represents the amount of increase
(decrease) in the objective function whenever the right hand side (RHS)
value of the constraints is increased (decreased)

3. RHS range where shadow price will remain the same and attain optimal solution
RHS – max decrease ≤ New RHS ≤ RHS + max increase
Lower limit ≤ New RHS ≤ Upper limit

Max increase is the negative ratio with the smallest absolute value
Max decrease is the smallest positive ratio
Where ratio = RHS Qty / Si in the final simplex table
Interpretation: Lower limit refers to the lowest level by which the original RHS
can be decreased. Upper Limit refers to the highest level by which the original
RHS can be increased.

4. Range of contribution (Cx) of the decision variable (variables with nonzero

coefficients) in the objective function without affecting the optimal product mix
Cx – max decrease ≤ New Cx ≤ Cx + max increase
Lower limit ≤ New Cx ≤ Upper limit

Max increase is the smallest positive ratio

Max decrease is the is the negative ratio with the smallest absolute value
Where ratio = (Cj-Zj) row / Xi row
Interpretation: Lower limit refers to the lowest level by which the original
profit contribution of a decision variable can be decreased. Upper Limit refers
to the highest level by which the original profit contribution of a decision
variable can be increased.

5. Range of contribution (Cx) of the non-basic decision variable (variables with zero
coefficients)

Max decrease = no limit

Max increase = (Cj-Zj) under this variable

6. Determine the new optimal solution mix using the changes in RHS.
New Optimal Solution Mix =
Present Optimal Solution Mix + (change in RHS) (Unit Adjustment under the Si
column)
7. Formulate the dual program and its solution.
 Illustrative Sample:

Final Simplex Table (Dimension Ltd.)

Cj BV RHS 8 6 0 0 Qty/S1 Qty/S2
X1 X2 S1 S2
6 X2 6 0 1 .1667 .333 36 18
8 X1 12 1 0 .333 -.1666 -36 -72
Zj 132 8 6 1.667 .666
Cj-Zj 0 0 -1.667 -.666
Ratio of Cx1 0 undef -5 4
Ratio of Cx2 undef 0 10 -2

1. Shadow prices: S1 = 1.667, S2 = .666

2. RHS range for Constraint 1 –Assembly (S1)

RHS – max decrease ≤ New RHS ≤ RHS + max increase
60 – 36 = 24 ≤ New RHS ≤ 60+36 = 96
RHS range for Constraint 2 - Finishing (S2)
48 – 18 = 30 ≤ New RHS ≤ 48+ 72 = 120

3. Range of Contribution (Cx) of the basic decision variable 8X1:

Cx – max decrease ≤ New Cx ≤ Cx + max increase
8 – 5 = 3 ≤ New Cx ≤ 8 + 4 = 12
Range of Contribution (Cx) of the basic decision variable 6X2:
6 – 2 = 4 ≤ New Cx ≤ 6 + 10 = 16
4. Determine the new optimal solution mix using the changes in RHS.
New Optimal Solution Mix = Present Optimal Solution Mix + (change in RHS) (Unit Adjustment under the
Si column)
RHS sensitivity analysis for Assembly constraint (≤ 60 hours)
If RHS is increased from 60 to 80, change in RHS = +20
X2 = 6 + 20 (.1666) = 9.332
X1 = 12 + 20 (.333) = 18.66
Z = 132 + 20 (1.667) = $165.34

If RHS is decreased from 60 to 50, change in RHS = -10

X2 = 6 + (-10) (.1666) = 4.333
X1 = 12 + (-10) (.333) = 8.66
Z = 132 + (-10) (1.667) = $115.33