Example 1
• Range of Optimality for c1 The slope of the objective function line is -c1/c2. The slope of the first binding constraint, x1 + x2 = 8, is -1 and the slope of the second binding constraint, x1 + 3x2 = 19, is -2/3. Find the range of values for c1 (with c2 staying 7) such that the objective function line slope lies between that of the two binding constraints: -1 < -c1/7 < -2/3 Multiplying through by -7 (and reversing the inequalities): 14/3 < c1 < 7

Example 1
• Range of Optimality for c2 Find the range of values for c2 ( with c1 staying 5) such that the objective function line slope lies between that of the two binding constraints: -1 < -5/c2 < -2/3 Multiplying by -1: Inverting, Multiplying by 5: 1 > 5/c2 > 2/3 1 < 5 < c2/5 < 3/2 c2 < 15/2

Right-Hand Sides
• The improvement in the value of the optimal solution per unit increase in the right-hand side is called the dual price. • The range of feasibility is the range over which the dual price is applicable. • As the RHS increases, other constraints will become binding and limit the change in the value of the objective function.

Dual Price
• Graphically, a dual price is determined by adding +1 to the right hand side value in question and then resolving for the optimal solution in terms of the same two binding constraints. • The dual price is equal to the difference in the values of the objective functions between the new and original problems. • The dual price for a nonbinding constraint is 0. • A negative dual price indicates that the objective function...

...Sensitivityanalysis, what-if analysis, and goal seeking analysis are used for same purpose to analyze complex relationships among millions of data items
to discover business patterns, trends.
All of them are part of Decision support systems (DSS) analysis techniques.
It helps managers to explore possible alternatives.
What-If Analysis:
In what-if analysis, an end user makes...

...SENSITIVITYANALYSIS
The solution obtained by simplex or graphical method of LP is based on deterministic assumptions i.e. we assume complete certainty in the data and the relationships of a problem namely prices are fixed, resources known, time needed to produce a unit exactly etc. However in the real world, conditions are seldom static i.e. they are dynamic. How can such discrepancy be handled? For example if a firm realizes that profit per...

...Sensitivityanalysis is a technique that indicates exactly how much a project's profitability (NPV or IRR) will change in response to a given change in a single input variable, other things held constant. Sensitivityanalysis begins with a base case developed using expected values (in the statistical sense) for all uncertain variables. Then, each uncertain variable is usually changed by a fixed percentage amount above and below its...

...Linear Programming Notes VII
SensitivityAnalysis
1
Introduction
When you use a mathematical model to describe reality you must make approximations. The world is more complicated than the kinds of optimization
problems that we are able to solve. Linearity assumptions usually are signiﬁcant
approximations. Another important approximation comes because you cannot
be sure of the data that you put into the model. Your knowledge of the relevant
technology...

...
SensitivityAnalysis
HCS/405
September 29, 2014
SensitivityAnalysis
Patton Fuller Community Hospital has been operating since 1975. Besides operating with the goal of keeping patient care their top priority there are other elements that demand the facility’s operations attention. At Patton Fuller Community Hospital there are elements that effect staffing, trend analysis and how that collected data is used forth...

...Assignment #3 BLAW 502 (Summer Class I, 2013): The Richard Spellman Case
Total word count: 1724
1) Is there any need for Spellman to wade through the draft documents?
(224 words)
There is definitely the need for Richard Spellman to go through the draft documents. He needs to ensure that the employment deal that he had discussed with Walt Sawyer was in fact what the contract spelled out and that all information that has been exchanged informally, has been taken into consideration on...