Post-Optimality Analysis

Post optimality analysis or sensitivity analysis is the study of how the changes in the
parameters of a problem, such as the coefficients of the constraints, coefficients of the
objective functions or the right-hand side values of a linear program affect the optimal
solution. Using sensitivity analysis, we can answer the questions such as:

a. Will an increase in the right-hand side of the constraint affect the objective
function?
b. If so, how much of the resource can be used?
c. Given the answer to the preceding question, what will be the revised optimal
solution?
d. How will a change in a coefficient of the objective function affect the optimal
solution?

As sensitivity analysis is concerned with how these changes affect the optimal solution,
the analysis does not begin until the optimal solution to the original linear programming
problem has been obtained. For that reason, sensitivity analysis is referred as post
optimality analysis. Thus, sensitivity analysis is an extension of linear programming
beyond identifying the optimal solution. It enables managers to answer “what if………..”
questions concerning the impact of potential changes to model parameters and that’s why
such analysis is also referred as what if analysis.

Sensitivity analysis is important to decision makers because real world problems exist in
a changing environment. Prices of products or costs of raw materials changes, product
demand changes, process design changes and so on. If a linear programming model is
used in such an environment, we can expect some of the coefficients to change overtime.
We will then want to determine how these changes affect the optimal solution of the
original linear programming problem. Sensitivity analysis provides us with the
information needed to respond to such changes without requiring the complete solution of
a revised linear program.

A change in the Right-Hand Side of a constraint:

The first step in determining how a change in the RHS (right hand side) of a constraint
(i.e. the amount of scarce resource that is available for use) would influence the optimal
solution is to examine the shadow prices in the final simplex tableau. A shadow price is a
marginal value; it indicates the impact that a one unit change in the amount of a
constraint would have on the value of the objective function. More specifically, a shadow
price reveals the amount by which the value of the objective function would increase if
the level of the constraint was increased by one unit.

What the shadow prices do not tell us is the extent to which the level of a scarce resource
can be changed and still have the same impact per unit. Therefore, we need to determine
the range over which we can change the right-hand side quantities and still have the same
shadow price and this range is called the range of feasibility.

Dr. Tasnim Uddin Chowdhury, Associate Professor of Finance, DBA, PUC Page | 1
 A change in an objective function coefficient:

Sometimes it is important for a decision maker to know how much the contribution of a
given decision variable to the objective function can change without changing the optimal
solution. Such changes may occur because of changed cost, new pricing policies, product
or process design changes, as well as other factors. The range over which the objective
function coefficient of a variable that is in solution can change without changing the
optimal values of the decision variables is called its range of optimality.

Duality:

Every linear programming problem can have two forms. The original formulation of a
problem is referred to as its primal form. The other form is referred to as its dual form
which might be termed as the “mirror image” of the primal. Analysis of the dual can
enable a manager to evaluate the potential impact of a new product and it can be used to
determine the marginal values of resources which help the manager to decide which of
several alternative uses of resources is most profitable.

Dr. Tasnim Uddin Chowdhury, Associate Professor of Finance, DBA, PUC Page | 2
 Problems on Post-Optimality Analysis
Problem: 1

A firm that assembles computers and computer equipment is about to start production of
two new models of microcomputers- Model A and Model B. Each type of microcomputer
will require assembly time, inspection time and storage space. The amounts of each of
these resources that can be devoted to the production of the microcomputers are limited.
The assembly time, inspection time and storage spaces available are 100 hours, 22 hours
and 39 cubic feet respectively. The manager of the firm would like to determine the
quantity of each microcomputer to produce in order to maximize the profit generated by
sales of these microcomputers.

Model A generates a profit of $60 and Model B generates a profit of $50. Assembly Time
required to produce each unit of model A and B is 4 hours and 10 hours respectively.
Inspection Time required to produce each unit of model A and B is 2 hours and 1 hour
respectively. Storage space used to store one unit of Model A is 3 cubic feet and for
Model B it is 3 cubic feet.

The manager also met with the firm’s marketing manager and learned that the demand for
the microcomputers was such that whatever combination of these two types of
microcomputers is produced can be sold.

Requirements:
a. Solve the Linear programming problem by simplex method to find the optimal
Combination (The Final Table is given).
b. Identify the shadow price and explain
c. Determine the range of feasibility for b2 and b3.
d. What will the revised optimal solution be if storage space is increased by 3 cubic
feet or 8 cubic feet?
e. Find the revised optimal solution if storage space is decreased by 6 cubic feet or 9
cubic feet.
f. Calculate the range of optimality for C1 and C2.
g. What would be the effect of $5 increase in C2 or a $10 decrease in C2 on the
optimal solution and the value of the solution?
h. Formulate the dual of the problem and solve.
i. Suppose the firm is considering a third model of microcomputer that will yield a
profit of $70 per unit and this will require resource requirements of 8 hours of
assembly time, 4 hours of inspection time and 5 cubic feet of storage space per
unit. Should the manager introduce the model?

The Final Table:

Cj 60 50 0 0 0 Quantity
Basis x1 x2 s1 s2 s3
s1 0 0 0 1 6 –16/3 24
x1 60 1 0 0 1 –1/3 9
x2 50 0 1 0 –1 2/3 4
Zj 60 50 0 10 40/3 Z = 740
Cj – Zj 0 0 0 10 –40/3

Dr. Tasnim Uddin Chowdhury, Associate Professor of Finance, DBA, PUC Page | 3
 Problem: 2

Three products are produced through three different operations. The times (in minutes)
required per unit of each product, the daily capacity of the operations (in minutes per day)
and the profit per unit for each product (in dollar) are as follows:

Operations Time per unit Capacity

Product-1 Product-2 Product-3
1 3 4 3 420
2 5 0 3 450
3 3 6 2 410
Profit $3 $2 $1

The zero time indicates that the product does not require the given operation.
The solution table is given below:

Cj X1 X2 X3 s1 s2 s3 Values
Basis CB 3 2 1 0 0 0

S1 0 0 0 16/15 1 -1 -2/3 6
X1 3 1 0 3/5 0 1/5 0 9
X2 2 0 1 1/30 0 -1/10 1/6 2
Cj 3 2 28/15 0 2/5 1/3 Z= 31
Cj-Zj 0 0 -13/15 0 -2/5 -1/3

Requirements:

a. Identify the shadow price and explain

b. Determine the range of feasibility for b2 and b3.
c. What will the revised optimal solution be if capacity for operation-2 is increased by
30 minutes or decreased by 20 minutes?
d. Find the revised optimal solution if the capacity for operation-2 is increased by 80
minutes or decreased by 10 minutes.
e. Calculate the range of optimality for C1 and C2.
f. Formulate the dual of the problem and state the solution values.

Problem: 3

Consider the following LP model and its final tableau:

Max. Z: 3x1 + 2x2+ 5x3

S.t.:
x1 + 2x2 + x3 ≤ 430 (Operation 1)
3x1 + 2x3 ≤ 460 (Operation 2)
x1 + 4x2 ≤ 420 (Operation 3)

And, all variables ≥0

Dr. Tasnim Uddin Chowdhury, Associate Professor of Finance, DBA, PUC Page | 4
 Cj X1 X2 X3 S1 S2 S3 Const.
Basis CB 3 2 5 0 0 0
X2 2 -1/4 1 0 1/2 -1/4 0 100
X3 5 3/2 0 1 0 1/2 0 230
S3 0 2 0 0 -2 1 1 20
Cj 7 2 5 1 2 0 Z=1350
Cj-Zj -4 0 0 -1 -2 0

Requirements:
a. Determine the range of feasibility for b1 and b2.
b. What will the revised optimal solution be if capacity for operation-1 is increased by
9 minutes or decreased by 120 minutes?
c. Calculate the range of optimality for C2 and C3.
d. Formulate the dual of the problem.

Problem: 4

Consider the following linear programming problem:

Max: Z = 5x1 + 6x2 + 4x3
s. t.
3x1 + 4x2 + 3x3 ≤ 120
x1 + 2x2 + x3 ≤ 50
x1 + 2x2 + 3x3 ≥ 30
& x1, x2, x3 ≥0

The optimal simplex tableau is:

Cj x1 x2 x3 s1 s2 s3 Constants
Basis CB 5 6 4 0 0 0 bi
s3 0 0 4 0 -2 7 1 80
x3 4 0 2 1 -1 3 0 30
x1 5 1 0 0 1 -2 0 20
Zj 5 8 4 1 2 0 Z = 220
Cj-Zj 0 -2 0 -1 -2 0

Required:
a. Compute the range of optimality for C1 and C3
b. Compute the range of feasibility for b1 and b2
c. Formulate the dual of the problem.

Problem: 5

Consider the following linear programming problem:

Maximize, Z = 50x1 + 40x2

Sub. to const. 3x1 + 5x2 ≤ 150 (assembly time)

x2 ≤ 20 (portable display)

Dr. Tasnim Uddin Chowdhury, Associate Professor of Finance, DBA, PUC Page | 5
 8x1 + 5x2 ≤ 300 (warehouse capacity)
and x1, x2 ≥ 0

The optimal table is as follows:

Cj x1 x2 s1 s2 s3
50 40 0 0 0 Constants
Basis CB bi
x2 40 0 1 8/25 0 -3/25 12
s2 0 0 0 -8/25 1 3/25 08
x1 50 1 5 -5/25 0 5/25 30
Zj 50 40 14/5 0 26/5 Z = 1980
Cj-Zj 0 0 -14/5 0 -26/5

a. Identify the shadow price and explain

b. Determine the range of feasibility for b1 and b3.
c. What will the revised optimal solution be if warehouse space is increased by 3 cubic
feet or 8 cubic feet?
d. Find the revised optimal solution if warehouse space is decreased by 6 cubic feet
or 9 cubic feet.
e. Calculate the range of optimality for C1 and C2.
f. What would be the effect of $5 increase in C1 or a $10 decrease in C1 on the optimal
solution and the value of the solution?
g. Formulate the dual of the problem.

Problem: 6

Consider the following linear programming problem:

Max. Z = 5000 x1 + 6000 x2

s.t.c.
2x1 + x2 ≤ 16 (Cotton)
x1 + 2x2 ≤ 11 (silk)
x1 + 3x2 ≤ 15 (wool)

& x1,x2 ≥ 0

The optimal table is as follows:

Cj x1 x2 s1 s2 s3
5000 6000 0 0 0 Constants
Basis CB bi
s3 0 0 0 1/3 -5/3 1 2
x1 5000 1 0 2/3 -1/3 0 7
x2 6000 0 1 -1/3 2/3 0 2
Zj 5000 6000 4000/3 7000/3 0 Z = 47,000
Cj-Zj 0 0 - 4000/3 -7000/3 0

Dr. Tasnim Uddin Chowdhury, Associate Professor of Finance, DBA, PUC Page | 6
 Requirements:
a. Identify the shadow price and explain
b. Determine the range of feasibility for b1 and b2.
c. Calculate the range of optimality for C1 and C2.
d. What would be the effect of $150 increase in C2 or a $100 decrease in C2 on the
optimal solution and the value of the solution?
e. Formulate the dual of the problem.

Problem: 7

Given the Linear Programming model and its final simplex tableau:

Z (maximize) = 10 x1 + 6 x2 + 5 x3
Subject to
2 x1 + 3x2 + 4 x3  25
1x1 + 3x2 + 2 x3  22
6 x1 + 3x2 + 4 x3  32
x1 , x2 , x3  0

C→ 10 6 5 0 0 0 Quantity
Basis↓ x1 x2 x3 s1 s2 s3
s1 0 0 0 8/5 1 –4/5 –1/5 1
x2 6 0 1 8/15 0 2/5 –1/15 4
x1 10 1 0 2/5 0 –1/5 1/5 2
Z 10 6 36/5 0 2/5 8/5 Z = 44
C–Z 0 0 –11/5 0 –2/5 –8/5

i) Interpret the shadow prices of the problem.

ii) Determine the range of feasibility for b2 and b3.
iii) Determine the range of optimality for C1 and C2.
iv) Formulate the dual.

Problem: 8

Consider the following linear programming problem and the solution table:

Max, Z= 40 x1+ 30 x2

Subject to the constraints:

2/5 x1 + 1/2 x2 ≤ 20 (Material 1)
1/5 x2 ≤ 5 (Material 2)
3/5 x1 + 3/10 x2 ≤ 21 (Material 3)

The final simplex tableau is shown here.

Dr. Tasnim Uddin Chowdhury, Associate Professor of Finance, DBA, PUC Page | 7
 Basis↓ X1 X2 S1 S2 S3 Values
C͢→ 40 30 0 0 0
X2 30 0 1 10/3 0 -20/9 20
S2 0 0 0 -2/3 1 4/9 1
X1 40 1 0 -5/3 0 25/9 25
Z 40 30 100/3 0 400/9 Z= 1600
C-Z 0 0 -100/3 0 -400/9

Requirement:
i) Determine the range of feasibility for b1 & b3
ii) Compute the range of optimality for C1and C2
iii) What is the dual price for the Material 1, 2, and 3 constraints?
iv) Formulate the dual of the model.

N.B: This sheet contains only the summarized discussion on the contents of the chapter.
So, students are suggested to use the following books for further discussion and to
practice more mathematical problems:

1. David R. Anderson, Dennis J. Sweeney & Thomas A. Williams, An Introduction to

Management Science – Quantitative Approaches to Decision Making, 7th edition, West
Publishing Company, USA.
2. William J. Stevenson, Introduction to Management Science, IRWIN, USA.

Dr. Tasnim Uddin Chowdhury, Associate Professor of Finance, DBA, PUC Page | 8