A Very Confused Manager Is Reading a Two-Page Report Given

Question

Examlex · Accepted Answer

The Answer is Answer Report
Target Cell Max: The target cell should be maximized,so the manager must have provided the intern with profit information.
Final Value: The final value is the greatest amount possible for the situation.If we are working with profit figures,this is the best return possible given what we estimate is on hand and how it is to be produced.This may change if our inventory or recipes are slightly off.The highest profit identified is $88,888.89
Adjustable Cells: The adjustable cells show that we considered any positive quantity of models W-Z as possible outputs for the week.
Name: The names are those of the models we produce.
Final Value: These are the exact amounts of each of our four models to produce to earn the final value.In this case we would make 111.1 units of model W and none of the other four models.
Status: This shows what is limiting our ability to produce the models.A binding constraint directly limits our output although a nonbinding constraint means that factor does not limit us.In this case,the second and third constraints are nonbinding,so producing 111.1 units of model W leaves us with leftovers of whatever scarce resource they represent.The first constraint is binding,so we are using up every bit of that resource.
Slack: Slack shows us how much of each resource we have left.Our first constraint is binding,so we have none left over and therefore have 0 slack.Our second and third constraints are not binding,so we have plenty (3,888 and 25,000 units respectively)of these scarce resources left over.
Sensitivity Report
Adjustable Cells
Reduced Cost: This is the change in the optimum objective per unit change in the upper or lower bounds of the variable.The objective function will increase by 0.-66,and so on,per unit increase.
Allowable Increase: These two (Allowable Increase and Allowable Decrease)provide a range for our current answer and the recipe we used to arrive at it.For model W,we have assumed that each unit gives us $800 profit.If our estimate was too high,and the return was up to $80 less per unit,we would still arrive at the same answer.If it were more than $80 too high,our answer would change.The same holds true for the models we are not making.If model Y made more than $666.66 profit per unit,then our final product mix would change.
Allowable Decrease: See analysis for Allowable Increase.
Constraints
Shadow Price: This is the marginal return for having one more unit of each resource.Here we have a shadow price of $8.88,so if we had one more unit of resource in the first constraint,we could make an additional $8.88.This gives us an idea of the maximum we would be willing to pay for more of that resource.
Allowable Increase: These work the same as the allowable increases and decreases for the adjustable cells except they focus on the shadow prices.They indicate how far the RHS of the constraint can change before the shadow price will change.
Allowable Decrease: See discussion immediately preceding.

A Very Confused Manager Is Reading a Two-Page Report Given

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