The optimal value of two decision variables (quantities sold) and the current se
ID: 3181049 • Letter: T
Question
The optimal value of two decision variables (quantities sold) and the current selling prices are given in the sensitivity report. Calculate the maximal revenue. Can we find the change in maximal revenue if the selling price of the first product is reduced to 390? When yes, find it; when no, explain why it is not possible. Use the sensitivity report
32
VARIABLE CELLS Cell Name Final Value Reduced Cost Objective Coefficient Allowable Increase Allowable Decrease $C$12 x1 4,6 0 430 40032
$D$12 x2 9,2 0 210 540 133Explanation / Answer
Answers
Maximal revenue = (4.6 x 430) + (9.2 x 210) = 3910.
Change in maximal revenue if the selling price of the first product is reduced to 390 cannot be computed because the sensitivity report says allowable decrease in the price of the first product is only 32 implying that the current optimum solution would remain so only up to (430 - 32) = 398. Since 390 does not come within that limit, the optimum solution for x1 and x2 can undergo change if the price of first product is brought down to 390 which in turn would affect the revenue which cannot be now predicted.
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