COMMERCE 3QA3 Chapter Notes - Chapter 4: Microsoft Excel, Profit Margin, Carpentry
3 Jun 2016
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Lhs = rhs slack = surplus = 0. Deterministic assumptions: we can determine the data we need with certainty. E. g. prices, cost, fixed resources quantity, constraints, etc. However, real world scenario input data values would change: values estimated incorrectly. E. g. over-estimated selling price by : management interested in getting quick answers from a series of what-if questions. What if less money spent on advertising, sales decrease 10%, etc. Gives ranges of values of the ofc and rhs constraint over which the optimal solution does not change. If we have what-if analysis for 10 different prices, we end up having 10 lp models. Sensitivity analysis always corresponds to an optimal solution. You must know what the optimal solution is in order to do a sensitivity analysis. Does not examine the effect of changes in the constraint coefficients (just constraint value) Report for a larger problem with a maximization objective function. Report for a larger problem with a minimization objective function.
