Class 5 Worksheet

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Bentley University *

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610

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Mechanical Engineering

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Jan 9, 2024

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docx

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4

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Class 5 Sensitivity Analysis Example 1: A pen manufacturer makes three items – a ballpoint pen, a mechanical pencil, and a fountain pen. All are available only in black and sell in specialty stores and online. The per-unit profit of the items is $3.00 for the ballpoint pen, $3.00 for the mechanical pencil, and $5.00 for the fountain pen. These values take into account labor, cost of materials, packing, quality control, and so on. The company is currently trying to plan its production mix for each week. They believe they can sell all the pens and pencils they produce, but production is limited by the available resources. They are able to get at most 1000 ounces of plastic, 1200 ounces of chrome and 2000 ounces of stainless steel each week. Each ballpoint pen requires 1.2 ounces of plastic, 0.8 ounces of chrome, and 2 ounces of stainless steel. Each mechanical pencil requires 1.7 ounces of plastic, no chrome, and 3 ounces of stainless steel. Each fountain pen requires 1.2 ounces of plastic, 2.3 ounces of chrome and 4.5 ounces of stainless steel. Other resources such as labor time available are not taken into consideration at this point. a) Formulate (algebraic formulation) the LP that finds the production plan that maximizes profit. b) Use Analytic Solver to find the solution and generate the sensitivity report. c) Due to some unexpected cost increases, the manufacturer realizes that the profit on the mechanical pencil may actually be less than $3.00. If the actual profit is $2.00 on the pencil, will they have to change the production schedule? d) If the profit on the ballpoint pens is $3.50 will the production schedule change?
e) If 500 ounces of additional stainless steel are available for 0.60 more than what is currently being paid, should the company buy additional steel at this price? f) Based on the allowable ranges, which unit profit is most sensitive? g) If additional plastic is available at $1.00 over the usual cost of $5.00 per ounce, if the manufacturer agrees to purchase 500 ounces. Should the plastic be purchased? Does the answer change if they can purchase less than 500 ounces at this price? h) If the manufacturer discovers that only 1,000 ounces of chrome are available this week, what happens to the profit? i) Due to some unexpected cost savings, the profits on the ballpoint and fountain pens may actually be larger than expected. If the profit on the ballpoint pens is $3.50 and the profit on the fountain pens is $5.50, will the production schedule change?
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