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identical, but if the change to the project type 3 was greater, for example 29 units,
the two reports would not be the same. Thus, she can answer the questions without
regard to the change (2 required) in type 3 projects. Since it is difficult to know
how large a change is necessary to change the Reduced Costs and related Allowable
Increase and Decrease , it is wise to re-solve the problem and not take the risk of
missing the change. And now for the answer to Nick’s question about changes in
revenue:
1) The allowable change in the revenue of type 2 projects is from $60,203.39 to
$69,098.31. This range includes the $60,500.00 to $68,000.00 that Nick has pro-
posed; thus, the current solution will not be changed by Nick’s change in type 2
revenue.
2) The allowable change for type 4 projects is $18,750.00 to $29,812.50, which
includes Nick’s lower boundary of $19,000.00, but the upper boundary,
$32,000.00, exceeds the allowable upper boundary. Therefore, if Nick believes
that the revenue can indeed be greater than $29,812.50, then the decision vari-
ables in the current optimal solution will be changed. The current revenue of
$19,500.00 appears to be quite low given Nick’s new range, and he should
probably revisit his point estimate and attempt to improve his estimate.
Finally, Nick has asked Elizabeth to determine the effect of increasing the RHS
of the resource C by 12 hours from 700 to 712. We can see from Exhibit 9.11 that the
Shadow Price for the resource is 699.15, and we are within the allowable Constraint
R.H. Side , 638.5 (700–61.5) and 720.44 (700+20.44). The results will be an increase
to the objective function of $8389.8 (12 699.15).
Exhibit 9.11 Sensitivity report for new solution
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