Operations Management Exam 1 Rutgers ELY
Sensitivity analysis is a way to deal with uncertainty in linear programming models. True False
True
LP
a model that consists of linear relationships representing a firm's decision(s), given an objective function and resource constraints;
Sensitivity analysis measures
uncertainty
Properties of LP Problems
-proportionality -additivity -divisibility -certainty
Inputs
Are resources used in the process of production
___________________ refers to the ability of an organization to sell products in a market. Please choose the option that best fits the empty space above. A. Total Quality Management B. Productivity C. Optimal profitability D. Business competitiveness E. None of the above
Business Competitiveness
shadow price
Defined as the marginal value of one additional unit of resource: how much an organization is willing to pay for it Z / q
If the objective function slope is exactly the same as one of the constraints and this specific constraint is redundant, we have a case of multiple optimal solutions. True False
False
Sensitivity ranges can be computed only for the coefficients of the objective function. True False
False
Slack variables are only associated with maximization problems. True False
False
The break-even point is the volume that the profit is positive (greater than zero) True False
False
the correct way to implement a sensitivity analysis for the second coefficient of the objective function is to vary not only the second coefficient but also the first one (at the same time). True False
False
If by processing the same amount of inputs used in the past a company is now capable to produce a(n) ________ amount of outputs, it means that an improvement of productivity was achieved. A. greater B. similar C. lower D. exactly the same E. none of the above
Greater
Australian road freight company Linfox uses aerodynamic trucks and trailers to reduce fuel consumption. This is a case of generating higher A. productivity B. competitiveness C. quality D. stochastic simulation E. none of the above
Productivity
Sensitivity Analysis
Sensitivity analysis determines the effect on the optimal solution, for example, due to changes in coefficients of the objective function and/or constraints
Fixed cost includes A. raw materials and resources B. staff and management salaries C. material handling and freight D. direct labor and packaging E. none of the above
Staff and management salaries
Break-Even Point
TOTAL REVENUE (TR) = TOTAL COST (TC) TC = FC + vc * v
Unbounded
There is a feasible region, however it continues on indefinitely. There is no defined region (ex. Quadrilateral, triangle, etc.) after graphing. The objective function can continue to move towards no specific one optimal solution point.
Infeasible
There is no feasible region (no common shaded region) after graphing all the constraint lines. This can be found in both min and max problems.
If one of the coefficients of the objective function is changed to a value outside of its respective sensitivity range (greater than the upper limit or lower than the lower limit), the optimal solution will be different than the one originally obtained before the change is implemented. True False
True
The optimal solution for a company that is able to produce two different products (x1 and x2) is x1 = 0 and x2 = 6. The best strategy for this company is to produce only x2. True False
True
Multiple optimal solutions
Use the slope equation (m = -A / B) to compare the slopes of the objective function and the slopes of the constraints - IMPORTANT: THIS IS ONLY VALID WHEN THE CONSTRAINT LINE IS USED TO CREATE THE FEASIBLE REGION. Just because the slopes may be the same, if the constraint line is irrelevant to the feasible region, there is only one optimal solution! - "Redundant" = not used to define the feasible region
Principles of Management Science
a scientific approach to solve management problems
Slack and surplus both do not
affect the objective function
C1 and C2
are the variables for the OBJECTIVE FUNCTION used to find the ranges where the OPTIMAL SOLUTION REMAINS THE SAME
Q1 and Q2
are the variables for the RIGHT HAND CONSTRAINTS used to find the ranges where the SHADOW PRICE REMAINS THE SAME
Another name for shadow price is
dual variable
Productivity
is a measure of efficiency— the amount of output produced compared to the amount of input required in production.
The sensitivity range for a constraint quantity value
is also the range over which the shadow price is valid
Transformation
is the conversion of inputs (resources) into outputs (goods or services)
The sensitivity range for an objective function coefficient
is the range of values over which the current optimal solution point remains optimal
Model Constraints
linear relationship that represents a restriction on decision making;
Objective Function
linear relationship that reflects the objective of an operation
decision variables
mathematical symbols that represent levels of activity;
Parameters
numerical values that are included in the objective functions and constraints;
The sensitivity range for an objective function coefficient is the range of values over which the current __________________ remains the same. A. shadow price B. right hand side C. optimal solution D. Z E. None of the above
optimal solution
Outputs
refer to the end result of an organization's efforts— the service or product that is delivered or provided to the consumer
Business competitiveness
refers to the ability of an organisation to sell products in a market
Surplus
used with a greater than sign use a -
Slack variables
variables that eliminate inequalities in linear programming problems used with a less than sign use a +