Lp Model - Management Sicience

IMSBD

Coursework

Table of Contents

Introduction        1

LP model and Real world problem        1

Identifying the decision variables        1

Formulating the problem: the objective function and constraint        2

●        Objective functions        2

●        Constraints        2

Solution and interpretation        3

Solving through solver        3

Interpreting the answer        4

Sensitivity analysis        4

Appendix 1 (set up)        6

Appendix 2 (Answer report)        7

Appendix 3(Sensitivity report)        8

Introduction

With the development of the technology and the operating systems being complex, management science, which is also known as operation research, the applications of scientific methods solving optimal solutions in business operation area, is becoming more applicable and attractive. The company that would be addressed in this report is a manufactory company based in Ningbo, which is planning to establish a production line of three products for the next four weeks. This report would apply the liner programing model, one of the most popular model of management science, to give solution on ‘how much to produce’ on each product during each week to maximize the profit, with all the prices costs and constraints are given, and the demand of each product during each week is accurately predicted. Also, this report would give an appropriate sensitivity analysis, concerning several major questions.

LP model and Real world problem

The company addressed faced a complex production planning problem, assuming that all the relevant input data and parameters are known with certainty, the LP model, a technique to reach the optimal whose requirements are represented by linear relationships, will be applied. With three products of different characteristics, a planning for the optimal production mix of products that a company should produce is underlying here. Since the production period is divided into four weeks, the decision maker has to determine the optimal decisions for several periods, here the multi-period application is emphasized. It should be noticed that, different from the solely production mix, a multi-period applications concerns the inventory, which makes the production linked among periods.