Interpreting the simplex tableau- sensitivity analysis, Managerial Accounting

Assignment Help:

INTERPRETING THE SIMPLEX TABLEAU

We can now see that our attention must be directed to reading, interpreting and analyzing the (simplex) results. It is erroneous, however, to assume that only one can interpret the simplex tableau without having adequate knowledge of how and why the simplex method works.

It will be disappointing to you to think that all we can get out of the optimum simplex tableau is a list of variables and their optimum values. The fact is that the simplex tableau is "loaded" with important information, the least of which are the optimum values of the variables. The following list summarizes the information that can be obtained from the simplex tableau, either directly or with simple additional computations.

1. The optimum answer
2. The position of resources
3. The unit value of each resource
4. The sensitivity of the optimum answer to changes in availability of resources, coefficients of the objective function, and usage of resources by activities.

The first three items are readily available in the optimum simplex tableau. The fourth item requires additional computations that are based on the information in the optimum solution.

To demonstrate these items we use the same example, which we repeat here for convenience.

The optimum tableau is specified as:

1596_table.jpg



Maximise:    Z = 3XE + 2X1

Subject to:    XE + 2X1 + S1 = 6

2XE + 2X1 + S2 = 8
-XE + 2X1 + S3 = 1
X1 + S4 = 2

X1, XE, S1, S2, S3, S4 ≥ 0

 


Related Discussions:- Interpreting the simplex tableau- sensitivity analysis

Motives for conducting cash balances, In this section we have discussed the...

In this section we have discussed the motives for conducting cash balances. In addition, we have discussed cash deficit or surplus situation and how it can be contained by the use

Kinematic pair-kinematic element-resistant body , Kinematic Pair: A pair ...

Kinematic Pair: A pair is a joint of two elements which permits relative motion. The relative motion among the elements of links that built a pair is needed to be fully constrain

Summary journal entries, Stine Company uses a job order cost system. On May...

Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,730 and two jobs in process: Job No. 429 $2,150, and Job No. 430

Break event, The Braggs & Struttin'' Company manufactures an engine for car...

The Braggs & Struttin'' Company manufactures an engine for carpet cleaners called the "Snooper." Budgeted cost and revenue data for the "Snooper" are given below, based on sales of

What is behind the wave of mergers in the banking industry, What is behind ...

What is behind the wave of mergers in the banking industry? A: Several economic factors have caused banking institutions to merge over the past several years. These factors inc

Show process of pricing under decline stage, Q. Show process of Pricing und...

Q. Show process of Pricing under decline stage? In this stage the producer should follow the pricing strategy which may fetch revenue not less than its cost of production. If h

State the important assumptions of break-even analysis, Assumption of break...

Assumption of break even analysis The break even analysis is based upon the following assumptions : 1) All elements of cost, i.e., production , administration and selling di

Define performance budgeting according u.s. bureau of budget, Define perfor...

Define performance budgeting according U.S. bureau of budget U.S. bureau of budget defines performance budget as one which presents purposes and objectives for which funds are

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd