Interpreting the simplex tableau- sensitivity analysis, Managerial Accounting

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

 

Posted Date: 12/7/2012 6:43:51 AM | Location : United States







Related Discussions:- Interpreting the simplex tableau- sensitivity analysis, Assignment Help, Ask Question on Interpreting the simplex tableau- sensitivity analysis, Get Answer, Expert's Help, Interpreting the simplex tableau- sensitivity analysis Discussions

Write discussion on Interpreting the simplex tableau- sensitivity analysis
Your posts are moderated
Related Questions
Why is corn so frequently used in typical American foods? In what forms does it take when being part of those foods? How does that relate to the modern epidemic on obesity?

Factory Layout The first stage of implementing the JIT manufacturing techniques is to rearrange the factory floor away from the batch production functional layout towards a pro

Yuma foods acquire Aldo's tortillas several years ago. Aldo's continued to operate as an independent company, except that Yuma foods has exclusive authority over capital investment

Susan works in a real estate office that is equipped with up-to-date copiers, scanners, and printers. She is frequently the only employee working in the office in the evenings and

Financial Accounting Which is concerned with the provision of information to external parties outside the organization? It is the procedure of measuring, classifying, summariz


What is the definition of internal controls

Determine the Price determination process 1) Estimating the demand for the product: the first step in determining the price of a new product is to estimation the anticipated

Granger products had the following transactions for the just completed month. The company had no beginning inventories. a)$75,000 in raw materials were purchased for cash. b) $7

what are the different arguments against direct materials, direct labor, and factory overhead