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

Manufacturing Budget Analysis, Tom Emory and Jim Morris strolled back to th...

Tom Emory and Jim Morris strolled back to their plant from the administrative offices of Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the company''s

Cost analysis., monetaryor non monetary which will arise as aresult of impl...

monetaryor non monetary which will arise as aresult of implemenntinng the project

The roles of management accounting within a company., Review the roles of m...

Review the roles of management accounting within a company. 1.What is the most important role of management accounting? 2.How is that different than financial accounting? 3.What is

State the price determination under the market condition, State the price d...

State the price determination under the market condition The price determination under the following market condition is as follows: 1) Pure competition: in this situation

Identify the management assertions, Identify the management assertions rela...

Identify the management assertions related to each of the fictitious supplier credits and unrecorded amounts in accounts payable using the facts presented

Correlation coefficient, Correlation coefficient (r) Correlation coeffi...

Correlation coefficient (r) Correlation coefficient measures the degree of association between two variables such as the cost and the activity level. r = nΣxy   -  Σx  Σy

Explain the shut down cost, Explain the Shut down cost A cost which wi...

Explain the Shut down cost A cost which will be still be required to be incurred even though a plant is closed or shut down for a temporary period. Ffor example the cost of

Differential analysis, Barker Company has a single product called a Zet. Th...

Barker Company has a single product called a Zet. The company normally produces and sells 80,000 Zets each year at a selling price of $40 per unit. The company’s unit costs at this

Multiple regression, MULTIPLE REGRESSION The least square regression eq...

MULTIPLE REGRESSION The least square regression equation discussed above was based on the assumption that total cost was determined by only one activity based variable. However

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