Sensitivity analysis report-explain dual value-shadow value/ Operation Management
An (extremely simplified) steel company must decide how to allocate next week’s time on a rolling mill. The mill takes unfinished slabs of steel as input, and can produce either of two semi-finished products, which we will call bands and coils. (The terminology is not entirely standard) The mill’s two products come off the rolling line at different rates: Tons per hour: Bands 200 Coils 140 and they also have different profitabilities: Profit per ton: Bands $25; Coils $30 To further complicate matters, the following weekly production amounts are the most that can be justified in light of the currently booked orders: Maximum tons: Bands 6,000 Coils 4,000. The question facing the company is as follows: If 40 hours of production time are available this week, how many tons of bands and how many tons of coils should be produced to bring in the greatest total profit? Solve it using: (a) Graphical Method (b) Using MS Excel Solver (c) Also generate Sensitivity Analysis report. On the report explain the dual value/Shadow value
