Question
Consider the LP model from your course packet for a venture capital firm where the decision variables are S = proportion of investment in Security
Consider the LP model from your course packet for a venture capital firm where the decision variables are S = proportion of investment in Security Systems and M = proportion of investment in Market Analytics. The first 3 constraints limit the number of dollars invested each year and the last 2 constraints limit the maximum investment proportions. An Excel Solver sensitivity report is provided below:
a. The OFCR for proportion of investment in Market Analytics is ____________________________.
b. The RHSR for maximum proportion of investment in Market Analytics is ________________________.
For the items below, determine the new optimal NPV based only on the information provided in the Sensitivity Report, if possible. If it is not possible to do so, then write CD for cannot determine. Consider each item independently and show your work.
New Optimal NPV
c. The objective function coefficient of Security Systems investment proportion decreases | |
from $1,800,000 to $1,500,000.
| ___________________ |
d. The RHS of the constraint for Year 1 investment decreases from $800,000 to $750,000.
| ___________________ |
e. The RHS of the constraint for Year 2 investment decreases from $700,000 to $650,000.
| ___________________ |
f. The RHS of the constraint for Year 3 investment increases from $500,000 to $510,000.
g. The RHS of the constraint for maximum proportion of investment in Security Systems | ___________________ |
decreases from 1 to 0.7. | ___________________ |
Variable Cells Final Reduced Objective Allowable Allowable Cost Coefficient Increase Decrease 0 1,800,000 120,000 800,000 0 1,600,000 1,280,000 100,000 Cell B$5 Pro Name Value of investment: S of investment: Market Analytics 0.61 0.87 y Systems $C$5 Pro Constraints Final Shadow Constraint Allowable Allowable R.H. Side Increase Decrease 60,000 30,435 38,889 0.39 0.13 Cell Name Value Price 2.78 22,951 1E+30 25000 1E+30 E+30 SD$12 Year 1 investment $D$13 Year 2 investment 800,000 669,565 500,000 0.61 0.87 800,000 700,000 500,000 D$14 Year 3 investment S Market Analytics max 0.52 SD$15 SD$16 Systems max tion Note that these results have been rounded to simplify calculations and the optimal net present value (NPV) for the investments is (approximately) S2490.000 Variable Cells Final Reduced Objective Allowable Allowable Cost Coefficient Increase Decrease 0 1,800,000 120,000 800,000 0 1,600,000 1,280,000 100,000 Cell B$5 Pro Name Value of investment: S of investment: Market Analytics 0.61 0.87 y Systems $C$5 Pro Constraints Final Shadow Constraint Allowable Allowable R.H. Side Increase Decrease 60,000 30,435 38,889 0.39 0.13 Cell Name Value Price 2.78 22,951 1E+30 25000 1E+30 E+30 SD$12 Year 1 investment $D$13 Year 2 investment 800,000 669,565 500,000 0.61 0.87 800,000 700,000 500,000 D$14 Year 3 investment S Market Analytics max 0.52 SD$15 SD$16 Systems max tion Note that these results have been rounded to simplify calculations and the optimal net present value (NPV) for the investments is (approximately) S2490.000
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