Chapter 5.2, Problem 2P

a.

Explanation of Solution

Optimum solution

• In this case the reduced cost for ${\text{x}}_{\text{1}}$  is 0.
• The allowable increase for ${\text{x}}_{\text{1}}$ is 20.
• Hence the basic variables remains the same

b.

Explanation of Solution

Shadow price

• The Relevant Shadow Price is ‑$20.
• If demand is decreased by up to 3 cars then the current basis remains optimal.
• So Dual Price may be used to compute new z‑value.

  $NewProfit=\$32,540+\left(-2\right)\left(-20\right)=\$33,580$