Chapter 5

• A parameter is considered sensitive if even a small change in its value can change the optimal solution
• In Analytic Solver, a data cell that contains a parameter which will be systematically varied is known as a parameter cell
• What-if analysis refers to the process of addressing questions that occur after the basic model has been solved to optimality
• The numbers that go into the data cells of a linear programming model are known as the parameters of the model
• In a product mix problem, it is often difficult to estimate the cost of new raw materials
• Analysis that addresses questions about what would happen to the optimal solution if different assumptions were made about future conditions is called what-if analysis
• Sensitivity analysis studies how other plausible values for the probabilities of the states of nature (or for the payoffs) would affect the recommended decision alternative.
• Solver generates Sensitivity Report that reveals the allowable range (increase or decrease) for each coefficient in the objective function
• Shadow price is the rate at which the optimal value of the objective function can be increased by increasing the right-hand side of the constraint by a small amount.
• A soft constraint is constraint that can be violated a little bit without very serious complications
• A hard constraint is a constraint that must be satisfied
• Robust optimization is an optimization procedure that finds a solution that is guaranteed to remain feasible and near-optimal for all plausible combinations of the actual values for the parameters
• A robust solution is found by using robust optimization
• Independent parameters are the parameters whose values are uninfluenced by the values taken on by the other parameters
• The range between the minimum and maximum possible value for a parameter is called the range of uncertainty
• For each functional constraint in ≤ form, use the maximum value for each uncertain coefficient on the left of the ≤ and the minimum value for an uncertain right-hand side
• For each functional constraint in ≥ form, use the minimum value for each uncertain coefficient on the left of the ≥ and the maximum value for an uncertain right-hand side
• For an objective function in maximization form, use the minimum value of each uncertain coefficient
• For an objective function in minimization form, use the maximum value for each uncertain coefficient
• A chance constraint only require that the original constraint will be satisfied with some very high probability while leaving a small chance that it will be violated a little bit
• What-if analysis is analysis done after finding an optimal solution for the original version of the basic model
• The allowable range for an objective function coefficient is the range of value for a particular coefficient in the objective function over which the optimal solution for the original model remain optimal
• Sensitive parameter is considered sensitive if even a small change in its value can change the optimal solution
• The 100 percent rule of simultaneous changes in objective function coefficients provides a convenient way of checking whole ranges of simultaneous changes
• A parameter analysis report is used to show the results in the changing cells and/or the objective cell for various trial values in the parameter cell