Sensitivity Analysis & Parametric Programming Analysis
Due: March 29
The Alfred family owns 410 acres of farmland in North Carolina on which they grow corn and tobacco. Each acre of corn costs $105 to plant, cultivate, and harvest; each acre of tobacco costs $210. The Alfreds have a budget of $52,500 for next year. The government limits the number of acres of tobacco that can be planted to 100. The profit from each acre of corn is $300; the profit from each acre of tobacco is $520. The Alfreds want to maximize their profit.
a) Define the linear programming model.
b) Solve the model using STORM. Print a detailed report, a sensitivity analysis and a parametric programming analysis.
c) The Alfreds have an opportunity to lease some extra land from a neighbor. The neighbor is offering the land to them for $110 per acre. Should the Alfreds lease the land at that price? What is the maximum price the Alfreds should pay their neighbor for the land, and how much should they lease at that price? Explain your answer to the Alfreds.
d) The Alfreds are considering taking out a loan to increase their budget. For each dollar they borrow, how much additional profit would they make? If they borrowed an additional $1,000, would the number of acres of corn and tobacco they plant change? Explain your answer to the Alfreds.
e) Analyze the remaining information on the STORM printouts for the Alfreds. (There is a lot of information in these reports. Create a clear, easy to read and understand report to the Alfreds with sections and section headings.)