A farmer has a 40-acre farm in Georgia. The farmer is using linear programming to determine how many acres of corn, peanuts, and cotton to plant. Each crop requires labor, fertilizer, and insecticide, and the farmer has formulated the linear programming model below, and solved it in excel solver, with the results and sensitivity report given below. Note that the model is a profit maximization problem. The farmer has estimates of revenue per acre for the three crops, and has estimated the cost per acre for each crop, where the costs included are, among other things, the labor, fertilizer, and insecticide costs. Using the revenue and cost estimates, he or she has calculated the profit per acre for each crop. The farmer owns the land and considers that a fixed cost, not a variable cost, so that the cost of land is not included in the profit calculations, but the costs of labor, fertilizer, and insecticide are included.
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Sensitivity report analysis is integrated.