Asked by Jonathan Catano on Jun 06, 2024
Verified
The shadow price ________.
A) tells how much the value of the allowable decrease will change as the right-hand side of a constraint is reduced to 0
B) tells how much the value of the allowable increase will change as the left-hand side of a constraint is reduced to 0
C) tells how much the value of the objective function will change as the right-hand side of a constraint is increased by 1
D) tells how much the objective coefficient needs to be reduced in order for a nonnegative variable that is zero in the optimal solution to become positive
Shadow Price
A monetary value assigned to currently unpriced goods or services, reflecting the opportunity cost of reallocating resources.
Objective Function
A mathematical function used in optimization to express the goal of the decision-making problem, often maximizing or minimizing some quantity.
Constraint
A Constraint refers to a limitation or restriction on the variables of an optimization problem, often defining the permissible solutions in mathematical modeling and decision-making processes.
- Understand the concept of shadow prices and their relevance in sensitivity analysis.
Verified Answer
Learning Objectives
- Understand the concept of shadow prices and their relevance in sensitivity analysis.
Related questions
The Acme Oil Company Is a Vertically Integrated Firm ...
Whenever a Constraint Has Negative Slack,the Shadow Price Is Zero
While Shopping, Lucie Sees a Pair of Jeans on Sale ...
Customers Are More Price Sensitive the Higher the Product's Price ...
Dremel Tools Dremel Sells a High Speed Rotary Tool Appropriate ...