MGOC10H3 Chapter Notes - Chapter 3: Sensitivity Analysis, Sunk Costs
Document Summary
Chapter 3 linear programming: sensitivity analysis and interpretation of. 3. 2 graphical sensitivity analysis for linear programming problems with two decision variables, graphical solution methods can be used to perform sensitivity analysis on the objective function coefficients and the right-hand-side values for the constraints. Objective function coefficients range of optimality the range of values over which an objective function coefficient may vary without causing any change in the values of the decision variables in the optimal solution. Managerial attention should be focused on those objective function coefficients that have a narrow range of optimality and coefficients near the end points of the range. When the cost of a resource is sunk, the dual value can be interpreted as the maximum amount the company should be willing to pay for one additional unit of the resource.
