DANCEST 805 Lecture Notes - Lecture 17: Sensitivity Analysis, Shadow Price
Document Summary
Linear programming is a powerful quantitative tool used by operations managers and other managers to obtain optimal solutions to problems that involve restrictions and limitations (linear-constrained problems), if an optimum exists. These problems are referred to as constrained optimization problems. Some examples of linear programming applications to such problems: Identifying the best set of worker-job assignments: determining optimal schedules for personnel, developing financial plans, developing optimal production schedules, developing shipping plans than will minimize shipping costs, performing production and service planning. Identifying the optimal mix of products in a factory. There are a number of different programming techniques; two of general-purpose techniques are graphical programming and computer solutions. Linear programming models are mathematical representations of constrained optimization problems. These models have certain characteristics in common, which can be divided into two groups: components and assumptions. Model formulation: list and define the decision variables (d. v. , these typically represent quantities, state the objective function.
