MS&E 107 Lecture Notes - Lecture 13: Decision-Making, Shadow Price, Umber
8 Nov 2016
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Classes of dna in optimization : product mix problem, building different cars from different materials, decision making textbook: boat production and mixes of raw materials for each boat type (boats. xls) Total profit is sumproduct formula of profit per unit and production quantity. Buy boats and then take it apart, get raw materials but lose money. But sometimes might not work - might run out of another material before. Maximize both things - maximize profit and maximize number of engines used. Shadow price: if we had one more unit of fiberglass, our profit goes up by 120 dollars. Dual values: same concept of shadow price - we were working with this in the boat example. Relax a constraint - try different things (video games) Instead of 1380 on hand have 1381 fiberglass units, optimize again and compare the difference in profit.
