MSCI 2200 Chapter Notes - Chapter 3: Feasible Region, Shadow Price, Reduced Cost
19 Feb 2017
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Used to determine how the optimal solution is affected by changes, within specified ranges, in: the objective function coefficients, the right-hand side (rhs) values. Important to the manager who must operate in a dynamic environment with imprecise estimates of the coefficients. Allows the manager to ask certain what-if questions about the problem. Change an objective function coefficient: may or may not change optimal solution. Change an existing constraint: rhs change: shift a constraint line, lhs coefficient: change slope; may change size of feasible region. Add a new constraint: may decrease the feasible region (if binding) Remove a constraint: may increase the feasible region (if binding) Kelso(cid:374) (cid:373)akes 2 differe(cid:374)t types of (cid:271)ase(cid:271)all gloves: a regular glove a(cid:374)d a (cid:272)at(cid:272)her"s (cid:373)itt. The firm has 900 hours of production time available in its cutting and sewing department, 300 hours available in its finishing department, and 100 hours available in its packaging and shipping department.
