COMMERCE 3QA3 Study Guide - Midterm Guide: Shadow Price, Feasible Region, Work Breakdown Structure

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 3QA3
• Professor: John Miltenburg

Document Summary

Feasible region all points that satisfy the constraints. Corner points (1-5) where the constraints intersect in the feasible region. Sensitivity analysis - gives ranges of values of the objective function coefficients and the constraint rhs over which the optimal solution does not change. Sensitivity analysis for constraints: binding or nonbinding, slack or surplus for a constraint. Shadow price for a non-negativity constraint (= reduced cost for a decision variable: range of feasibility for the right-hand-side (rhs) of a constraint, range of optimality for the coefficient of a decision variable in the objective function. P the optimal solution is furthest from the origin (check answer algebraically. If constraint is not binding", slack or surplus 0. If constraint is binding", slack or surplus = 0. Constraint is binding - lhs = rhs slack or surplus = 0. Constraint is nonbinding - lhs rhs slack or surplus >0. The shadow price for a binding constraint 0.