BU275 Chapter Notes - Chapter 3: Shadow Price, Sensitivity Analysis, Spreadsheet
Document Summary
Bu275 chapter 3: linear programming: computer solution and sensitivity analysis. Sensitivity analysis: computer solution result to experiment with a linear programming model to see what effect parameter changes have on the optimal solution. Simplex method: procedure involving a set of mathematical steps to solve linear programming problems. Only way to solve a linear programming problem in 40s lengthy manual procedure. Mathematical steps programmed in prewritten software packages designed for solution of linear programming problems. Knowledge of simplex method is useful in gaining overall, in-depth understanding of linear programming. Not used often now because of easy and low-cost availability of personal computers and linear programming software. Spreadsheet requires column and row headings for specific model be set up and that constraint and objective function formulas be input in their entirety, as opposed to just model parameters. Advantage: enables problem to be set up in attractive format for reports and presentations, can also be used as a template for other problems.
