- December 12, 2010 at 2:22 am
- Topics: 19
- Replies: 41
there r around 4 to 5 constraints in a question
labour – 4s + 2b = 26000
material 5s + 2b = 30000
calculate shadow price for labour
so we ll take 2 equations, labour for sure
which will be the second one?
coz answer as to contribution is different on using both 2nd and 3rd equations
so value of s and b by using i and ii will be different and by using i and iii will be different
please adviseDecember 12, 2010 at 3:26 am
- Topics: 40
- Replies: 59
Why do you need a second equation. For Shadow pricing you will write the
Labour equation as : 4s + 2b = 26001
Now you have the value of s, just substitute it in the above equation. 4×6000 +2b =26001
Now you will get the value of b, Substitute this value of b and s in the objective function/maximize contribution equation, and you will get a new contribution,
Then all you have to do is compare this contribution with the contribution at the optimum level of prodution, the difference will be The Shadow Price for 1 extra unit of labour.December 12, 2010 at 10:48 am
- Topics: 7
- Replies: 2
or u could calculate the shadow price by simultaneous equations..
solve the equations to get s and b..
then get the contribution of the above units.. and compare it with the contribution of the previous units, that will give u your shadow price.
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