Hi, Love your videos, on Shadow Pricing, you observed that "Shadow Price is the most we would be willing to pay for one additional unit", however when you are calculating the shadow price you are changing 80kgs to 81kgs, 1kg of material is not going to make one additional unit. Would it not make more sense to change 80kgs to 84kgs (4 kgs needed to make 1 Executive chair), and 180hrs to 186hrs (6 hrs per exec chair) i.e Contribution 80kgs & 180hrs = 225 (for optimum use), and for one additional unit 84kgs & 180hrs (assuming one more exec chair) = contribution of 234. Subtracting 225 from 234 = 9, is this not the most we would be wiling to pay for one additional unit of Exec chair?
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Thabo·
Thanks very much
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janetbrown1972·
Brilliant explanation of this topic, thank you very helpful :)
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bineeshaleyas·
Great lesson. Very helpful. Thanks
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maureen66·
Found this section on linear programming very helpful. Helped me to understand it much better.
Thank you
Thank you