shadow price

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August 31, 2017 at 4:47 am #404505
adarsh1997
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HI John!

I have some issue understanding shadow prices.

In your example, there is a limitation for executive and due to other constraint we are being able to produce only 5E and 30S.

Now lets say, that if in the optimum solution we are being able 10E(the maximum weekly demand). Therefore, does E has a shadow price?

Thanks.
August 31, 2017 at 9:42 am #404572
John Moffat
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Yes it would because it would then be a limiting factor (and it would be worth paying money if paying money would increase the maximum demand).
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