Chapter 8 – LP Sensitivity Analysis Shadow Prices

These flashcards cover key terms and definitions from the lecture on sensitivity analysis and shadow prices in linear programming.

Sensitivity Analysis

A method to analyze how the different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Shadow Prices

The value of an additional unit of resource, representing the amount by which the objective function would improve if the resource were available.

Right-Hand Side (RHS) Coefficients

Values in a constraint that define limits; changes to these can affect the feasible region.

Range of Feasibility (ROF)

The range in which the RHS coefficients can be changed without altering which constraints are binding in the optimal solution.

Binding Constraint

A constraint that is satisfied as an equality at the optimal solution, meaning it directly affects the feasible region.

Non-Binding Constraint

A constraint that does not influence the optimal solution because it has slack.

Objective Function

The function that one aims to maximize or minimize in a linear program.

Maximization Problem

A type of linear programming problem where the goal is to find the maximum value of the objective function.

Linear Program

Mathematical model that seeks to maximize or minimize a linear function subject to linear equality and inequality constraints.

Dual Value

Another term for shadow price, representing the rate of improvement in the objective function for a unit increase in the RHS.