Chapter 8
Linear Programming: Sensitivity Analysis
and Interpretation of Solution
Learning Objectives
1.
Understand what happens in graphical solutions when coefficients of the objective function change.
2.
Be able to interpret the range for an objective function coefficient.
3.
Understand what happens in graphical solutions when right-hand sides change.
4.
Be able to interpret the shadow price.
5.
Be able to interpret the range for a right-hand side.
6.
Understand the limitations of classical sensitivity analysis.
7.
Learn how to formulate, solve and interpret the solution for linear programs with more than two
decision variables.
8.
Understand the following terms:
sensitivity analysis
shadow price
reduced cost
sunk cost
relevant cost