ECON 3300

For a maximization problem, the shadow price measures the ________ in the value of the optimal solution, per unit increase for a given ________. A) decrease, resource B) increase, parameter C) improvement, resource D) decrease, parameter

C) improvement, resource

) Sensitivity analysis is the analysis of the effect of ________ changes on the ________. A) price, company B) cost, production C) parameter, optimal solution D) constraint, parameter

C) parameter, optimal solution

For a linear programming problem, assume that a given resource has not been fully used. We can conclude that the shadow price associated with that constraint A) will have a positive value. B) will have a negative value. C) will have a value of zero. D) could have a positive, negative or a value of zero. (no sign restrictions).

C) will have a value of zero.

For a resource constraint, either its slack value must be ________ or its shadow price must be ________. A) negative, negative B) negative, zero C) zero, zero D) zero, negative

D) zero, negative

A change in the value of an objective function coefficient will always change the value of the optimal solution.

FALSE

Sensitivity analysis can be used to determine the effect on the solution for changing several parameters at once.

FALSE

Sensitivity ranges can be computed only for the right-hand sides of constraints.

FALSE

The sensitivity range for an objective function coefficient is the range of values over which the profit does not change.

FALSE

When the right-hand sides of two constraints are both increased by one unit, the value of the objective function will be adjusted by the sum of the constraints' prices.

FALSE

________ is the analysis of the effect of parameter changes on the optimal solution

Sensitivity analysis

If we change the constraint quantity to a value outside the sensitivity range for that constraint quantity, the shadow price will change.

TRUE

Sensitivity analysis determines how a change in a parameter affects the optimal solution.

TRUE

The sensitivity range for an objective function coefficient is the range of values over which the current optimal solution point (product mix) will remain optimal.

TRUE

The shadow price for a positive decision variable is 0.

TRUE

The sensitivity range for a(n) ________ coefficient is the range of values over which the current optimal solution point (product mix) will remain optimal.

objective function

The reduced cost (shadow price) for a positive decision variable is ________.

zero