The reduced cost for a decision variable that appears in a Sensitivity Report refers to the __________ of the nonnegativity constraint for that variable.
A)range of optimality
B)slack value
C)shadow price
D)range of feasibility

Question

Quizplus · Accepted Answer

The shadow price in a sensitivity report refers to the amount by which the objective function coefficient for a particular constraint can change before the optimal solution changes. The question is asking about the reduced cost, which is the amount by which the objective function coefficient for a decision variable can be increased before it enters the basis. This concept is not related to the nonnegativity constraint, but rather to the objective function and the simplex algorithm. Therefore, the correct answer is C, as the shadow price is the closest concept to the question.

The Reduced Cost for a Decision Variable That Appears in a Sensitivity