Abstract
This study analyzes the sensitivity analysis using shadow price of plastic products. This is based on a research carried out to study optimization problem of BOPLAS, a plastic industry in Maiduguri, North eastern Nigeria. Simplex method of Linear programming is employed to formulate the equations which were solved by using costenbol software. Sensitivity analysis using shadow price reveals that the price of wash hand bowls is critical to the net benefit (profit) of the company.
Highlights
Shadow prices: the simplex-method provides more useful information than just the optimal solution to a linear programming problem
Sensitivity analysis using shadow price reveals that the price of wash hand bowls is critical to the net benefit of the company
Since the maximum time the company used was 8 hours per day, and the cycle time for water jugs and wash hand bowls are 36 units and 35.5 units, the optimum number of the two products to be produced per day will be, 966.15 units for water jugs and 1572.457 units for wash hand bowls
Summary
Shadow prices: the simplex-method provides more useful information than just the optimal solution to a linear programming problem. The value of each resource in terms of its contribution to profits and overheads is determined. The net benefit (or cost) of adjusting the amount of resource can be determined. The relative value of a resource with respect to the objective function in a linear programming problem is called its shadow price. It is the amount of change in the objective function per unit change in its right-hand side value
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