Question

Why are dual price interpretations not always accurate? **Need more than 2 sentences explain why**

Why are dual price interpretations not always accurate?

**Need more than 2 sentences explain why**

Homework Answers

Answer #1

The dual prices are some of the most interesting values in the solution to a linear program. A dual price is reported for each constraint. The dual price is only positive when a constraint is binding.

The dual price gives the improvement in the objective function if the constraint is relaxed by one unit.

In the case of a less-than-or-equal constraint, such as a resource constraint, the dual price gives the value of having one more unit of the resource represented by that constraint. In the case of a greater-than-or-equal constraint, such as a minimum production level constraint, the dual price gives the cost of meeting the last unit of the minimum production target.

The units of the dual prices are the units of the objective function divided by the units of the constraint. Knowing the units of the dual prices can be useful when you are trying to interpret what the dual prices mean.

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