How does the shadow price in sensitivity analysis indicate in operations research?
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In operations research, the shadow price in sensitivity analysis indicates the change in the objective function for a one-unit increase in the right-hand side of a binding constraint, reflecting the marginal value of the resource and helping guide decisions on resource allocation and constraint adjustments.
In Operations Research, the shadow price in sensitivity analysis indicates the marginal value of a resource or constraint. Specifically, it represents the amount by which the objective function profit or cost, would improve or worsen if there were a one-unit increase in the right-hand side of a binding constraint, assuming all other factors remain constant.