definition · term 19 of 25
shadow price.
The change in the optimal objective value when the right-hand side of a constraint grows by one unit.
worked examplethe price of one more unitThe budget constraint has a shadow price of 0.8. One more euro of budget raises the objective by 0.8 units, as long as the same constraints stay binding.
in plain language
If the budget is binding, its shadow price says how much the result would improve with one more euro. A non-binding constraint has a shadow price of zero: more of that resource would not help. Shadow prices come from the dual of a linear program and turn a plan into an argument for where to invest.
shadow price, on your own decision.
Bring one recurring decision. Your planners see the terms of this glossary applied to their own rules and data.
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