Sensitivity Analysis

based on:
Bradley, Hax, and Magnanti; Applied
Mathematical Programming, Addison-Wesley,
1977
Chapter 3, sections 3.1, 3.2, 3.3, 3.4 and 3.5

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Sensitivity Analysis

We have already been introduced to sensitivity analysis via the geometry of a simple example.
We saw that the values of the decision variables and those of the slack and surplus variables
remain unchanged even though some coefficients in the objective function are varied.
We also saw that varying the righthand-side value for a particular constraint alters the optimal
value of the objective function in a way that allows us to impute a per-unit value, or shadow
price, to that constraint. These shadow prices and the shadow prices on the implicit nonnegativity
constraints, called reduced costs, remain unchanged even though some of the righthand-side
values are varied.
Since there is always some uncertainty in the data, it is useful to know over what range and under
what conditions the components of a particular solution remain unchanged.
Further, the sensitivity of a solution to changes in the data gives us insight into possible
technological improvements in the process being modeled. For instance, it might be that the
available resources are not balanced properly and the primary issue is not to resolve the most
effective allocation of these resources, but to investigate what additional resources should be
acquired to eliminate possible bottlenecks. Sensitivity analysis provides an invaluable tool for
addressing such issues.

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Sensitivity Analysis
Learning Objectives
Define shadow price of a constraint.
Calculate shadow prices using only the initial and final simplex tableaux.
Define reduced cost of a decision variable (activity).
Calculate reduced costs using only the initial and final simplex tableaux.
Price out an activity.
Calculate the reduced cost of a variable using the shadow prices and the problem data.
Calculate shadow prices using the problem data and the optimal basis.
Determine how much the objective function coefficients can vary without changing the values of the
decision variables in the optimal solution.
Determine which variables will enter and leave the basis when the new cost coefficient reaches either of
the extreme values of the range.
Determine how much the right-hand-side values can vary such that the variables that constitute the basis
remain the same.
Determine which variables will enter and leave the basis when the new right-hand-side reaches either of
the extreme values of the range.
Identify alternative optimal solutions when they exist.
Identify alternative optimal shadow prices when they exist.
Analyze Solver (Microsoft Excel) sensitivity report and identify there shadow prices, reduced costs, and
variation ranges for objective coefficients and right-hand-sides.
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Production Planning at BA with Favaios Bottles

The factory of Barbosa & Almeida (BA) in Avintes produces glass containers through mould
injection.
BA recently won two new clients and intends to assign this production to one of its furnaces. The
orders were of bottles of Sandeman Ruby Port (75cl), one liter bottles of olive oil Oliveira da Serra
and one liter bottles of Favaios Moscatel. The customers buy all the bottles that BA can produce.
Due to differences in the production (number of cavities and different cycle times), each batch of
portwine bottles takes 50 hours to produce, whereas each batch of oil bottles requires only 30
hours and a batch of favaios takes 50 hours to produce. There are a total of 2000 hours available
at the oven.
Moreover, there are restrictions in the storage capacity of the bottles prior to their dispatch. The
warehouse has 300m3 available and each batch of portwine bottles occupies 6m3 of warehouse
space, each batch of bottles of olive oil holds 5m3 and each batch of favaios holds 6m3 .
Finally we must also consider the capacity available in the decoration sector (e.g. labels,
packaging), which is 200 hours. The portwine bottles spend 3 hours per batch, the olive oil
bottles 5 hours per batch and the favaios bottles also 5 hours per batch.
Barbosa & Almeida wants to maximize the profit from these two orders, knowing that the profit
per batch is 50e 60e and 20e, respectively.

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Production Planning at BA with Favaios Bottles

Decision variables
xVP Number of batches of Vinho do Porto Ruby Sandeman bottles to produce;
xA Number of batches of Azeite Oliveira da Serra bottles to produce;
xF Number of batches of Favaios bottles to produce.

Objective:
max

Z = 50xVP + 60xA + 20xF

Subject to:
50xVP

+30xA

+50xF 2000

6xVP

+5xA

+6xF 300

(space in the warehouse)

3xVP

+5xA

+5xF 200

(capacity in the decoration sector)

xVP ,

xA ,

(time in the oven)

xF 0

In this model xVP , xA and xF may not be integer.

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Production Planning at BA
Producing Favaios Bottles
s1
s2
s3
Z

s1
s2
xA
Z

xVP
s2
xA
Z

xVP
50
6
3
50

xA
30
5
5
60


xF
50
6
5
20

s1
1
0
0
0

s2
0
1
0
0

xVP

xA

xF

s1

s2

s3

32
3

0
0
1
0

20
1
1
40

1
0
0
0

0
1
0
0

6
1

xA
0
0
1
0

xF

s1
1
32
3
32
3
160
7
16

s2
0
1
0
0

3
5

14

xVP
1
0
0
0

(FEUP | DEGI)

5
8
78
5
8
48 34

s3
0
0
1
0

1
5

12

s3
3
16
7
16
5
16

9 83

2000
300
200
0

800
100
40
2400

25
25
25
2750

Operations Research

xA enters the basis because:

max(50, 60, 20) = 60
s3 leaves the basis because:
300 200
200
min( 2000
30 , 5 , 5 ) = 5

xVP enters the basis because:

max(14) = 14
s1 leaves the basis because:
100 40
800
min( 800
32 , 3 , 3 ) = 32 = 25
5

All the coefficients of the objective

function are 0.
Optimal solution:
(xVP , xA , xF ) = (25, 25, 0) and
Z = 2750

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Some remarks about the sensitivity analysis

We wish to analyze the effect on the optimal solution of changing various elements of the
problem data without re-solving the linear program or having to remember any of the
intermediate tableaux generated in solving the problem by the simplex method.
The type of results that can be derived in this way are conservative, in the sense that they
provide sensitivity analysis for changes in the problem data small enough so that the same
decision variables remain basic, but not for larger changes in the data.

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Shadow Prices
Reduced Costs

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Production Planning at BA
Producing Favaios Bottles
xVP
1

xA
0

xF

s1

xVP

5
8

1
32

s2
0

s3
3
16

25

s2

78

3
32

7
16

25

xA

5
8

3
160

5
16

25

48 34

7
16

9 38

2750

The complete optimal solution for the problem is

(xVP , xA , xF , s1 , s2 , s3 ) = (25, 25, 0, 0, 25, 0) and Z = 2750
The binding constraints in this optimal solution are therefore:
the first one (time in the oven, s1 = 0);
the third one (capacity in the decoration sector, s3 = 0);
and xF = 0.
50xVP
3xVP

+30xA
+5xA

+50xF
+5xF
xF

(FEUP | DEGI)

=
=
=

2000
200
0

(xVP , xA , xF ) = (25, 25, 0)

Z = 2750

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Shadow Price
Definition
The shadow price associated with a particular constraint is the
change in the optimal value of the objective function per unit
increase in the righthand-side value of that constraint, all other
problem data remaining unchanged.

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Production Planning at BA
Producing Favaios Bottles Shadow Prices
What will be the increase of the profit per unit increase in the oven time?
50xVP
3xVP

+30xA
+5xA

50xVP
3xVP

+30xA
+5xA

50xVP
18xVP

+50xF
+5xF
xF

=
=
=

2001
200
0

xF

=
=
=

2001
200
0

xF

=
=
=

2001
1200
0

+30xA
+30xA

xVP
xA
xF

(FEUP | DEGI)

=
=
=

1
25 32
24 157
160
0

1
, 24 157
, 0)
(xVP , xA , xF ) = (25 32
160
1
7
Z = 50 25 32
+ 60 24 157
+ 20 0 = 2750 16
160
7
2750 =
Profit increase: 2750 16

7
16

xVP

xA

xF

s1

s2

s3

xVP

5
8

1
32

3
16

25

s2

7
8

3
32

7
16

25

3
160

5
16

25

7
16

9 3
8

2750

xA

5
8

48 3
4

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Production Planning at BA
Producing Favaios Bottles Shadow Prices
What will be the increase of the profit per unit increase in the decoration capacity?
50xVP
3xVP

50xVP
3xVP

50xVP
18xVP

+30xA
+5xA

+50xF
+5xF
xF

=
=
=

2000
201
0

xF

=
=
=

2000
201
0

xF

=
=
=

2000
1206
0

+30xA
+5xA

+30xA
+30xA

xVP
xA
xF

(FEUP | DEGI)

5
, 25 16
, 0)
(xVP , xA , xF ) = (24 13
16
13
Z = 50 24 16
+ 60

5
16

+ 20 0 = 2759 38

Profit increase: 2759 38 2750 = 9 38

xVP
xVP

xA

xF

s1

s2

s3

5
8

1
32

3
16

25

3
32

7
16

25

s2

7
8

24 13
16

xA

5
8

3
160

5
16

25

83
25 240

48 3
4

7
16

9 3
8

2750

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Each constraint of a problem has as shadow

price.

The shadow price for a constraint is the negative of the coefficient

of the appropriate slack (or artificial) variable in the objective
function of the final tableau.

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Reduced Cost
Definition
The reduced cost associated with the nonnegativity constraint for
each variable is the shadow price of that constraint (i.e., the
corresponding change in the objective function per unit increase in
the lower bound of the variable).

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Production Planning at BA
Producing Favaios Bottles Reduced costs
What will be the reduction of the profit if we must produce at least one batch of favaios bottles?
50xVP
3xVP

+30xA
+5xA

50xVP
3xVP

+30xA
+5xA

50xVP
3xVP

+30xA
+5xA

+50xF
+5xF
xF

=
=
=

2000
200
1

+50
+5
xF

=
=
=

2000
200
1

xF

=
=
=

1950
195
1

xVP
xA
xF

(FEUP | DEGI)

=
=
=

195/8
195/8
1

195
, 1)
8
195
+ 20
8

,
(xVP , xA , xF ) = ( 195
8
Z = 50

195
8

+ 60

1 = 2701, 25

Profit reduction:
2750 2701, 25 = 48, 75 = 48 43
xVP

xA

xF

s1

s2

s3

xVP

5
8

1
32

3
16

25

s2

7
8

3
32

7
16

25

3
160

5
16

25

7
16

9 3
8

2750

xA

5
8

48 3
4

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Production Planning at BA
Producing Favaios Bottles Reduced costs
What will be the reduction of the profit if we must produce at least one batch of favaios bottles?

s1
s2
s3
Z

xVP
50
6
3
50

xA
30
5
5
60

xF
50
6
5
20

s1
1
0
0
0

s2
0
1
0
0

s3
0
0
1
0

xA
0

xF

s1

5
8

1
32

s2
0

s3

xVP

xVP
1

3
16

25

3
32

7
16

25

5
16

25

9 38

2750

s2

78

xA

5
8

3
160

48 43

7
16

(FEUP | DEGI)

2000
300
200
0

Operations Research

We can compute the reduced cost of

xF in a different way by computing the
oportunity cost for producing 1 batch of
favaios bottles:
7
50 16
+ 6 0 + 5 9 38 = 21 78 + 46 78 =
68 43

As the revenue of 1 batch of favaios

bottles is 20, the profit will change by
20 68 34 = 48 43

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General Discussion
Fundamental relationship between shadow prices, reduced
costs, and the problem data. I

s1
1
..
.
0
0

...
...

...
...

xn
a1n
..
.
amn
cn

...
...

sm
0
..
.
1
0

At the final tableau:

Z
c1
...

cn

c n+1
=
y1

...
...
...

c n+m
=
ym

s1
..
.
sm
Z

x1
a11
..
.
am1
c1

(FEUP | DEGI)

...
...

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b1
..
.
bm
0

Shadow
price
y1
..
.
ym

z 0

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General Discussion
Fundamental relationship between shadow prices, reduced
costs, and the problem data. II

At each iteration of the simplex method, the objective function is transformed by subtracting
from it a multiple of the row in which the pivot was performed.
Consequently, the final form of the objective function could be obtained by subtracting multiples
of the original constraints from the original objective function.
Consider first the final objective coefficients associated with the original basic variables: s1 , . . .,
sm . Let 1 , . . ., m be the multiples of each row that are subtracted from the original objective
function to obtain its final form. Since si appears only in the ith constraint and has a +1
coefficient we should have c n+i = 0 1i = i = yi . Thus the shadow prices are the
multiples i .
Since these multiples can be used to obtain every objective
coefficient in the final form, the
P
reduced cost c j of variable xj is given by c j = cj P
m
i=1 aij yi (j = 1 . . . n).
Since c j = 0 for the m basic variables: 0 = cj m
i=1 aij yi (for j basic). This is a system of m
equations in m unknowns that uniquely determines the P
values of the shadow
Pm prices yi .
The current value of the objective function is z 0 = m
i=1 bi yi , z 0 =
i=1 bi yi

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Variation in the objective coefficients

How much the objective-function coefficients can vary without
changing the values of the decision variables in the optimal solution?

We will make the changes one at a time, holding all other

coefficients and righthand-side values constant.

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Production Planning at BA
Producing Favaios Bottles
Variation in the objective coefficient of xF
Suppose that we increase the objective function coefficient of xF in the original problem
formulation by cF :
In applying the simplex method, multiples of the rows were subtracted from the objective function
to yield the final system of equations. Therefore, the objective function in the final tableau will
remain unchanged except for the addition of cF xF .
s1
s2
s3
Z

xVP
50
6
3
50

xA
30
5
5
60

xF
50
6
5
20 + cF

s1
1
0
0
0

s2
0
1
0
0

s3
0
0
1
0

2000
300
200
0

xVP
1

xA
0

xF

xVP

5
8

s1
1
32

s2
0

s3
3
16

25

3
32

7
16

25

5
16

25

9 38

2750

s2

78

xA

5
8

3
160

+ cF

7
16

48 43

(FEUP | DEGI)

Operations Research

xF will become a candidate to

enter the basis, only when its
objective-function coefficient is
positive.
The optimal solution remains unchanged as long as:
48 34 + cF 0
cF 48 34

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Production Planning at BA
Producing Favaios Bottles
Variation in the objective coefficient of xVP
s1
s2
s3
Z

xVP

xVP
50
6
3
50
+cVP

xA
30
5
5
60

xF
50
6
5
20

s1
1
0
0
0

s2
0
1
0
0

s3
0
0
1
0

xVP
1

xA
0

xF
5
8

s1
1
32

s2
0

s3
3
16

25

3
32

7
16

25

5
16

25
2750

s2

7
8

xA

5
8

3
160
7
16

2000
300
200
0

cVP

48 3
4

9 3
8

xVP

xVP
1

xA
0

xF
5
8

s1
1
32

s2
0

s3
3
16

25

s2

7
8

3
32

7
16

25

3
160

5
16

25

7
16
1 cVP
32

9 3
8
+ 3 cVP
16

2750

xA

5
8

48 3
4
5 cVP
8

(FEUP | DEGI)

The current solution remains unchanged while:

48 34 85 cVP 0
(cVP 78)
7
1
16
32
cVP 0
(cVP 14)
3
3
9 8 + 16 cVP 0
(cVP 50)
Taking the most limiting inequalities, the bounds on
cVP are:
14 cVP 50
new
14 + 50 cVP
50 + 50
new
36 cVP
100

25cVP

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General Discussion
Ranges of the cost coefficients in the optimal solution.
s1
1
.
.
.
0
0

...
...

...
...

xn
a1n
.
.
.
amn
cn

At the final tableau:

Z
c1
...

cn

c n+1

s1
.
.
.
sm
Z

x1
a11
.
.
.
am1
c1

...
...

...
...

sm
0
.
.
.
1
0

b1
.
.
.
bm
0

...

c n+m

z 0

Shadow
price
y1
.
.
.
ym

If xj is a non-basic variable at the final tableau with objective function coefficient cj that was
changed to cjnew = cj + cj , then the current solution remains unchanged so long as the new reduced
P
cost c new
remains nonnegative, that is, c new
= cj + cj m
j
j
i=1 aij yi = c j + cj 0.
The range on the variation of the objective-function coefficient of a nonbasic variable is then given by:
< cj < c j ; ( < cj + cj = cjnew < cj c j ).
If xr is a basic variable at the final tableau
P with objective function coefficient cr that was changed to
crnew = cr + cr , then c new
= cr + cr m
r
i=1 aij yi = c r + cr .
Since xr is a basic variable, c r = 0. So, to recover a canonical form with c new
= 0, we subtract cr
r
times the rth constraint in the final tableau from the final form of the objective function, obtaining new
reduced costs for all nonbasic variables: c new
= c j arj cr , where arj is the coefficient of variable xj in
j
the rth constraint in the final tableau.
For all basic variables c new
= 0 and the current basis remains optimal if c new
0.
j
j
The range on the variation of the objective-function coefficient is:
nc
o
nc
o
Maxj a j | arj > 0 cr Minj a j | arj < 0
rj

(FEUP | DEGI)

rj

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Variations on the righthand-side values

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Production Planning at BA
Producing Favaios Bottles
Variations on the righthand-side values
Varying the righthand-side value of a constraint that is non-binding in the optimal solution:
the warehouse constraint.

s1
s20
s3
Z

xVP
50
6
3
50

xA
30
5
5
60

xF
50
6
5
20

s1
1
0
0
0

s20
0
1
0
0

s3
0
0
1
0

xVP
1

xA
0

xF

s1

xVP

5
8

1
32

s20
0

s3
3
16

25 + 0 b2

s20

87

3
32

7
16

25 + 1 b2

xA

5
8

3
160

5
16

25 + 0 b2

48 43

7
16

9 38

(FEUP | DEGI)

2000
300 + b2
200
0

b2 is added to the righthand side of

the warehouse constraint.
This is equivalent to substituting s2 by
s20 = s2 + b2 in the original problem
formulation.
In order to keep the solution feasible:
b2 25

2750

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Production Planning at BA
Producing Favaios Bottles
Variations on the righthand-side values
Varying the righthand-side value of a constraint that is binding in the optimal solution:
the decoration constraint.

s1
s2
s30
Z

xVP
50
6
3
50

xA
30
5
5
60

xF
50
6
5
20

s1
1
0
0
0

s2
0
1
0
0

s30
0
0
1
0

xVP

xVP
1

xA
0

xF
5
8

s1
1
32

s2
0

s30
3
16

25 3 b3
16

s2

7
8

3
32

7
16

25 7 b3
16

xA

5
8

3
160

5
16

25 + 5 b3
16

48 3
4

(FEUP | DEGI)

7
16

9 3
8

2000
300
200 + b3
0

2750 9 3 b3
8

Operations Research

b3 is added to the righthand side of

the decoration constraint.
This is equivalent to substituting s3 by
s30 = s3 + b3 in the original problem
formulation.
xVP 0 b3 2516
3
s2 0 b3 2516
7
xA 0 b3 5 16
2516
7

200 +

2516
7

b3 80
b3new 200 80

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xVP
1

xA
0

xF

xVP

5
8

s1
1
32

s2
0

s3
3
16

25

3
b3
16

s2

1 58

3
32

7
16

25

7
b3
16

xA

5
8

3
160

5
16

25 +

5
b3
16

48 43

7
16

9 38

2750 9 38 b3

The final tableau for b3new = 120 (b3 = 80) will be:
xVP
1

xA
0

xF

xVP

5
8

s1
1
32

s2
0

s3
3
16

40

s2

87

3
32

7
16

60

xA

5
8

3
160

5
16

48 43

7
16

9 38

2480

(FEUP | DEGI)

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For b3new < 120 the basic variable xA < 0.

What variable should enter the basis to take its place?
In order for the new basis to be an optimal solution, the entering variable must be chosen so that
the reduced costs are not allowed to become positive.
Regardless of which variable enters the basis, the entering variable will be isolated in row 3 of the
final tableau to replace xA , which leaves the basis.
To isolate the entering variable, we must perform a pivot operation, and a multiple, say t, of row
3 in the final tableau will be subtracted from the objective-function row.

Coefficient
Coefficient
Coefficient
Coefficient

for
for
for
for

xVP
1

xA
0

xF

xVP

5
8

s1
1
32

s2
0

s3
3
16

40

s2

78

3
32

7
16

60

xA

5
8

3
160

5
16

0
t

48 34
t 58

7
16
3
+t 160

9 38
5
t 16

2480
t 0

XA : t 0 t 0
XF : 48 43 t 58 0 t 288
5
3
7
+ t 160
0 t 70
s1 : 16
3
3
5
s3 : 9 8 t 16 0 t 30
0t

70
3

Since the coefficient of s1 is most constraining on t, s1 will enter the basis.

Note that the pivot is made on a negative coefficient.
(FEUP | DEGI)

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General Discussion
Variations in the Righthand-Side values. I

...
...

sk
0
.
.
.
1
.
.
.
0
0

In the final tableau (canonical form):

x1 . . .
xn
s1 . . .
basic1
a11 . . .
a1n
11 . . .
.
.
.
.
.
.
.
.
.
.
.
.
basick
ak1 . . .
akn
k1 . . .
.
.
.
.
.
.
.
.
.
.
.
.
basicm
am1 . . . amn
m1 . . .
Z
c1 . . .
cn
c n+1 . . .

sk
1k
.
.
.
kk
.
.
.
mk
c n+k

s1
.
.
.
sk
.
.
.
sm
Z

x1
a11
.
.
.
ak1
.
.
.
am1
c1

...
...

...

...
...

xn
a1n
.
.
.
akn
.
.
.
amn
cn

s1
1
.
.
.
0
.
.
.
0
0

...
...

...

...
...

...

...
...

...
...

...

...
...

sm
0
.
.
.
0
.
.
.
1
0

sm
1m
.
.
.
km
.
.
.
mm
c n+m

b1
.
.
.
bk
.
.
.
bm
0

b1
.
.
.
bk
.
.
.
bm
z 0

As this is a canonical form, aij and ij in the final tableau will be structured so that one basic variable is
isolated in each constraint.

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General Discussion
Variations in the Righthand-Side values. II
We can change the coefficient bk in the kth righthand-side by bk with all the other data held fixed, simply by
substituting sk by sk0 = sk + bk in the initial tableau.
x1
a11
.
.
.
ak1
.
.
.
am1
c1

s1
.
.
.
sk0
.
.
.
sm
Z

...
...

...

...
...

xn
a1n
.
.
.
akn
.
.
.
amn
cn

In the final tableau: (sk0 = sk

x1 . . .
xn
basik1
a11 . . .
a1n
.
.
.
.
.
.
.
.
.
basick
ak1 . . .
akn
.
.
.
.
.
.
.
.
.
basicm
am1 . . . amn
Z
c1 . . .
cn

...
...

...
...

sk0
0
.
.
.
1
.
.
.
0
0

+ bk )
s1 . . .
11 . . .
.
.
.
k1 . . .
.
.
.
m1 . . .
c n+1 . . .

sk0
1k
.
.
.
kk
.
.
.
mk
c n+k

...
...

s1
1
.
.
.
0
.
.
.
0
0

...
...

...

...

...
...

...

...
...

sm
0
.
.
.
0
.
.
.
1
0

sm
1m
.
.
.
km
.
.
.
mm
c n+m

b1
.
.
.
bk + bk
.
.
.
bm
0

b 1 + 1k bk
.
.
.
b k + kk bk
.
.
.
b m + mk bk
z 0 + c n+k bk

The current basis is optimal whenever b i + ik bk 0 for (i = 1, 2, . . . , m).

n
o
n
o
b
b
Equivalently Maxi i | ik > 0 bk Mini i | ik < 0
ik

(FEUP | DEGI)

ik

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March 19, 2014

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General Discussion
Variations in the Righthand-Side values. III
When bk reaches either its upper or lower bound any further increase (or decrease) in its value
makes one of the updated righthand sides negative.
Consider that bk is such that b r + rk bk < 0.
The basic variable in row r leaves the basis, and we must pivot in row r of the final tableau to find
the variable to be introduced in its place.
Since pivoting subtracts a multiple t of the pivot row from the objective equation, the new
objective equation has coefficients c j tarj (j = 1, 2, . . . , n).
For the basis to be optimal, each of these coefficients must be nonpositive. Since c j = 0 for the
basic variable being dropped and since its coefficient in constraint r is arj = 1, we must have
t 0.
For any t 0, the updated coefficient c j tarj for any other variable remains 0 if arj 0.
Consequently we need only to consider arj < 0, and t is given by:
t = Minj

nc

arj

o
| arj < 0

The index u giving this minimum has c u taru = 0, and the corresponding variable xu can
become the new basic variable in row r by pivoting on aru .
Note that the pivot is made on a negative coefficient.

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March 19, 2014

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Alternative optimal solutions

As in the case of the objective function and righthand-side ranges,
the final tableau of the linear program tells us something
conservative about the possibility of alternative optimal solutions.

If all reduced costs of the nonbasic variables are strictly negative

(positive) in a maximization (minimization) problem, then there is
no alternative optimal solution, because introducing any variable
into the basis at a positive level would reduce (increase) the value of
the objective function.

If one or more of the reduced costs are zero, there may exist
alternative optimal solutions.

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Alternative shadow prices

Independent of the question of whether or not alternative optimal
solutions exist in the sense that different values of the decision
variables yield the same optimal value of the objective function,
there may exist alternative optimal shadow prices.

If all righthand-side values in the final tableau are positive, then

there do not exist alternative optimal shadow prices.

If one or more of these values are zero, then there may exist
alternative optimal shadow prices.

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Alternative Shadow Prices

Example I

xVP

xA

xF

s1

s2

s3

xVP

5
8

1
32

3
16

40

s2

78

3
32

7
16

60

xA

5
8

3
160

5
16

48 34

7
16

9 38

2480

Since the righthand-side value in row 3 is zero, it is possible to take xA (basic variable in row 3)
out of the basis as long as there is a variable to introduce into the basis.
The candidates to be introduced
 the basis are xF , s1 and s3 , the one that corresponds to:
 7 into
nc
o
16
s1 will enter the basis.
Minj a j | arj < 0 = Min
3
rj

(FEUP | DEGI)

160

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Alternative Shadow Prices

Example II
To isolate the entering variable, we must perform a pivot operation, and a multiple, say t, of row
3 in the final tableau will be subtracted from the objective-function row.

Coefficient
Coefficient
Coefficient
Coefficient

for
for
for
for

xVP
1

xA
0

xF

s1

xVP

5
8

1
32

s2
0

s3
3
16

40

s2

78

3
32

7
16

60

xA

5
8

3
160

5
16

0
t

48 34
t 58

7
16
3
+t 160

9 38
5
t 16

2480
t 0

XA : t 0 t 0
XF : 48 43 t 58 0 t 288
5
7
3
s1 : 16
+ t 160
0 t 70
3
3
5
s3 : 9 8 t 16 0 t 30
0t

(FEUP | DEGI)

70
3

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Alternative Shadow Prices

Example III

Since the coefficient of s1 is most constraining on t, s1 will enter the basis and the new tableau
will be the following1 :
xVP
1

xA

xF

xVP

5
3

3
2

s1
0

s2
0

s3
17
24

40

s2

9
8

60

s1

160
3

100
3

50
3

70
3

190
3

50
3

2480

In this example we have for the same optimal solution alternative shadow prices.
The optimal solution is (xvp , xA , xF , s1 , s2 , s3 ) = (40, 0, 0, 0, 60, 0) and the shadow prices are:
(yO1 , yW 1 , yD1 ) = (48 43 , 0, 9 38 ) and (yO2 , yW 2 , yD2 ) = (0, 0, 50
)
3

1
In order to obtain the alternative shadow prices there would be no need to built the whole tableau, the line of
the objective function would be sufficient as you may see.
(FEUP | DEGI)

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