Discuss the Shadow price rule and " dual price". Are they related? What are they used for?
Maximum price that management is willing to pay for an extra unit of a given limited resource. Management may wish to know whether it pays to add capacity in a particular department. It would be interested in the monetary value to the firm of adding, say, an hour per week of assembly time. This monetary value is usually the ...
This solution discusses the shadow price rule and the dual price rule, and explains if they are related and what they are used for.