Shadow prices in linear programming: A cost behavior complication

Chon Huat Goh, Jean C. Cooper

Research output: Contribution to journalArticlepeer-review


Linear programming (LP) is a widely used technique to model production systems. It also provides the shadow price or opportunity cost of a constrained resource. However, the correct opportunity cost of a fixed resource is calculated differently from that of a variable cost resource. Understanding the effect of the resource's cost behavior is vital when using LP as a managerial decision tool.

Original languageEnglish (US)
Pages (from-to)11-14
Number of pages4
JournalProduction and Inventory Management Journal
Issue number2
StatePublished - 1996

All Science Journal Classification (ASJC) codes

  • Industrial and Manufacturing Engineering


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