The _____ for a Decision Variable Is the Shadow Price

question 34

Multiple Choice

The _____ for a decision variable is the shadow price of the nonnegativity constraint for that variable.

• A) range of optimality
• B) slack value
• C) reduced cost
• D) range of feasibility

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Definitions:

Variable Expenses

Costs that change in relation to the level of activity or volume of production.

Fixed Expenses

Costs that do not vary with the level of production or sales over a short period, such as rent and salaries.

Relevant Costs

Future costs that will differ under various alternatives, considered important for making financial decisions.

Special Order

An order for goods or services that is outside the company's normal scope of operations or requires customization to meet the customer's specific requirements.