ACCA PM Chapter 6 - Limiting Factors

Linear Programming

1. Define the unknowns in terms of symbols
2. Formulate equations for the constraints
3. Formulate an equation for the objective
4. Graph the constraints and the objective
5. Find the optimum solution

Spare capacity

If the optimum solution results in using less than the maximum available of a particular resource, then we have spare capacity of that resource or slack.

Shadow prices (dual price)

Shadow Price is the most EXTRA we would be prepared to pay for an extra unit of the limited resource.

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