Questions 1 through 4 refer to the following sensitivity report (the report shows profits, not costs): Variable Cells Final Reduced Objective Allowable Allowable Cell Name Value Cost Coefficient !no...

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Answered Same DayDec 21, 2021

Answer To: Questions 1 through 4 refer to the following sensitivity report (the report shows profits, not...

Robert answered on Dec 21 2021
126 Votes
Answer 1:
Shadow price: The increase in profit for one additional unit of a binding constraint.
N
on-binding constraint has zero shadow prices.
The shadow price and marginal cost is one and the same. From the sensitivity report above we can
find that marginal cost of cotton is 2.063 and marginal cost of leather is 0.
Answer 2:
The shadow price is 0.321 so the company earns 0.321 additional on each notion, so buying 1000
sewing notions will add revenue by 0.321*1000 = $321. The cost of these notions...
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