How to Analyze the Results of Linear Programs—Part 2: Price Interpretation

Harvey J. Greenberg
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Harvey J. Greenberg: Mathematics Department, University of Colorado at Denver, PO Box 173364, Denver, Colorado 80217-3364

Interfaces, 1993, vol. 23, issue 5, 97-114

Abstract: In the second part of a four-part series, I consider an exercise in analysis that arises in many applications: Why is the price of 〈 some commodity 〉 equal to 〈 whatever its solution value 〉? The ability to interpret dual prices in a linear programming solution is part of economic analysis, and the mathematical basis is as old as linear programming, itself. New approaches, however, go beyond the usual duality arguments in answering this question in more practical terms. One of these new approaches is path tracing, which seeks a portion of the linear program that accounts for the row's price by activity costs from sources to the row. In some cases this is a simple path in a network problem. More generally, in ordinary network terms, it can be a tree or involve embedded cycles, but it is regarded as a path in hypergraph terms.

Keywords: programming:; linear (search for similar items in EconPapers)
Date: 1993
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