Generalized average shadow prices and bottlenecks

Alejandro Crema ()
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Alejandro Crema: Universidad Central de Venezuela

Mathematical Methods of Operations Research, 2018, vol. 88, issue 1, No 5, 99-124

Abstract: Abstract Usually some of the constraints of a 0-1-Mixed Integer Linear Programming problem correspond to resources and in this paper we suppose that they may be redefined. For the availability of the resources the average shadow price is the maximum price that the decision maker is willing to pay for an additional unit of the package (i.e. a combination) of resources defined by some direction. In this paper we present a generalization of the average shadow price and its relation with bottlenecks including the analysis relative to the coefficients matrix of resource constraints. The generalization presented does not have some limitations of the usual average shadow price. A mathematical programming approach to find the strategy for investment in resources is presented.

Keywords: Mixed integer programming; Average shadow price; Bottlenecks; Resource constraints (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s00186-018-0630-8

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