Captain Stubing runs the LP model associated with the scenario and reads the following about the constraints in the Excel sensitivity report
Gopher is unable to provide an interpretation, but you volunteer to provide insight on the Restaurant and Excursions portion of the sensitivity report.
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$10 Bar/Food 0 1560 0 5 16
$E$11 Budget 150000 3.4 150000 1E+30 96200
$E$6 Excursions 24.24 0 5 19.24 1E+30
$E$7 Restaurant 12 -1660 12 16 5
Answer: The Restaurant constraint has a shadow price of -$1,660 which means that for every one more cuisine variety required, the profit will drop by $1,660. If we required two more, profit would drop by $3320, and so on, up to requiring 16 additional meal types. Beyond that, the $1,660 cost would not be a correct estimate. For each type of cuisine dropped, from 12 to 11, the same figure hold, up to a reduction of five types of cuisine. Excursions has no shadow price – it is not a binding constraint, so we can actually reduce the number of excursions quite a bit, but 19.24 down to the required minimum of 5 per day.
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