Encyclopedia of Operations Research and Management Science

2001 Edition
| Editors: Saul I. Gass, Carl M. Harris

Indirect costs

Reference work entry
DOI: https://doi.org/10.1007/1-4020-0611-X_450

In the simplex method, the indirect costs are found by taking the inner products of the multiplier (pricing) vector with each column of the problem's defining A matrix. This product, for a column j, is usually denoted by zj. For cj, the original objective function coefficient for column j, the term (zjcj)or (cjzj) is used to determine if the associated variable is a candidate to enter the basic feasible solution. For any basic variable xk, (zkck) = 0. The (zjcj) terms are called relative costs (relative to the basis) or reduced costs. Prices.

Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  1. 1.Robert H. Smith School of BusinessUniversity of MarylandCollege PartUSA
  2. 2.School of Information Technology & EngineeringGeorge Mason UniversityFairfaxUSA