Encyclopedia of Operations Research and Management Science

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

Opportunity cost

Reference work entry
DOI: https://doi.org/10.1007/1-4020-0611-X_704

The cost associated with forgoing an opportunity; the money or other value sacrificed by choosing a nonoptimal course of action. In linear programming, the opportunity cost is the reduced cost of a variable not in the optimal basic solution. If a unit of a nonbasic variable is introduced into the solution, the optimal value of the objective function would decrease by an amount equal to the associated reduced cost. Simplex method.

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© 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