Encyclopedia of Operations Research and Management Science

2013 Edition
| Editors: Saul I. Gass, Michael C. Fu

Prices

Reference work entry
DOI: https://doi.org/10.1007/978-1-4419-1153-7_200628

In the simplex method, for a nonbasic variable xj, the price is defined as dj = cjzj or dj = zjcj, where cj is the variable's original cost coefficient and zj = πAj, with Aj the variable's original column of coefficients and π the multiplier (pricing) vector of the current basis. The dj is termed the reduced or relative cost. It is the difference between the direct cost cj and indirect cost zj. The dj indicates how much the objective function would change per unit change in the value of xj. The dj for the variables in the basic feasible solution are equal to zero.

See

Copyright information

© Springer Science+Business Media New York 2013