About Shadow Price Calculator (Formula)
The Shadow Price Calculator is a tool used to determine the shadow price of a particular variable in an optimization or linear programming problem. The shadow price represents the rate of change in the objective function value when the value of a specific variable is increased by one unit, while keeping all other variables constant.
The formula to calculate the shadow price is as follows:
Shadow Price = Value of objective function with one more unit (£) – Value of original objective function (£)
In this formula, the “Value of objective function with one more unit” refers to the objective function value when the variable of interest is increased by one unit, while the “Value of original objective function” represents the original objective function value with the current variable value.
By subtracting the original objective function value from the objective function value with an increased variable, we can determine the shadow price. The shadow price indicates how much the objective function value would change with a one-unit increase in the variable, allowing decision-makers to assess the impact of changes in input variables on the overall objective.
The Shadow Price Calculator simplifies this process by providing a user-friendly interface to input the relevant values and obtain the corresponding shadow price. It enables users to make informed decisions and optimize their objectives based on the calculated shadow price for different variables.