On the use of pseudo shadow prices in a multiperiod formulation of the production planning problem

On the use of pseudo shadow prices in a multiperiod formulation of the production planning problem

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Article ID: iaor1990102
Country: United Kingdom
Volume: 40
Issue: 12
Start Page Number: 1109
End Page Number: 1119
Publication Date: Dec 1989
Journal: Journal of the Operational Research Society
Authors:
Keywords: programming: linear
Abstract:

A multiperiod linear programming model of the production planning problem is used to argue for a different costing, profit and resource-evaluation procedure in manufacturing. This procedure is based on the concept of ‘pseudo shadow prices’, and it avoids many of the pitfalls associated with the more traditional accounting methodologies. Conclusions are drawn which question the profit objectives used by many firms, as well as by those in academia.

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