A short note on marginal analysis of a transportation problem

Decision analysis is a structured approach to decision-making, which allows managers to gain enhanced insight and sharper intuition about the problems they face. Marginal analysis is a concept employed, in microeconomics where the marginal change in some parameter might be of interest to the decision-maker. A marginal change is a ration of very small addition or subtraction to the total quantity of some parameter. Marginal analysis is the analysis of the relationships between such changes in relation to the performance measure. Examples of marginal analysis are: marginal cost; marginal revenue; marginal product; marginal rate of substitution; marginal propensity to save, and so on. In optimization, the marginal analysis is employed primarily to explicate various changes in the parameters and their impact on optimal value. Sensitivity analysis, i.e., the analysis of the effect of small variations in system parameters on the output measures can be studied by computing the derivatives of the output measures with respect to the parameter.