Enter the value of objective function with one more unit ($) and the value of original objective function ($) into the Shadow Price Calculator. The calculator will evaluate and display the Shadow Price. 

Shadow Price Formula

The following formula is used to calculate the Shadow Price. 

SP = V(f+1) - V(f)
  • Where SP is the Shadow Price ($)
  • Vf(f+1) is the value of objective function with one more unit ($) 
  • V(f) is the value of original objective function ($) 

To calculate the shadow price, subtract the value of the original objective function from the value of the objective function with one more unit.

How to Calculate Shadow Price?

The following example problems outline how to calculate Shadow Price.

Example Problem #1:

  1. First, determine the value of objective function with one more unit ($).
    1. The value of objective function with one more unit ($) is given as: 450.
  2. Next, determine the value of original objective function ($).
    1. The value of original objective function ($) is provided as: 50.
  3. Finally, calculate the Shadow Price using the equation above: 

SP = V(f+1) – V(f)

The values given above are inserted into the equation below:

SP = 450 – 50 = 400.00 ($)

Example Problem #2: 

For this problem, the variables needed are provided below:

value of objective function with one more unit ($) = 3020

value of original objective function ($) = 93

This example problem is a test of your knowledge on the subject. Use the calculator above to check your answer. 

SP = V(f+1) – V(f) = ?