 Solution

ID: past-exam-of-the-probability-statistics-and-options-i-course-of-the-university-of-oxford/2009/t/1/b/i/solution

The basis and reduced costs stay unchanged when only the right-hand side changes. Its new basic values are

(x_{3} x_{1}) = B^{- 1} (6 4 + α) = ((2 - α) /3 (14 + 2 α) /3) .

Thus for small

∣ α ∣

x_{1} = (14 + 2 α) /3, x_{3} = (2 - α) /3, x_{2} = x_{4} = x_{5} = 0, z_{m a x} = (26 + 5 α) /3.

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