ACCA PM Syllabus C. Decision-making Techniques - Slack and its Implications for Decision-Making and Performance Management - Notes ^{5 / 5}

Slack occurs when the maximum availability of a resource is not used.

Therefore, slack is the amount by which a resource is under-utilised. It will occur when the optimum point does not fall on the given resource line.

If, at the optimal solution, the resource used equals the resource available, the constraint is binding and there is no slack.

Hence, a shadow price has to be calculated.

What happens if the objective is to minimise costs?

1. Same steps as above

2. Check the constraints :- are they less than or greater than?

3. If they are ‘greater than’, the region which you should consider is above the constraint.

4. The optimal point will be the first point you reach on the feasible region when you shift out the iso-cost function.