Final answer:
In a minimum cost network flow problem, high costs from dummy supply nodes to demand nodes indicate a penalty cost. These costs discourage exceeding the real supply or demand in the network and are not meant to be part of the optimal flow.
Step-by-step explanation:
In the context of a minimum cost network flow problem, units 'shipped' along arcs with exorbitantly high costs from dummy supply nodes to demand nodes represent a penalty cost. These costs are not meant to be incurred in an optimal solution but rather serve as a deterrent for sending flow along an undesirable path. Essentially, they act as a form of soft constraint that discourages exceeding the supply or demand of the real nodes in the network. By assigning high costs, the solver is influenced to satisfy real demands from real supplies rather than these artificially created dummy supplies. Therefore, when a flow does occur on such arcs, it implies that it was necessary to meet the demand, irrespective of the high cost, which is indicative of a situation where the demand exceeds the available supply from real sources.