Consider the following problem: A company supplies goods to three customers, who each require 30 units. The company has two warehouses. Warehouse 1 has 40 units available, and warehouse 2 has 30 units available. The costs of shipping 1 unit from warehouse to customer are shown below. From To Warehouse 1 Customer 1 $15 Customer 2 35 Customer 3 25 Warehouse 2 10 50 40 There is a penalty for each unmet customer unit of demand: With customer 1, a penalty cost of $90 is incurred; with customer 2, $80; and with customer 3, $110. a. Formulate the corresponding model to determine the optimal transportation schedule. b. Solve the model using northwest-corner method and stepping-stone method.

Practical Management Science
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Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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Consider the following problem: A company supplies goods to three customers, who each require
30 units. The company has two warehouses. Warehouse 1 has 40 units available, and warehouse 2
has 30 units available. The costs of shipping 1 unit from warehouse to customer are shown below.
Customer 1.
From To
Warehouse 1
Customer 2
35
Customer 3
25
$15
Warehouse 2
10
50
40
There is a penalty for each unmet customer unit of demand: With customer 1, a penalty cost of
$90 is incurred; with customer 2, $80; and with customer 3, $110.
a. Formulate the corresponding model to determine the optimal transportation schedule.
b. Solve the model using northwest-corner method and stepping-stone method.
Transcribed Image Text:Consider the following problem: A company supplies goods to three customers, who each require 30 units. The company has two warehouses. Warehouse 1 has 40 units available, and warehouse 2 has 30 units available. The costs of shipping 1 unit from warehouse to customer are shown below. Customer 1. From To Warehouse 1 Customer 2 35 Customer 3 25 $15 Warehouse 2 10 50 40 There is a penalty for each unmet customer unit of demand: With customer 1, a penalty cost of $90 is incurred; with customer 2, $80; and with customer 3, $110. a. Formulate the corresponding model to determine the optimal transportation schedule. b. Solve the model using northwest-corner method and stepping-stone method.
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