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Chapter B, Problem 23P

A fertilizer manufacturer has to fulfill supply contracts to its two main customers (650 tons to Customer A and 800 tons to Customer B). It can meet this demand by shipping existing inventory from any of its three warehouses. Warehouse 1 (W1) has 400 tons of inventory on hand, Warehouse 2 (W2) has 500 tons, and Warehouse 3 (W3) has 600 tons. The company would like to arrange the shipping for the lowest cost possible, where the per-ton transit costs are as follows:

Chapter B, Problem 23P, A fertilizer manufacturer has to fulfill supply contracts to its two main customers (650 tons to , example  1

  1. a. Explain what each of the six decision variables (V) is: (Hint: Look at the Solver report below.)

V A1: _________

V A2: _________

V A3: _________

V B1: _________

V B2: _________

V B3: _________

  1. b. Write out the objective function in terms of the variables (V A1, V A2, etc,) and the objective coefficients.
  2. c. Aside from nonnegativity of the variables, what are the five constraints? Write a short description for each constraint, and write out the formula (and circle the type of equality/inequality).

Chapter B, Problem 23P, A fertilizer manufacturer has to fulfill supply contracts to its two main customers (650 tons to , example  2

After you formulate and enter the linear program for Problem B.27 in Excel, the Solver gives you the following sensitivity report:

Adjustable Cells

Chapter B, Problem 23P, A fertilizer manufacturer has to fulfill supply contracts to its two main customers (650 tons to , example  3

Constraints

Chapter B, Problem 23P, A fertilizer manufacturer has to fulfill supply contracts to its two main customers (650 tons to , example  4

  1. d. d) How many of the constraints are binding?
  2. e. e) What is the range of optimality on variable V A3?
  3. f. f) If we could ship 10 tons less to Customer A, how much money might we be able to save? If we could choose to short either Customer A or Customer B by 10 tons, which would we prefer to short? Why?
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