Market Сарacity 5 (tons/month) 1 2 3 $20 $25 $30 $15 $35 Mill 4 Shipping A 1200 Cost/Ton B $30 $20 $32 $28 $19 1500 C C $25 $18 $28 $23 $31 900 Monthly 600 100 500 800 500 Demand (tons)
FiberTech makes newsprint for newspapers at three mills, A,
B, and C. Th e cost of producing newsprint is estimated to be $210 at
mill A, $225 at B, and $220 at C. Five primary geographical markets
are served from these mills. Th e monthly demand at each market,
the shipping cost (per ton) between each mill and market, and the
monthly production capacity of each mill are given in the table
FiberTech would like to assign production responsibilities to
the mills, and also specify how much should be shipped from
each plant to each market, so as to minimize total production and
distribution costs.
(a) Formulate an LP to minimize total production and
distribution costs.
(b) Set up and solve the problem on a spreadsheet.
(c) What is the optimal solution? Explain the rationale for the
solution.
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