A company is developing a 5 year plan indicating when to purchase and replace its trucks. In any year that a truck is sold, a replacement must be bought. The following table gives the net cost for each combination.
Year of sale
1 2 3 4 5
0 3 10 17 23 28
1 3 10 17 23
Year of buy 2 3 10 17
3 3 10
4 3
(a) Using the matrix given above, formulate the problem as a shortest route problem to find an optimal replacement policy (in terms of network).
(c) Find an optimal replacement policy using the shortest path algorithm.
(d) Formulate the problem as a linear program model by clearly defining the variables, objective function and the constraints.
(e) Solve the LP model using Excel solver.