Steco, a steel wholesaler, leases regional warehouses for its operation on a monthly basis. Steco currently has a list of three potential warehouses that it can lease. The cost per month to lease each warehouse is shown in table 1 below. There are four sales districts in Stecos operation. The monthly demand (in truck load requirements) is indicated in table 1 as well as the unit cost of sending a truck from a warehouse to a given district. Steco wants to know which warehouses to lease and how many trucks to send from each warehouse to each district that will minimize overall cost. Keep in mind that every warehouse does not have to be used. Formulate an LP program and solve this problem.
Table 1
Cost per truck from warehouse to Sales District Sales Districts Monthly Capacity (number of truck loads) Monthly Leasing Cost
WAREHOUSE 1 2 3 4
A $170 $40 $70 $160 200 $7,750
B $150 $195 $100 $10 250 $4,000
C $100 $240 $140 $60 300 $5,500
Monthly Demand (truck loads) 100 90 110 60