Suppose some new equipment was installed that reduces the


A tin box company has four factorial that supply to 5 ware house. The variable cost of manufacturing and shipment of one ton of product from each factory to each warehouse are shown in the matrix given below, factory capacities and ware house requirement are shown in the margin.

After several iterations the solution obtained also shown.

Factories

A

B

C

D

E

DUMMY

SUPPLY

W

17

9

14

25

10

30

14

0

20

75

X

13

10

6

20

11

15

11

12

0

45

Y

6

30

17

9

12

12

0

30

Z

15

20

11

14

6

0

50

Demand

40

20

50

30

40

20

200

(a) Is this an optimal solution? How do you know?

(b) Is there an alternate solution? If so find it.

(c) Suppose some new equipment was installed that reduces the variable operation cost by two birr per ton in factory X, is the shipping schedules remain optimum? If not what is the new optimum?

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Finance Basics: Suppose some new equipment was installed that reduces the
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