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4120_lecture7

# 4120_lecture7 - Computational Methods for Management and...

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Computational Methods for Management and Economics Carla Gomes Lecture 7 Reading: 3.4-3.8 of textbook

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We’ve seen: Resource-Allocation Problems Cost-benefit-trade-off problems Today’s lecture: Distribution-Network Problems Mixed LP problem Displaying and Solving LP Models on a Spreadsheet and Modeling Languages Outline
Distribution-Network Problems Mixed LP problems

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Distribution Network Problems
The Big M Distribution-Network Problem The Big M Company produces a variety of heavy duty machinery at two factories. One of its products is a large machine (model L). Orders have been received from three customers for the machine (model L).

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Some Data Shipping Cost for Each Machine (Model L) To Customer 1 Customer 2 C ustomer 3 From Output Factory 1 \$700 \$900 \$800 12 model L Factory 2 800 900 700 15 model L Order Size 10 Model L 8 Model L 9 Model l
The Distribution Network F1 C2 C3 C1 F2 12 lathe produced 15 lathes produced 10 lathes needed 8 lathes needed 9 lathes needed \$700/lathe \$900/lathe \$800/lathe \$800/lathe \$900/lathe \$700/lathe Question: How many machines (model L) should be shipped from each factory to each customer so that sipping costs are minimized? 12 Model L produced 15 Model L produced 10 Model L needed 8 Model L needed 9 Model L needed /model l /model l /model l /model l /model l /model l

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Activities – shipping lanes (not the level of production which has already been defined) Level of each activity – number of machines of model L shipped through the corresponding shipping lane. Best mix of shipping amounts Resources requirements from factories and customers. Example: Requirement 1: Factory 1 must ship 12 machines model L
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