ARE155FA11HW4-1 - 1 Managerial Economics (ARE) 155...

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1 Managerial Economics (ARE) 155 University of California, Davis Fall Quarter, 2011 Instructor: John H. Constantine PROBLEM 1(D) UPDATED —Homework 4: Due Friday, October 28, 2011 Problem 1 : Solver required to answer this problem. This is an example of a standard Transportation Problem. A firm has three factories ( i = A, B, C) and sells its product in four retail outlets ( j = 1, …, 4). The table below contains (i) each factory’s production capacity, (ii) each retail outlet’s demand needs, and (iii) the unit cost of shipping from Supply Center i to Demand Center j . The firm wants to minimize the cost of shipping product subject to production and demand constraints. Factory Retail Outlet 1 Retail Outlet 2 Retail Outlet 3 Retail Outlet 4 Capacity A 5 8 4 9 500 B 5 4 2 6 800 C 10 11 9 5 200 Requirements 400 500 300 200 (a) Write out the full total cost-minimizing primal problem. (b) Write the complete dual problem. (c) Solve the primal problem using Solver. State the optimal x ij values and TC. (d) If you did the problem correctly, you should have a zero result for x A2 . Discuss the complementary- slackness condition associated this constraint, and verify the value of ys A2 using the equation with u i and v j .
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This note was uploaded on 03/14/2012 for the course ARE 155 taught by Professor Staff during the Fall '08 term at UC Davis.

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ARE155FA11HW4-1 - 1 Managerial Economics (ARE) 155...

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