"

7
1 :
Widgetco manufactures widgets at two factories, one in Memphis and one in Denver. The
Memphis factory can produce up to 150 widgets per day, and the Denver factory can
produce up to 200 widgets per day. Widgets are shipped by air to customers in Los
Angeles and Boston. The customers in each city require 130 widgets per day Because of
the deregulation of air fares, Widgetco believes that it may be cheaper to first fly some
widgets to New York or Chicago and then fly them to their final destinations. The costs of
flying a widget are shown in Table 3. Widgetco wants to maximize the total cost of
shipping the required widgets to its customers.
To
Memphis
Denver
.N.Y
Chicago
L.A.
From
Memphis
0
8
13
25
Denver
0
15
12
26
N.Y.
0
6
16
Chicago
6
0
14
L.A.
0
Boston
Table 3.Shipping Costs for Transshipment
2 :
I have just purchased (at time 0) a new car for $12000. the cost of maintaining a car
during a year depends on the age of the car at the beginning of the year, as given in Table
1. To avoid the high maintenance costs associated with an older car, I made trade in my
car and purchase a new car. The price I receive on a trade-in depends on the age of the car
at the time of trade-in. To simplify the computations, we assume that at any time, it costs
$12000 to purchase a new car. My goal is to minimize the net cost (purchasing
costs+maintenance costs money received in trade-ins) incurred during the next five
years. Formulate this problem as a shortest path problem.
Age of
Annual
Age of Car(years) Trade-in Prices
Car(years) Maintenance Cost
0
$2000
1
$7000
1
$4000
2
$6000
2
$5000
3
$2000
3
$9000
4
$1000
4
$12000
5
$0
Car Maintenance Costs
Car Trade-in Prices

Boston
28
25
17
16
0

 1
' . .
. )) 58 " "- ( .
' 1,100 . 2,900 .
2,400 .1,500
. SIMPLEX
.LINDO
Tampa

Houston

Atlanta

Detroit

225
119
78
0

90
110
113
0
-

100
111
0
121
82

140
0
115
109
117

L.A
L.A
0
Detroit
145
Atlanta
105
Houston
89
Tampa
210
Table 58: Costs of Shipping

2
- , - ,
- ' , .
, .
150 100 . ' 80 , 70
.60 10,000$ .60
.

New York

Denver

637
841

1253
1398

Philadelphia

Chicago

1691
100

996
802

To
From
Detroit
Atlanta

Los Angeles
To
From
Denver
1059
York
2786
Table 60: Shipping Cost

3
Suppose it costs 10000 to purchase a new car. The annual operating cot and resale value
of a used car is shown in Table 4. Assuming that one has new car at present, determine a
replacement policy that minimizes the net costs of owning and operating a car for the
next six years.
Age of
Resale Value
Operating Cost
Car(years)
1
7000
300
2
6000
500
3
4000
800
4
3000
1200
5
2000
1600
6
1000
2200
Table 4
4
It costs $40 to buy a telephone from the department store. Assume that I can keep a
telephone for at most five years and that the estimated maintenance cost each year of
operation is as follows: year 1, $20; year 2, $30; year 3, $40; year 4, $60; year 5, $70. I
have just purchased a new telephone. Assuming that a telephone has no salvage value,
determine how to minimize the total cost of purchasing and operating a telephone for the
next six years.
5
A company sells seven types of boxes, ranging in volume from 17 to 33 cubic feet. The
demand and size of each box is given in Table 7. The variable cost(in dollars) of
producing each box is equal to the box's volume. A fixed cost of $1000 is incurred to
produce any of a particular box. If the company desires, demand for a box may be
satisfied by a box of larger size. Formulate and solve a shortest path problem whose
solution will minimize the cost of meeting the demand for boxes.
Box
Size
Demand
1
33
400
2
30
300
3
26
500
4
24
700
5
19
200
6
18
400
7
17
200
Table 7
6
At the beginning of year 1 a new machine must be purchased. The cost of maintaining a
machine I years old is given in Table 5. The cost of purchasing a machine at the
beginning of each year is given in Table 6. There I no trade-in value when a machine is
replaced. Your goal is to minimize the total cost(purchase plus maintenance) of having a

machine for five years. Determine the years in which a new machine should be
purchased.
Age at beginning of Year Maintenance Cost for next Year
0
$38000
1
$50000
2
$97000
3
$182000
4
$304000
Table 5
Year
1
2
3
4
5

Maintenance Cost for next Year

$170000
$190000
$210000
$250000
$300000

Table 6
7
A company must meet the following demands for cash at the beginning of each of the
next six months: month 1, $200; month 2, $100; month 3, $50; month 4, $80; month 5,
$160; month 6, $140. At the beginning of month 1, the company has $150 in cash and
$200 worth of bond 1, $100 worth of bond 2, and $400 worth of bond 3. The company
will have to sell some bonds to meet demands, but a penalty will be charged for ay bonds
sold before the end of month 6. The penalties for selling $1 worth of each bond are as
shown in Table 61.
Assuming that all bills must be paid on time, formulate a balanced transportation
problem that can be used to minimize the cost of meeting the cash demands for
the next six months.
Solve the problem using LINDO.
Month of
Bond 1
Bond 2
Bond 3
Sale
1
$0.21
$0.50
$1.00
2
$0.19
$0.50
$1.00
3
$0.17
$0.50
$1.00
4
$0.13
$0.33
$1.00
5
$0.09
$0
$1.00
6
$0.05
$0
$0
Table 61