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Micro Economics Schedule Using Transportation Model

Micro Economics Schedule Using Transportation Model

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Taiwan Electronics produces three models of CB radios, A, B, and C. The estimated demand for the three models is 10,000, 12,000, and 7,000 units, respectively. The radios can be produced on one of four available production lines: Q, R, S, and T, whose production capacities are: 6,000, 15,000, 20,000 units, respectively. The manufacturing costs vary among the production lines and are shown in the table below (in $ per unit)
Taiwan Electronics produces three models of CB radios, A, B, and C. The estimated demand for the three models is 10,000, 12,000, and 7,000 units, respectively. The radios can be produced on one of four available production lines: Q, R, S, and T, whose production capacities are: 6,000, 15,000, 20,000 units, respectively. The manufacturing costs vary among the production lines and are shown in the table below (in $ per unit)

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A. 20. . The manufacturing costs vary among the production lines and are shown in the table below (in $ per unit) model A B C Q 60 80 75 R 53 75 70 S 61 81 75 T 50 70 65 The company’s objective is to meet all estimated demand at the lowest possible manufacturing cost. R.000. and T.000.classof1. S.com/homework-help/economics *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.Sub: Economics Question: Topic: Micro Economics Micro Economics Schedule Using Transportation Model Taiwan Electronics produces three models of CB radios. The estimated demand for the three models is 10. and C. 12.000 units. respectively. 15.000. The radios can be produced on one of four available production lines: Q. and 7.000. B.000 units. www. whose production capacities are: 6. Use the transportation model to find the best production schedule. respectively.

classof1. Because Supply is greater than demand. Total Demand at this station is 16000 (45000-29000) DEMA ND A SUP PLY Q R S T 60 53 61 50 10000 B 80 75 81 70 C 75 70 75 65 D 0 0 0 0 16000 6000 15000 20000 4000 12000 7000 Let us solve the problem with Vogel approximation method.com/homework-help/economics *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.Sub: Economics Solution: Topic: Micro Economics Lets us use Vogel’s approximation method to find basic feasible solution. . Let us create a dummy demand station. Write the difference of minimum cost and next to minimum cost against each row and each column in the penalty column. DEMAND A SUP PLY Q R S T 60 53 61 50 B 80 75 81 70 C 75 70 75 65 D 0 0 0 0 6000 15000 20000 4000 Penalty 60 53 61 50 www. D.

classof1. Allocate the maximum units to the place where the cost is minimum in row three. DEMAND A SUP PLY Q R S T 60 53 61 50 10000 Pena lty 3 5 5 0 B 80 75 81 70 12000 C 75 70 75 65 7000 D 0 0 0(16000) 0 0 6000 15000 4000 4000 Penalty 15 17 14 15 Again repeat same step. . DEMAND A SUPPLY Q R 60 53(10 B 80 75 C 75 70 D 0 0 6000 5000 Penalty 5 5 www. And minimum cost in row second is 53.Sub: Economics 10000 Pena lty 3 5 5 0 12000 7000 16000 Topic: Micro Economics Identify the maximum penalties.com/homework-help/economics *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades. We see that maximum penalty is in row second. In this case it is at row three. Now write the remaining stock penalties and stock.

classof1. DEMAND A SUPPLY Q R 60 53(10000) B 80 75 C 75(3000) 70 D 0 0 3000 5000 Penalty 5 5 www. We see that maximum penalty is in row third. . We see that maximum penalty is in row one.Sub: Economics 000) S T 61 50 0 Penalty 3 81 70 12000 5 75 65 7000 5 0(16000) 0 0 0 Topic: Micro Economics 4000 4000 6 5 Again repeat same step.com/homework-help/economics *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades. And minimum cost in row three is 75. And minimum cost in row one is 75. DEMAND A Q SUPPLY R S T 60 53(10000) 61 50 0 Penalty 3 B 80 75 81 70 12000 5 C 75 70 75(4000) 65 3000 5 D 0 0 0(16000) 0 0 0 6000 5000 0 4000 Penalty 5 5 6 5 Again repeat same step.

.com/homework-help/economics *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.Sub: Economics S T 61 50 0 Penalty 3 81 70 12000 5 75(4000) 65 0 5 Topic: Micro Economics 0(16000) 0 0 0 0 4000 6 5 DEMAND A Q SUPPLY R S T 60 53(10000) 61 50 0 Penalty 0 B 80(3000) 75(5000) 81 70(4000) 0 0 C 75(3000) 70 75(4000) 65 0 0 D 0 0 0(16000) 0 0 0 0 0 0 0 Penalty 0 0 0 0 Thus initial basic solution is thus obtained.classof1. DEMAND A Q SUPPLY R S T 60 53(10000) 61 50 B 80(3000) 75(5000) 81 70(4000) C 75(3000) 70 75(4000) 65 D 0 0 0(16000) 0 6000 15000 20000 4000 www.

com/homework-help/economics *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.Sub: Economics 10000 12000 7000 16000 Topic: Micro Economics Now we will check if the solution.classof1. so obtained by Vogel's method. DEMAND A Q SUPPLY R S T Vj 58 70 80 75 0 53 B 80 75 75 0 C 75 D Ui 0 -5 0 -10 Ui+Vj for empty positions DEMAND A Q SUPPLY R S T Vj 58 48 58 80 80 65 75 -10 0 58 70 B C D 0 -5 Ui 0 -5 0 -10 Cij for empty positions www. . is also optimal solution.

com/homework-help/economics *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades. .Sub: Economics DEMAND A Q SUPPLY R S T Vj 61 50 58 80 81 60 B Topic: Micro Economics C D 0 Ui 0 -5 0 70 0 65 75 0 0 -10 Dij=Cij-(Uij+Vij) will give following matrix DEMAND A Q SUPPLY R S T Vj 3 2 58 80 1 0 75 10 0 2 0 B C D 0 5 Ui 0 -5 0 -10 Since all values of Dij are positive. we conclude that the solution obtained by Vogel's Method is Optimal Solution. The Solution is: DEMAND SUPPLY A Q B 3000 C 3000 D 6000 www.classof1.

This is minimized cost. .Sub: Economics R S T 10000 4000 12000 7000 10000 5000 4000 Topic: Micro Economics 15000 16000 20000 4000 16000 45000 Total cost is =80*3000+75*3000+53*1000+75*5000+75*4000+70*4000=1950000. www.com/homework-help/economics *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.classof1.

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