Case 1:

The case has been solved through the Transportation problem method using a Simplex Linear
Programming via excel. The answers to the questions asked are as follows:

Q.1: Which plants should the City buy asphalt from? The City can buy from as many plants as
it wants?
Ans: The City should buy asphalt from the plants in Tully, VanBro, Yonkers, New York, Sopranos and
Hamilton

Q.2: How much should it take from each plant?

Ans: The answer has been provided in the table below. For eg: Queens should take 65000 tons from
Tully plant and 60000 tons from New York plant
Staten
Manhattan Bronx Brooklyn Queens Island
Grace 0 0 0 0 0
Tully 0 0 0 75000 0
Van Bro 0 0 30000 0 70000
Nigro 10000 0 0 50000 0
Yonkers 10000 55000 0 0 0
New York 0 0 0 0 0
Sopranos 0 0 0 0 0
Hamilton 45000 0 55000 0 0

Q.3: Would it make sense for the City to expand its own plant? How much would it be willing
to invest in that expansion? Assume it can expand without limit and produce at the same
cost.
Ans: Yes it would because the capacity of the Hamilton (City’s own plant) is a binding constraint. Its
upper bound is 150,000 which means city can increase the capacity up to 400,000 tons which is the total
demand. On increasing the capacity from 100,000 to 150,000 the total cost reduces from $1,05,868,75
to $ 84,45,200 which amounts to a $21,41,675 savings. The savings that can be accrued through this
investment i.e. $21,41,675 is the maximum amount that they should be willing to invest.

Of course, this is under the assumption that the demand would remain uniform as per the current year.
Also, there would be economies of scale which would garner further savings in terms of reducing the
cost per ton and the logistics cost.