Question: Chapter 5, Question 3: Note. In this tranportation problem you need to include production cost in your transportation cost. For example, the cost of transporting
Chapter 5, Question 3: Note. In this tranportation problem you need to include production cost in your transportation cost. For example, the cost of transporting 1 ton in from Germany to Northe America is $1,300. Furthermore, the company needs to spend 15,000 euros in Germany to produce 1 ton of ink. This needs to be added to the transportation cost. Therefore, it increases to $1,300 + $7,530 (7,530 = 15,000 0.502, to exchange euro to $). The production cost is not a fixed cost. It needs to be included for every ton of ink transported. Variables and parameters needed: xij = quantity transported from Plant i to City j cij = transportation cost from Plant i to City j pi = production cost in Plant i
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