Homework

$$ Formulate $(50\%)$ and solve $(50\%)$

problems using LP

$$ A forward buying problem $($similar to Pigskin

inventory problem$)$

$$ A transportation problem $($similar to SSDs

problem$).$

$$ Please use Excel solver to show your work.

PDF files with solution will not be accepted.

Forward Buying Problem

$$ A major pharmaceutical wholesaler buys branded drugs from

a manufacturer and sells them to pharmacies.

$$ It estimates that the wholesale $($W$)$ price, the retail $($R$)$ price

and pharmacy sales for a drug follow this trend:

Month $123456$

W price $($$$/$unit$)404555606570$

R price $($$$/$unit$)8090110120130140$

Demand

$($in million units$)$

$203045607595$

Forward Buying Problem

$$ The inventory carrying cost for one unit for one month is

$$2.$

$$ Assume $0$ initial inventory, how should the wholesaler

buy to maximize its profit?

Transportation Problem$$ There are three warehouses at Detroit, Pittsburgh and Buffalo. They have $250,$

$130$ and $235$ tons of paper accordingly. There are four publishers in Boston,

New York, Chicago and Indianapolis. They ordered $75,230,240$ and $70$ tons of

paper to publish new books

$$ How do we ship papers to publishers to meet all demand and minimize cost?

From $\backslash$ To Boston $($Bs$)$ New York $($NY$)$ Chicago $($CH$)$ Indianapolis $($IN$)$

Detroit $($DT$)$ $$15/$ton $201621$

Pittsburg

$($PT$)$

$2513511$

Buffalo $($BF$)1515717$