Question: Problem 4 ( Adapted from Taha, 2 0 0 3 ) : Chemco operates two production facilities that manufacture a chemical compound for two customers

Problem 4(Adapted from Taha, 2003): Chemco operates two production facilities that manufacture a
chemical compound for two customers who demand (respectively)750 and 840 tons per month. The
monthly production capacity of production facility 1 is 900 tons and that of production facility 2 is 730
tons. The cost per ton of compound produced is $32 at production facility 1 and $37 at production
facility 2. Raw material for the two production facilities are provided by three suppliers, who are each
contracted to provide as much as 600 tons of raw material at a cost of $200? ton (from supplier 1),
$208? ton (from supplier 2), and $213? ton (from supplier 3).(You may assume 1 ton of raw material
produces 1 ton of the compound.) Chemco assumes the transportation cost of both the raw material
and the final compound. The costs per ton of transporting raw material from supplier to production
facility are given in the following table:
The costs per ton of transporting the final compound are given in the following table:
Part a: Formulate a minimum cost flow model to determine a minimum cost plan for transporting raw
material and producing and transporting compound. (Note: For this problem, you should provide a
drawing of the minimum-cost flow network. Explain in words what nodes and arcs represent, and label
nodes and arcs with all relevant data. If you need data, variables, or constraints that are not included in
the standard minimum cost flow model, make sure you define those to make the linear programming
formulation clear.)
Part b: Solve the problem using an indexed model in AMPL/CPLEX and report the obtained optimal
solution.
 Problem 4(Adapted from Taha, 2003): Chemco operates two production facilities that

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