RVW (Restored Volkswagens) Buys 15 Used VW's at Each of Two

question 45

Essay

RVW (Restored Volkswagens) buys 15 used VW's at each of two car auctions each week held at different locations. It then transports the cars to repair shops it contracts with. When they are restored to RVW's specifications, RVW sells 10 each to three different used car lots. There are various costs associated with the average purchase and transportation prices from each auction to each repair shop. Also there are transportation costs from the repair shops to the used car lots. RVW is concerned with minimizing its total cost given the costs in the table below. $\text { a. Given the costs below, draw a network representation for this problem. }$
$\begin{array} { cc } \text { Repait Shops }&\text { Used Car Lots }\\\begin{array}{lll}\mathrm{S} 1 & \mathrm{S} 2 \\\text { Auction 1 } &550&500\\\text { Auction 2 } & 600 & 450\end{array}&\begin{array}{llll}&\mathrm{L} 1 & \mathrm{L} 2 & \mathrm{L} 3 \\\mathrm{S} 1 & 250 & 300 & 500 \\\mathrm{~S} 2 & 350 & 650 & 450\end{array}\end{array}$
$\text { b. Formulate this problem as a transshipment linear programming model. }$

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Definitions:

Direct Expense

Costs that can be directly attributed to the production of goods or services, such as raw materials or labor.

Cost Center

A division or department within a business to which costs can be allocated for accounting and budgeting purposes.

Indirect Expense

Costs not directly traceable to a specific cost object, such as overhead or administrative expenses, which support the operation of the business as a whole.

Profit Center

A branch or division of a company that is directly responsible for generating its portion of the organization's overall profit.