A Computer Manufacturing Company Wants to Develop a Monthly Plan

question 21

Essay

A computer manufacturing company wants to develop a monthly plan for shipping finished products from three of its manufacturing facilities to three regional warehouses. It is thinking about using a transportation LP formulation to exactly matched capacities and requirements. Data on transportation costs (in dollars per unit), capacities, and requirements are given below:
$\begin{array}{ccccc}& \text { Plant } & \text { Plant } & \text { Plant } \\\text { Warehouse } & 1 & 2 & \underline{3}&\text { Requirements }\\X & 2.41 & 1.63 & 2.09 & 8,000 \\\mathrm{Y} & 3.18 & 5.62 & 1.74 & 2,000 \\\mathrm{Z} & 4.12 & 3.16 & 3.09 & 3,000 \\\text { Capacities } & 4,000 & 6,000 & 3,000 &\end{array}$
a. How many variables are involved in the LP formulation?
b. How many constraints are there in this problem?
c. What is the constraint corresponding to plant 2?

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Definitions:

Entity Method

An approach in accounting where the financial performance and position of a business entity are considered separately from its owners.

Unrealized Profits

Profits that have been generated on paper from an investment but have not yet been realized through the sale of that investment.

Upstream Sales

Transactions where a subsidiary sells goods or services to the parent company or another subsidiary within the same corporate group, often scrutinized for transfer pricing.

Subsidiary's Separate-entity Earnings

The net income or loss generated by a subsidiary, considered independently before any adjustments for intercompany transactions or consolidation.