Posted by Joe on August 02, 19100 at 01:52:29:
Hi, I have recently started reading up on Linear Optimization and seem to be having the most trouble setting up the LP problems. I was hoping someone might have a suggestion or be able to help on how to approach the following problem:
There are 2 companies, A and B. Company A has a production capacity of up to 2 million per year, company B has production capacity of up to 3 million per year. Each company ships to 2 distribution centers C and D which can sell up to 5 million per year each. The profit earned per million of product depends on where it was produced and distributed. From A->C profit per million of product = 20,000: From A->D profit per million of product = 15,000: From B->C profit per million of product = 18,000: From B->D profit per million of product = 17,000
If A and B expand capacities, the added cost for A is 120,000 for each million added over current capacity and the added cost for B is 150,000 for each million added over curretn capacity.
I'm having trouble formulating this up to maximize profit less expansion costs over a ten year period. I can't seem to piece it all together
I greatly appreciate your time/help.
Thank you