Question

Jose Martinez of El Paso has developed a polished stainless steel tortilla machine that makes it a​ "showpiece" for display in Mexican restaurants. His forecast of capacity and demand​ follows:

Month	1	2	3	4	5
Demand	140	160	140	240	220
Capacity
Regular time	140	140	160	160	150
Overtime	20	40	20	20	20

Subcontracting: 90 units available over the 5-month period

Beginning inventory: 0 units

Ending inventory required: 10 units

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Costs:

Regular-time cost per unit: $80

Overtime cost per unit: $125

Subcontract cost per unit: $132

Inventory holding cost per unit per month: $2

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Assume that backorders are not permitted.

Using the transportation​ method, the total cost of the optimal plan is ​$__ (enter your response as a whole​ number).

Answer 1

The transportation model for above problem is:

Associated formulae are:

And solver Constraints are:

Using the transportation​ method, the total cost of the optimal plan is ​$ 80,600.