In: Statistics and Probability
Let S represent the amount of steel produced (in tons). Steel production is related to the amount of labor used (L) and the amount of capital used (C) by the following function:
S = 15 L0.4C 0.6
In this formula L represents the units of labor input and C the units of capital input. Each unit of labor costs $40, and each unit of capital costs $100.
(a) | Formulate an optimization problem that will determine how much labor and capital are needed in order to produce 55,000 tons of steel at minimum cost. | |||||||||||||||
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(b) | Solve the optimization problem you formulated in part a. Hint: When using Excel Solver, start with an initial L > 0 and C > 0. | |||||||||||||||
If required, round your answers to two decimal places. | ||||||||||||||||
L = $ | ||||||||||||||||
C = $ | ||||||||||||||||
Cost = $ |
(a) Min Z = 40L + 120C
20L0.3C0.7 >= 50,000
L,C >= 0
(b) L= 2990.86
C=2318.44
Cost = 397447.6