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State University must purchase 1300 computers from three vendors. Vendor 1 charges $600 per computer plus a total delivery charge of $5,000. Vendor 2 charges $400 per computer plus a total delivery charge of $4,000. Vendor 3 charges $300 per computer plus a total delivery charge of $6,000. Vendor 1 will sell the university at most 500 computers, vendor 2, at most 900, and vendor 3, at most 600. The minimum order from a vendor is 200 computers. Determine how to minimize the cost of purchasing the needed computers.

Interpretation “a” - Each vendor must supply at least the minimum. Hence all vendors are used and all delivery charges are incurred.

Interpretation “b” - Each vendor must supply at least the minimum only if that vendor is used. Hence delivery charges are incurred only for those vendors used. Hint - A fixed cost can be modeled by using a binary integer variable (to be discussed in class).

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93116573

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