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A Transportation Problem with Costs of Manufacture and Revenue at Sale

A company has two warehouses and four customers. The shipping costs between warehouses and customers are shown in the table below. Minimum and maximum shipments and unit manufacturing costs are shown for each plant. Minimum and maximum receipts, and unit revenues are shown for each customer. Our problem is to model the problem of finding the optimum shipping pattern with a network flow model.

The network model in Fig. 19 resembles that of a transportation problem except we have added arcs to carry the extra supplies and demands allowed.

Figure 19. Network Model

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