A steel manufacturer has 3 factories \(F_1\), \(F_2\) and \(F_3\) which can produce 35, 25 and 15 kilotomnes of steel per year, respectively. Three businesses \(B_1\), \(B_2\) and \(B_3\) have annual requirements of 20, 25 and 30 kilotomnes respectively. The table below shows the cost \(C_{ij}\) in appropriate units, of transporting one kilotome of steel from factory \(F_i\) to business \(B_j\).
| | Business | |
| \(B_1\) | \(B_2\) | \(B_3\) |
| \(F_1\) | 10 | 4 | 11 |
| Factory \(F_2\) | 12 | 5 | 8 |
| \(F_3\) | 9 | 6 | 7 |
The manufacturer wishes to transport the steel to the businesses at minimum total cost.
- Write down the transportation pattern obtained by using the North-West corner rule. [2]
- Calculate all of the improvement indices \(I_{ij}\) and hence show that this pattern is not optimal. [5]
- Use the stepping-stone method to obtain an improved solution. [3]
- Show that the transportation pattern obtained in part (c) is optimal and find its cost. [4]