Question

# Suppose you have just been hired as the new production manager of Quest Steel. There are...

Suppose you have just been hired as the new production manager of Quest Steel. There are three plants currently producing ½ inch sheet steel of identical quality. Total cost of production in plant 1 is

C1 = 1 + 10q1,

Where q is measured in tones and C is in dollars. The total cost function in plant 2 is

C2 = 10 + .5(q2)2 + 2q2

Cost at plant 3 is given by

C3 = 5 + (q3)2

Total production Q = q1 + q2 + q3

a. Traditionally, 10 tons of steel have been produced each period. Plant 1 has produced 2 tons, plant 2 has produced 4 tons and plant 3 has produced 4 tons. You have been assigned the task of developing ways to reschedule production among plants to reduce costs, given that the output level remains at 10 tons per day. What changes, if any, do you suggest?

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