The Production Problem of NSC
Step 2: Identify the Objective Function
Words: Minimize total costs
Decompose: Total costs = production costs + inventory costs +
change-in-production costs
Mathematics:
Prod. Costs = 7400x1 + 7500x2 + 7600x3 + 7800x4
Inv. Costs = 120I1 + 120I2 + 120I3 + 120I4
Change Costs = 50 |x2 - x1| + 50 |x3 - x2| + 50 |x4 - x3