2. Each year, a local school district contracts with a private bus company for the transportation

of students in the primary grades to school. The district's annual payment is equal to $1 times

the number of "kid-miles" the bus company carries. (For example, transporting 10 kids two

miles each amounts to 20 kid-miles, or transporting 5 kids 4 miles each also equals 20 kid-miles.)

The school district has four schools and draws students from four distinct geographic

neighborhoods-North, East, West and South. The district's planning department has come up

the following figures on the distance from a particular neighborhood to a particular school

(distance is in miles):

The capacities for Schools 1,2,3 and 4 are 324, 386, 255, and 95, respectively. The number of

students in each district which are to be transported to school is 252 in North, 138 in East, 403

in West, and 196 in South.

a. The district's objective is to minimize the cost of transporting students to school while

satisfying the school capacity and neighborhood constraints. Formulate the linear programming

problem.

b. Find the cost-minimizing solution using EXCEL's Solver. Hand in copies of the answer report

and the sensitivity report.

c. Suppose it costs $1 to add another unit school capacity at School 1. Is it desirable to add

another unit of capacity at this school? Explain with reference to the sensitivity report.

d. Explain the value of School 1's shadow price with reference to the changing pattern of

student transportation if School 1 had one more unit of capacity available.