A given merchandise must be transported at a minimum total cost between two origins (supply) and two destinations (demand). Destination 1 and 2 demand 500 and 700 units of merchandise, respectively. At the origins, the available amounts of merchandise are 600 and 800 units. USPS charges $5 per unit from origin 1 to demand 1, and $7 per unit from origin 1 to demand 2. From origin 2 to demand 1 and 2, USPS charges the same unit cost, $10 per unit, however, after 200 units, the unit cost of transportation increases by 50% (only from origin 2 to demand 1 and 2). Required:
a. Formulate this as a network-flow problem in terms of objective function and constraint(s.
b. How many units of merchandise should be shipped on each route and what is total cost?