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Let S represent the amount of steel produced (in tons). Steel production is related to the amount of labor used (L) and the amount of capital used (C) by the following function: S = 10 L0.4 C 0.6 In this formula L represents the units of labor input and C the units of capital input. Each unit of labor costs $60, and each unit of capital costs $100.
(a) Formulate an optimization problem that will determine how much labor and capital are needed in order to produce 40,000 tons of steel at minimum cost. Min _L + _C ____L0.4 C 0.6 L, C (bigger or equal, less or equal, equa etc)= _______
L,C (bigger or equal, less or equal, equa etc)= _______
(b) Solve the optimization problem you formulated in part a. Hint: When using Excel Solver, start with an initial L > 0 and C > 0. If required, round your answers to two decimal places. L = $
C = $
Cost = $
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