Reference no: EM132313555
Assignment
The Tillman Company operates a plant in Cincinnati. Its annual capacity is 60,000 units. Product is shipped to regional distribution centers located in Philadelphia, Birmingham, and Dallas. Tillman plans to increase capacity by constructing a new plant in one or more of the following cities: Detroit, Bowling Green, Colorado Springs, or Davenport. The estimated annual fixed cost and the annual capacity for the four proposed plants are as follows:
|
Proposed Plant
|
Annual Fixed Cost
|
Annual Capacity
|
|
Detroit
|
$275,000
|
20,000
|
|
Bowling Green
|
$300,000
|
40,000
|
|
Colorado Springs
|
$275,000
|
60,000
|
|
Davenport
|
$500,000
|
80,000
|
The company's long-range planning group developed forecasts of the anticipated annual demand at the distribution centers as follows:
|
Distribution Center
Philadelphia
|
Annual Demand
60,000
|
|
Birmingham
|
40,000
|
|
Dallas
|
40,000
|
The shipping cost per unit from each plant to each distribution center is as follows:
|
|
Distribution Centers
|
|
|
Plant Site
|
Philadelphia
|
Birmingham
|
Dallas
|
|
Detroit
|
5
|
2
|
3
|
|
Bowling Green
|
4
|
3
|
4
|
|
Colorado Springs
|
9
|
8
|
5
|
|
Davenport
|
11
|
4
|
2
|
|
Cincinnati
|
8
|
4
|
5
|
a. Formulate a mixed integer programming model that could be used to help Tillman determine which new plant or plants to open in order to satisfy anticipated demand.
b. Solve the model you formulated in part a. What is the optimal cost? What is the optimal set of plants to open?
c. Using the procedure discussed in BAN 6050 on the binary variables in your model, find a second best solution. What is the increase in cost versus the best solution from part b?
Attachment:- Assignment - Supply Chain.rar