Reference no: EM1393677
During the war with Iraq in 1991 the Terraco Motor Company produced a lightweight, all terrain vehicle code named "J99 Terra" for the military. The company is now planning to sell the Terra to the public. It has five plants that manufacture the vehicle and four regional distribution centers. The company is unsure of public demand for the Terra, so it is cnsidering reducing its fixed operating costs by closing one or more plants, even though it would incur an increase in transportation costs. The revelant costs for the problem are provided in the following table. The transportation costs are per thousand vehicles shipped; for example, the cost of shipping 1,000 vehicles from plant 1 to warehouse C is $32,000.
From Transportation Costs (1,000's) Annual Production Annual fixed
Plant to warehouse Capacity Operating costs
A B C D
1 $56 $21 $32 $65 12,000 $2,100,000
2 18 46 7 35 18,000 850,000
3 12 71 41 52 14,000 1,800,000
4 30 24 61 28 10,000 1,100,000
5 45 50 26 31 16,000 900,000
Annual
Demand 6,000 14,000 8,000 10,000
Formulate and solve an integer programming model for this problem to assist the company in determining which plants should remain open and which should be closed and the number of vehicles that should be shipped from each plant to each warehouse to minimize total cost.
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: During the war with Iraq in 1991 the Terraco Motor Company produced a lightweight, all terrain vehicle code named "J99 Terra" for the military. The company is now planning to sell the Terra to the public.
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