A company is looking at various options for expansion.

After a lot of thought it has decided to adopt one of five al

classified as fixed annual payment (for rent, electricity, and other overheads) and a variable costs which depends
variable cost per unit of throughput are given below.

Alternative Fixed Cost ($000) Variable cost per unit ($) Qty
A. Open new medium sized facility 40 45 2
B. Open two new small facilities 120 35 4
C. Expand current facility 450 26 6
D. Build large new facility and close old one 400 18 8
E. Build large new facility and keep old one 600 22 10
12
14
16
18
20

1200

1000

800

600

400

200

0
2 4 6 8 10 12 14 16
ed to adopt one of five alternatives. Each of these has total costs whch can be
ble costs which depends on throughput. Estimates of fixed annual cost and

A B C D E
130 190 502 436 644
220 260 554 472 688
310 330 606 508 732
400 400 658 544 776
490 470 710 580 820
580 540 762 616 864
670 610 814 652 908
760 680 866 688 952
850 750 918 724 996
940 820 970 760 1040

A
B
C
D
E

14 16 18 20
A manufacturer of staplers is about to lose its lease, so it must move to another location. Two sites are currently undercons
site A and $9400 at site B. Variable costs are expected to be $5 per unit at site A and $4 per unit at site B. Monthly demand
is not expected to deviate from that amount in the foreseeable future. Assume staplers sell for $6 per unit. Determine whic
conditions

Site TR FC VC TC Profit
A 52800 8000 44000 52000 800
B 52800 9400 35200 44600 8200
sites are currently underconsideration. Fixed costs would be $8,000 per month at
it at site B. Monthly demand has been steady at 8800 units for the several years and
r $6 per unit. Determine which location would yield higher profit under these
A company is considering four alternative locations for a new depot. It decides the most important factors and th
shown in below table. After considerable discussion the scores in the table were allocated for each site. What is th
each factor? Which site should be selected?
Location
Factor Weight A B C D A B
Climate 0.1 68 56 69 67 63.45 66.15
Infrastructure 0.2 78 96 95 68
Accessibility 0.1 56 68 67 69
Construction cost 0.05 35 15 45 25
Community Attitude 0.1 56 68 68 45
Government views 0.05 25 25 35 45
Proximity to supliers 0.15 70 70 82 82
Proximity to customers 0.2 78 70 95 97
Availabilty of workers 0.05 15 25 45 55
portant factors and their relative weights as
or each site. What is the relative importance of

C D
76.95 69.65
An assembly plant is planned to take components from three suppliers, and send finished goods to six regional w
these and the amounts supplied or demanded are given below. Where would you start looking for a site for the a

Coordinates Case 1 Case 2 Case 1: If quantity to be shipped are

Location X Y Supply/Demand Supply/Demand
Supplier 1 91 8 40 100 X 45.5
Supplier 2 93 35 60 100 Y 50.3
Supplier 3 3 86 80 100
Warehouse 1 83 26 24 100
Warehouse 2 89 54 16 100
Warehouse 3 63 87 22 100 Case 2: If quantity to be shipped a
Warehouse 4 11 85 38 100
Warehouse 5 9 16 52 100 X 54
Warehouse 6 44 48 28 100 Y 49.44444

360 900
hed goods to six regional warehouses. The locations of
t looking for a site for the assembly plant?

1: If quantity to be shipped are not equal

e 2: If quantity to be shipped are equal

to construct the plant in just a few regions. They are considering two different plant sizes in each location. Low
year, whereas high-capacity plants can produce 20 million units a year. The VP wants know what the lowest co
Demand Region
Production and Transportation Cost per 1,000,000 Units Fixed
Cost Low
Supply Region N. America S. America Europe Asia Africa ($) Capacity
N. America 81 92 101 130 115 6000 10
S. America 117 77 108 98 100 4500 10
Europe 102 105 95 119 111 6500 10
Asia 115 125 90 59 74 4100 10
Africa 142 100 103 105 71 4000 10
Demand 12 8 14 16 7

What is the lowest cost network?

Model
DV
Demand Region
Production and Transportation Cost per 1,00,000 Units Low capacity High capacity
Supply Region N. America S. America Europe Asia Africa plant open plant open
N. America 0 0 0 0 0 0 0
S. America 0 0 0 0 0 0 0
Europe 0 0 0 0 0 0 0
Asia 0 0 0 0 0 0 0
Africa 0 0 0 0 0 0 0
t sizes in each location. Low-capacity plants can produce 10 million units a
nts know what the lowest cost network should look like.
Fixed
Cost High
($) Capacity
9000 20
6750 20
9750 20
6150 20
6000 20

Demand Constraint
N. America S. America Europe Asia Africa
Unmet demand 12 8 14 16 7

Supply Constraint Objective Function

Excess Capacity
N. America 0 Cost= 1.1075433E-10
S. America 0
Europe 0
Asia 0
Africa 0