Solutions to Case Problems

Case Problem 2: Distribution Systems Design

Three related linear programming models were developed and solved to answer the questions in this case.
First, we developed a linear programming formulation of the network model shown on the following page;
we refer to this network model and the corresponding linear program as the Part 2 Network Model and the
Part 2 Linear Program, respectively. Variations of the Part 2 Linear Program were then used to answer the
questions in parts 1 and 3. For instance, to answer the question concerning the existing system in part 1 we
added constraints to the Part 2 Linear Program which set the flow equal to 0 over the distribution
centercustomer arcs that Darby does not currently use. For Part 3, we added three plant to customer arcs to
the Part 2 Network Model and corresponding linear program: El Paso - San Antonio, San Bernardino - Los
Angeles, and San Bernardino - San Diego.

The decision variables used in each of the linear programs use 4 letters to describe the amount of flow over
each arc. The first two letters in each variable name identify the “from” node and the second two letters
identify the “to” nodes. For instance, EPFW represents the amount shipped from El Paso to Ft. Worth and
LVDE represents the amount shipped from Las Vegas to Denver.

A description of the LP models that provide the basis for answering the questions in the managerial report
follows the network model for the questions in part 2.

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 Solutions to Case Problems

Part 2 Network Model:

Dallas 6300

San 4880
Antonio
0.3
2.1

Ft. Worth 3.1 Wichita 2130

4.4
3.20 6.0

5.4 Kansas 1210

30,000 El Paso
2.20 4.5 City
5.2
6.0
4.20
Santa Fe 2.7 Denver 6120
4.7

3.90 3.4
San 3.3 Salt
20,000 2.7 Lake 4830
Bernardino
City
1.20 5.4
3.3

Las Vegas 2.4

Phoenix 2750
2.1

2.5
Los
8580
Angeles

San Diego 4460

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 Solutions to Case Problems

LP Model and Solution for Part 2

MIN 13.7EPFW + 12.7EPSF + 14.7EPLV + 13.9SBSF + 11.2SBLV + .3FWDA +

2.1FWSA + 3.1FWWI + 4.4FWKC + 6.0FWDE + 5.2SFDA + 5.4SFSA + 4.5SFWI +
6.0SFKC + 2.7SFDE + 4.7SFSL + 3.4SFPH + 3.3SFLA + 2.7SFSD + 5.4LVDE +
3.3LVSL + 2.4LVPH + 2.1LVLA + 2.5LVSD

S.T.

1) EPFW + EPSF + EPLV < 30000 2) SBSF + SBLV < 20000

3) FWDA + FWSA + FWWI + FWKC + FWDE - EPFW = 0 4) SFDA + SFSA
+ SFWI + SFKC + SFDE + SFSL + SFPH + SFLA + SFSD - EPSF - SBSF = 0
5) LVDE + LVSL + LVPH + LVLA + LVSD - EPLV - SBLV = 0 6) FWDA
+ SFDA = 6300 7) FWSA + SFSA = 4880 8) FWWI + SFWI =
2130 9) FWKC + SFKC = 1210 10) FWDE + SFDE + LVDE =
6120 11) SFSL + LVSL = 4830 12) SFPH + LVPH = 2750
13) SFLA + LVLA = 8580 14) SFSD + LVSD = 4460

Objective Function Value = 600942.000

Variable Value Reduced Costs

-------------- --------------- ------------------
EPFW 14520.000 0.000 EPSF
6740.000 0.000 EPLV 0.000
1.800 SBSF 0.000 2.900
SBLV 20000.000 0.000 FWDA
6300.000 0.000 FWSA 4880.000
0.000 FWWI 2130.000 0.000
FWKC 1210.000 0.000 FWDE
0.000 4.300 SFDA 0.000
3.900 SFSA 0.000 2.300
SFWI 0.000 0.400 SFKC
0.000 0.600 SFDE 6120.000
0.000 SFSL 0.000 1.200
SFPH 0.000 0.800 SFLA
0.000 1.000 SFSD 620.000
0.000 LVDE 0.000 2.900
LVSL 4830.000 0.000 Variable
Value Reduced Costs --------------
--------------- ------------------ LVPH
2750.000 0.000 LVLA 8580.000
0.000 LVSD 3840.000 0.000

LP Model and Solution for Part 1 Questions (Existing System)

The following constraints were added to the above LP Model so that each customer can only be served by
the distribution center it is currently served by.

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 Solutions to Case Problems

15) SFDA = 0
16) SFSA = 0
17) SFWI = 0
18) SFKC = 0
19) SFLA = 0
20) SFSD = 0
21) LVDE = 0
22) FWDE = 0
23) LVSL = 0
24) LVPH = 0

The optimal solution shows that the total cost (manufacturing plus distribution) of the existing system is
$620,770. Details of this solution and the modifications suggested in questions 2 and 3 are contained in the
“Summary of Optimal Solutions.”

LP Model and Solution for Part 3 (Plant-Customer Shipments)

The network model for the part 2 questions must be modified by adding 3 arcs: San Bernardino - Los
Angeles, San Bernardino - San Diego, and El Paso - San Antonio. The corresponding linear program must
also be modified to incorporate the new variables.

A summary of the optimal solutions suggested by questions (1), (2), and (3) follows.

Summary of Optimal Solutions

Part 1 Part 2 Part 3
Plant
Existing Any Distribution Customer
Costs System Center Shipments
Manufacturing Cost $426,710 $423,230 $423,230
Shipping Cost 194,060 177,712 130,304
$620,770 $600,942 $553,534
Total Cost

Decision Variables

EPFW 14520 14520 9640

EPSF 13700 6740 6740
EPLV 0 0 0
SBSF 0 0 0
13040 20000 6960
SBLV
FWDA 6300 6300 6300
FWSA 4880 4880 0
FWWI 2130 2130 2130
FWKC 1210 1210 1210
FWDE 0 0 0

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 Solutions to Case Problems

SFDA 0 0 0
SFSA 0 0 0
SFWI 0 0 0
SFKC 0 0 0
SFDE 6120 6120 6120
SFSL 4830 0 0
SFPH 2750 0 620
SFLA 0 0 0
SFSD 0 0
620
LVDE 0 0 0 LVSL 0 4830 4830 LVPH 0 2750
2130

EPSA 4880
8580
SBSD 4460
SBLA

Part 1 Part 2 Part 3

Plant
Existing Any Distribution Customer
System Center Shipments
LVLA 8580 8580 0
4460 3840 0
LVSD

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 Solutions to Case Problems

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