Case Situation

1. LG Ltd. is a manufacturing of AC that has been its demand grows significantly. The
company anticipates nationwide demand for the year 2020 to be 180,000 units in the south,
120,000 units in the west India, 110,000 units in the East, and 100,000 units in the North
India. Manager of LG Ltd are designing the manufacturing network and have selected four
potential sites – Delhi, Mumbai, Chennai, and Bangalore. Plants could have a capacity of
either 200,000 to 400,000 units. The annual fixed costs at the four locations are shown in
table along with the cost of producing and shipping an AC to each of the four markets.
Where should LG build its factories and how large should they be?

Delhi Mumbai Chennai Bangalore

Annual fixed cost $6 Million $5.5 Million $5.6Million $6.1 Million
of 200,000 plant
Annual fixed cost $10 Million $9.2 million $9.3Million $10.2Million
of 400,000 plant
South $299 $211 $197 $222
West $202 $198 $257 $265
East $240 $270 $250 $265
North $175 $210 $240 $244
2. SC Consulting, a supply chain consulting firm, must decide on the location of its home
offices. Its clients are located primarily in the 16 states listed in table. There are four potential
sites for home offices: New Delhi, Jaipur, Mumbai, and Pune the annual fixed cost of
locating an office in New Delhi is $165, 428, Jaipur is $ 131, 230, Mumbai is $140,000, and
Pune is $ 145,000. The expected no. of trips to each is Cities and the travel costs from each
potential site are shown in table. Each consultant is expected to take at most 25 trips each
year.

Cites Total # of trips Cost from Cost from Cost From Cost from
Delhi Jaipur Mumbai Pune
40 150 250 200 25
Bangalore 35 150 250 200 75
Noida 100 75 200 150 125
Bhopal 25 150 200 125 125
Lucknow 40 100 200 125 150
Chennai 25 175 175 125 125
Nasik 50 150 175 100 150
Indore 30 150 150 100 200
Gaogoan 50 75 100 200 250
surat 65 150 125 25 250
HY 40 125 125 75 125
Warangal 30 300 200 150 200
Goa 20 300 175 125 200
Udaipur 30 250 100 125 250
Ahmadabad 40 250 75 75 300
Ajmer 55 100 25 125 300