You are on page 1of 18

HighOptic

Inputs - Costs, Capacities, Demands (Table 5-2 for HighOptic)

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Demand City
Production and Transportation Cost per 1000 Units
Atlanta
Boston
Chicago
Denver Omaha
1,675
400
685
1,630
1,160
1,460
1,940
970
100
495
1,925
2,400
1,425
500
950
380
1,355
543
1,045
665
922
1,646
700
508
311
10
8
14
6
7

Portland
2,800
1,200
800
2,321
1,797
11

Demand City - Production Allocation (1000 Units)


Atlanta
Boston
Chicago
Denver Omaha
0
0
0
0
0
0
0
0
6
7
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Plants
Portland (1=open)
0
0
1
11
1
0
0

Fixed
Cost ($)
7,650
3,500
5,000
4,100
2,200

Decision Variables
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Unmet Demand

Guess feasible?
Excess Capacity
18
11
16
22
31
Atlanta
Boston
10
8

Objective Function
Cost =
$
21,416
Improvement on optimization =

Chicago
14

Denver
0

yes

Omaha
0

Cost of guess allocation =

Portland
0
$
$

51
(21,365)

HighOptic

Linear Program Formulations


Model Inputs:

n = Number of potential factory locations


m = Number of markets or demand points
Dj = Annual demand from market j
Ki = Potential capacity of factory i
fi = Annualized fixed cost of keeping factory i open
cij = Cost of producing and shipping one unit from factory i to market j
(cost includes production, inventory, and transportation)
Decision Variables:

yi = 1 if factory i is open, 0 otherwise.


xij = Quantity shipped from factory i to market j

HighOptic

Capacity
18
24
27
22
31

HighOptic

TelecomOne

Inputs - Costs, Capacities, Demands (5-2 for TelecomOne)


Demand City
Production and Transportation Cost per 1000 Units
Atlanta
Boston Chicago
Denver Omaha
1,675
400
685
1,630
1,160
1,460
1,940
970
100
495
1,925
2,400
1,425
500
950
380
1,355
543
1,045
665
922
1,646
700
508
311
10
8
14
6
7

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Portland
2,800
1,200
800
2,321
1,797
11

Fixed
Cost ($)
7,650
3,500
5,000
4,100
2,200

Decision Variables
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Unmet Demand

Demand City - Production Allocation (1000 Units)


Atlanta
Boston Chicago
Denver Omaha
0
8
2
0
0
0
0
0
0
0
0
0
0
0
0
10
0
12
0
0
0
0
0
0
0
Guess feasible?

Portland
0
0
0
0
0

yes

Excess Capacity
8
24
27
0
31
Atlanta
0

Objective Function
Cost =
$
42,786
Improvement on optimization =

Boston
0

Chicago
0

Denver
6

Omaha
7

Cost of guess allocation =

Portland
11
$
$

13,950
(28,836)

Plants
(1=open)
1
0
0
1
1

TelecomOne

Linear Program Formulations


Model Inputs:

n = Number of potential factory locations


m = Number of markets or demand points
Dj = Annual demand from market j
Ki = Potential capacity of factory i
fi = Annualized fixed cost of keeping factory i open
cij = Cost of producing and shipping one unit from factory i to market j
(cost includes production, inventory, and transportation)
Decision Variables:

yi = 1 if factory i is open, 0 otherwise.


xij = Quantity shipped from factory i to market j

TelecomOne

Capacity
18
24
27
22
31

TelecomOne

Production Allocation

Inputs - Costs, Capacities, Demands (for TelecomOptic)


Demand City
Production and Transportation Cost per 1000 Units
Atlanta Boston Chicago Denver
Omaha Portland
1,675
400
685
1,630
1,160
2,800
1,460
1,940
970
100
495
1,200
1,925
2,400
1,425
500
950
800
380
1,355
543
1,045
665
2,321
922
1,646
700
508
311
1,797
10
8
14
6
7
11

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Fixed
Cost ($)
7,650
3,500
5,000
4,100
2,200

Decision Variables
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Unmet Demand

Demand City - Production Allocation (1000 Units)


Atlanta Boston Chicago Denver
Omaha
0
8
2
0
0
0
0
0
6
0
0
0
0
0
0
10
0
12
0
0
0
0
0
0
7
Excess Capacity
8
18
16
0
24
Atlanta
0

Total Available Capacity

Boston Chicago
0
0

Denver
0

Omaha
0

Portland
0
0
11
0
0

Plants
(1=open)
1
1
1
1
1

122

Portland
0

Objective Function
Cost =
$
48,913
*This optimal cost given your plant location choices will be carried forward for future comparisions.

Capacity
18
24
27
22
31

Production Allocation

Linear Program Formulations


Model Inputs:

n = Number of potential factory locations


m = Number of markets or demand points
Dj = Annual demand from market j
Ki = Potential capacity of factory i
fi = Annualized fixed cost of keeping factory i open
cij = Cost of producing and shipping one unit from factory i to market j
(cost includes production, inventory, and transportation)
Decision Variables:

yi = 1 if factory i is open, 0 otherwise.


xij = Quantity shipped from factory i to market j

Location & Allocation

Inputs - Costs, Capacities, Demands (for TelecomOptic)


Demand City
Production and Transportation Cost per 1000 Units
Atlanta
Boston Chicago
Denver Omaha
1,675
400
685
1,630
1,160
1,460
1,940
970
100
495
1,925
2,400
1,425
500
950
380
1,355
543
1,045
665
922
1,646
700
508
311
10
8
14
6
7

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Portland
2,800
1,200
800
2,321
1,797
11

Fixed
Cost ($)
7,650
3,500
5,000
4,100
2,200

Decision Variables
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Unmet Demand

Demand City - Production Allocation (1000 Units)


Atlanta
Boston Chicago
Denver Omaha
0
8
2
0
0
0
0
0
6
7
0
0
0
0
0
10
0
12
0
0
0
0
0
0
0

Portland
0
11
0
0
0

Excess Capacity
8
0
0
0
0
Atlanta
0

Boston
0

Chicago
0

Denver
0

Omaha
0

Objective Function
Cost =
$
47,401
Cost with your Plant Choice=
Improvement on location and allocation optimization =

Portland
0
$
$

22,450
(24,951)

Plants
(1=open)
1
1
0
1
0

Location & Allocation

Linear Program Formulations


Model Inputs:

n = Number of potential factory locations


m = Number of markets or demand points
Dj = Annual demand from market j
Ki = Potential capacity of factory i
fi = Annualized fixed cost of keeping factory i open
cij = Cost of producing and shipping one unit from factory i to market j
(cost includes production, inventory, and transportation)
Decision Variables:

yi = 1 if factory i is open, 0 otherwise.


xij = Quantity shipped from factory i to market j

Location & Allocation

Capacity
18
24
27
22
31

Location & Allocation

Figure 5-9, 5-10, 5-11, & 5-12

Inputs - Costs, Capacities, Demands (for TelecomOptic)

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Demand City
Production and Transportation Cost per 1000 Units
Atlanta Boston Chicago Denver Omaha
Portland
1,675
400
685
1,630
1,160
2,800
1,460
1,940
970
100
495
1,200
1,925
2,400
1,425
500
950
800
380
1,355
543
1,045
665
2,321
922
1,646
700
508
311
1,797
10
8
14
6
7
11

Fixed
Cost ($)
7,650
3,500
5,000
4,100
2,200

Demand City Supplied (1 indicates Cities Supplied)


Atlanta Boston Chicago Denver Omaha
Portland
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Plants
(1=open)
0
0
0
0
0

Decision Variables
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita

Resulting Production Allocation


Demand City - Production Allocation (1000 Units)
Supply City
Atlanta Boston Chicago Denver Omaha
Portland
Baltimore
0
0
0
0
0
0
Cheyenne
0
0
0
0
0
0
Salt Lake
0
0
0
0
0
0
Memphis
0
0
0
0
0
0
Wichita
0
0
0
0
0
0
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Excess Capacity
0
0
0
0
0
Atlanta
0

Boston Chicago
0
0

Objective Function
Cost =
$
Cost penalty for single sourcing =

Denver
0

Omaha
0

Portland
0

Optimal Location&Allocation Cost=

$
$

Figure 5-9, 5-10, 5-11, & 5-12

Linear Program Formulations


Model Inputs:

n = Number of potential factory locations


m = Number of markets or demand points
Dj = Annual demand from market j
Ki = Potential capacity of factory i
fi = Annualized fixed cost of keeping factory i open
cij = Cost of producing and shipping one unit from factory i to market j
(cost includes production, inventory, and transportation)
Decision Variables:

yi = 1 if factory i is open, 0 otherwise.


xij = Quantity shipped from factory i to market j

Figure 5-9, 5-10, 5-11, & 5-12

Capacity
18
24
27
22
31

Figure 5-9, 5-10, 5-11, & 5-12