Andrew-Carter, producer and distributor of outdoor lighting fixtures.

3 plants 5 distribution centres

A-C is considering closing one of its
plants, as it is now operating with a forecasted excess capacity of 34,000 units per week.

Plant Capacity Normal Overtime

Plant 1 27000 7000

Plant 2 20000 5000
Plant 3 25000 6000

From/To Wing 1 Wing 2 Wing 3 Wing 4 Wing 5

Plant 1 0.5 0.44 0.49 0.46 0.56
Plant 2 0.4 0.52 0.5 0.56 0.57
Plant 3 0.56 0.53 0.51 0.54 0.35

Plan A – Plant 1 and Plant 2 will be operating; Plant 3 will be closed

Plan B – Plant 1 and Plant 3 will be operating; Plant 2 will be closed
Plan C – Plant 2 and Plant 3 will be operating; Plant 1 will be closed

Production Cost (PC) = Total Variable Cost + Total Operating Fixed Cost

3.3 3.24 3.29 3.26 3.36

4.02 3.96 4.01 3.98 4.08

3.18 3.3 3.28 3.34 3.35

3.88 4 3.98 4.04 4.05

3.28 3.25 3.23 3.26 3.07

3.98 3.95 3.93 3.96 3.77
 Forecasted weekly demand Units
Warehouse 1 9000
Warehouse 2 13000
Warehouse 3 11000
Warehouse 4 15000
Warehouse 5 8000

Total Demand 56000

FC
Plant Variable Cost Operating Not Operating

Plant 1, RT 2.8 14000 6000

Plant 1, OT 3.52
Plant 2, RT 2.78 12000 5000
Plant 2, OT 3.48
Plant 3, RT 2.72 15000 7500
Plant 3, RT 3.42

Implications of closing a plant :

Benefits: 1. lower fixed operationg cost
2.lower inventory holding cost
3.Increase workers utilization

Challaneges : 1.cost of termination and rehiring

2.negative reputation of the company
3.workforce rearrangement
4.adjusting output rates
5.backorders and lost sales

unintended outcomes: 1. distrust , anxiety , job insecurity , low job satisfaction , low motivation , low loyalty
2. public image , stock price , customer relation , competitiveness
 low motivation , low loyalty
mpetitiveness
Microsoft Excel 16.0 Answer Report
Worksheet: [Book1.xlsx]Sheet2
Report Created: 04-12-2019 02:01:30
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.078 Seconds.
Iterations: 20 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001, Use Automatic Scaling
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

Objective Cell (Min)

Cell Name Original Value Final Value
$C$38 total Wing 1 0 188360

Variable Cells
Cell Name Original Value Final Value Integer
$C$29 Plant 2, RT Wing 1 0 9000 Integer
$D$29 Plant 2, RT Wing 2 0 11000 Integer
$E$29 Plant 2, RT Wing 3 0 0 Integer
$F$29 Plant 2, RT Wing 4 0 0 Integer
$G$29 Plant 2, RT Wing 5 0 0 Integer
$C$30 Plant 2, OT Wing 1 0 0 Integer
$D$30 Plant 2, OT Wing 2 0 0 Integer
$E$30 Plant 2, OT Wing 3 0 5000 Integer
$F$30 Plant 2, OT Wing 4 0 0 Integer
$G$30 Plant 2, OT Wing 5 0 0 Integer
$C$31 Plant 3, RT Wing 1 0 0 Integer
$D$31 Plant 3, RT Wing 2 0 2000 Integer
$E$31 Plant 3, RT Wing 3 0 6000 Integer
$F$31 Plant 3, RT Wing 4 0 15000 Integer
$G$31 Plant 3, RT Wing 5 0 2000 Integer
$C$32 Plant 3, OT Wing 1 0 0 Integer
$D$32 Plant 3, OT Wing 2 0 0 Integer
$E$32 Plant 3, OT Wing 3 0 0 Integer
$F$32 Plant 3, OT Wing 4 0 0 Integer
$G$32 Plant 3, OT Wing 5 0 6000 Integer

Constraints
Cell Name Cell Value Formula Status Slack
$C$33 Wing 1 9000 $C$33>=$C$34 Binding 0
$D$33 Wing 2 13000 $D$33>=$D$34 Binding 0
$E$33 Wing 3 11000 $E$33>=$E$34 Binding 0
$F$33 Wing 4 15000 $F$33>=$F$34 Binding 0
$G$33 Wing 5 8000 $G$33>=$G$34 Binding 0
$H$29 Plant 2, RT Sum 20000 $H$29<=$I$29 Binding 0
$H$30 Plant 2, OT Sum 5000 $H$30<=$I$30 Binding 0
$H$31 Plant 3, RT Sum 25000 $H$31<=$I$31 Binding 0
$H$32 Plant 3, OT Sum 6000 $H$32<=$I$32 Binding 0
$C$29 Plant 2, RT Wing 1 9000 $C$29>=0 Not Binding 9000
$D$29 Plant 2, RT Wing 2 11000 $D$29>=0 Not Binding 11000
$E$29 Plant 2, RT Wing 3 0 $E$29>=0 Binding 0
$F$29 Plant 2, RT Wing 4 0 $F$29>=0 Binding 0
$G$29 Plant 2, RT Wing 5 0 $G$29>=0 Binding 0
$C$30 Plant 2, OT Wing 1 0 $C$30>=0 Binding 0
$D$30 Plant 2, OT Wing 2 0 $D$30>=0 Binding 0
$E$30 Plant 2, OT Wing 3 5000 $E$30>=0 Not Binding 5000
$F$30 Plant 2, OT Wing 4 0 $F$30>=0 Binding 0
$G$30 Plant 2, OT Wing 5 0 $G$30>=0 Binding 0
$C$31 Plant 3, RT Wing 1 0 $C$31>=0 Binding 0
$D$31 Plant 3, RT Wing 2 2000 $D$31>=0 Not Binding 2000
$E$31 Plant 3, RT Wing 3 6000 $E$31>=0 Not Binding 6000
$F$31 Plant 3, RT Wing 4 15000 $F$31>=0 Not Binding 15000
$G$31 Plant 3, RT Wing 5 2000 $G$31>=0 Not Binding 2000
$C$32 Plant 3, OT Wing 1 0 $C$32>=0 Binding 0
$D$32 Plant 3, OT Wing 2 0 $D$32>=0 Binding 0
$E$32 Plant 3, OT Wing 3 0 $E$32>=0 Binding 0
$F$32 Plant 3, OT Wing 4 0 $F$32>=0 Binding 0
$G$32 Plant 3, OT Wing 5 6000 $G$32>=0 Not Binding 6000
$C$29:$G$32=Integer
 VARIABLE COST & DISTRIBUTION COST

Wing 1 Wing 2 Wing 3 Wing 4 Wing 5 SUPPLY

Plant 1, RT 3.3 3.24 3.29 3.26 3.36 27000
Plant 1, OT 4.02 3.96 4.01 3.98 4.08 7000
Plant 2, RT 3.18 3.3 3.28 3.34 3.35 20000
Plant 2, OT 3.88 4 3.98 4.04 4.05 5000
Plant 3, RT 3.28 3.25 3.23 3.26 3.07 25000
Plant 3, OT 3.98 3.95 3.93 3.96 3.77 6000

DEMAND 9000 13000 11000 15000 8000

Scenario I: Assuming that Plant 1 will be closed

Wing 1 Wing 2 Wing 3 Wing 4 Wing 5 SUPPLY

Plant 2, RT 3.18 3.3 3.28 3.34 3.35 20000
Plant 2, OT 3.88 4 3.98 4.04 4.05 5000
Plant 3, RT 3.28 3.25 3.23 3.26 3.07 25000
Plant 3, OT 3.98 3.95 3.93 3.96 3.77 6000
56000
DEMAND 9000 13000 11000 15000 8000 56000

Wing 1 Wing 2 Wing 3 Wing 4 Wing 5 Sum SUPPLY

Plant 2, RT 9000 11000 0 0 0 20000 20000
Plant 2, OT 0 0 5000 0 0 5000 5000
Plant 3, RT 0 2000 6000 15000 2000 25000 25000
Plant 3, OT 0 0 0 0 6000 6000 6000
9000 13000 11000 15000 8000 56000
DEMAND 9000 13000 11000 15000 8000 56000

vc+distribution cost 188360 total cost 221360 =

 FC
Plant Operating Not Operating

Plant 1, RT 14000 6000

Plant 2, RT 12000 5000

Plant 3, RT 15000 7500

188360 + 12000 + 15000 + 6000

Microsoft Excel 16.0 Answer Report
Worksheet: [Book1.xlsx]Sheet4
Report Created: 04-12-2019 02:16:51
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.078 Seconds.
Iterations: 18 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001, Use Automatic Scaling
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

Objective Cell (Min)

Cell Name Original Value Final Value
$D$25 vc+distribution cost Wing 1 0 183430

Variable Cells
Cell Name Original Value Final Value Integer
$D$16 Plant 1, RT Wing 1 0 0 Integer
$E$16 Plant 1, RT Wing 2 0 13000 Integer
$F$16 Plant 1, RT Wing 3 0 0 Integer
$G$16 Plant 1, RT Wing 4 0 14000 Integer
$H$16 Plant 1, RT Wing 5 0 0 Integer
$D$17 Plant 1, OT Wing 1 0 0 Integer
$E$17 Plant 1, OT Wing 2 0 0 Integer
$F$17 Plant 1, OT Wing 3 0 0 Integer
$G$17 Plant 1, OT Wing 4 0 0 Integer
$H$17 Plant 1, OT Wing 5 0 0 Integer
$D$18 Plant 3, RT Wing 1 0 5000 Integer
$E$18 Plant 3, RT Wing 2 0 0 Integer
$F$18 Plant 3, RT Wing 3 0 11000 Integer
$G$18 Plant 3, RT Wing 4 0 1000 Integer
$H$18 Plant 3, RT Wing 5 0 8000 Integer
$D$19 Plant 3, OT Wing 1 0 4000 Integer
$E$19 Plant 3, OT Wing 2 0 0 Integer
$F$19 Plant 3, OT Wing 3 0 0 Integer
$G$19 Plant 3, OT Wing 4 0 0 Integer
$H$19 Plant 3, OT Wing 5 0 0 Integer

Constraints
Cell Name Cell Value Formula Status Slack
$D$20 Wing 1 9000 $D$20>=$D$21 Binding 0
$E$20 Wing 2 13000 $E$20>=$E$21 Binding 0
$F$20 Wing 3 11000 $F$20>=$F$21 Binding 0
$G$20 Wing 4 15000 $G$20>=$G$21 Binding 0
$H$20 Wing 5 8000 $H$20>=$H$21 Binding 0
$I$16 Plant 1, RT sum 27000 $I$16<=$J$16 Binding 0
$I$17 Plant 1, OT sum 0 $I$17<=$J$17 Not Binding 7000
$I$18 Plant 3, RT sum 25000 $I$18<=$J$18 Binding 0
$I$19 Plant 3, OT sum 4000 $I$19<=$J$19 Not Binding 2000
$D$16 Plant 1, RT Wing 1 0 $D$16>=0 Binding 0
$E$16 Plant 1, RT Wing 2 13000 $E$16>=0 Not Binding 13000
$F$16 Plant 1, RT Wing 3 0 $F$16>=0 Binding 0
$G$16 Plant 1, RT Wing 4 14000 $G$16>=0 Not Binding 14000
$H$16 Plant 1, RT Wing 5 0 $H$16>=0 Binding 0
$D$17 Plant 1, OT Wing 1 0 $D$17>=0 Binding 0
$E$17 Plant 1, OT Wing 2 0 $E$17>=0 Binding 0
$F$17 Plant 1, OT Wing 3 0 $F$17>=0 Binding 0
$G$17 Plant 1, OT Wing 4 0 $G$17>=0 Binding 0
$H$17 Plant 1, OT Wing 5 0 $H$17>=0 Binding 0
$D$18 Plant 3, RT Wing 1 5000 $D$18>=0 Not Binding 5000
$E$18 Plant 3, RT Wing 2 0 $E$18>=0 Binding 0
$F$18 Plant 3, RT Wing 3 11000 $F$18>=0 Not Binding 11000
$G$18 Plant 3, RT Wing 4 1000 $G$18>=0 Not Binding 1000
$H$18 Plant 3, RT Wing 5 8000 $H$18>=0 Not Binding 8000
$D$19 Plant 3, OT Wing 1 4000 $D$19>=0 Not Binding 4000
$E$19 Plant 3, OT Wing 2 0 $E$19>=0 Binding 0
$F$19 Plant 3, OT Wing 3 0 $F$19>=0 Binding 0
$G$19 Plant 3, OT Wing 4 0 $G$19>=0 Binding 0
$H$19 Plant 3, OT Wing 5 0 $H$19>=0 Binding 0
$D$16:$H$19=Integer
 Scenario 2: Assuming that Plant 2 will be closed

Wing 1 Wing 2 Wing 3 Wing 4 Wing 5

Plant 1, RT 3.3 3.24 3.29 3.26 3.36
Plant 1, OT 4.02 3.96 4.01 3.98 4.08
Plant 3, RT 3.28 3.25 3.23 3.26 3.07
Plant 3, OT 3.98 3.95 3.93 3.96 3.77

Wing 1 Wing 2 Wing 3 Wing 4 Wing 5 sum SUPPLY

Plant 1, RT
0 13000 0 14000 0 27000 27000
Plant 1, OT
0 0 0 0 0 0 7000
Plant 3, RT
5000 0 11000 1000 8000 25000 25000
Plant 3, OT
4000 0 0 0 0 4000 6000
9000 13000 11000 15000 8000 56000 65000
DEMAND 9000 13000 11000 15000 8000 56000

vc+distribution cost 183430

 FC
Plant Operating
Not Operating

Plant 1, RT 14000 6000

Plant 2, RT 12000 5000

Plant 3, RT 15000 7500

9000 excess supply

total 217430
Microsoft Excel 16.0 Answer Report
Worksheet: [Book1.xlsx]Sheet6
Report Created: 04-12-2019 02:24:02
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.047 Seconds.
Iterations: 16 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001, Use Automatic Scaling
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

Objective Cell (Min)

Cell Name Original Value Final Value
$C$26 vc+distribution cost Wing 2 0 188930

Variable Cells
Cell Name Original Value Final Value Integer
$B$17 Plant 1, RT Wing 1 0 0 Integer
$C$17 Plant 1, RT Wing 2 0 9000 Integer
$D$17 Plant 1, RT Wing 3 0 3000 Integer
$E$17 Plant 1, RT Wing 4 0 15000 Integer
$F$17 Plant 1, RT Wing 5 0 0 Integer
$B$18 Plant 1, OT Wing 1 0 0 Integer
$C$18 Plant 1, OT Wing 2 0 4000 Integer
$D$18 Plant 1, OT Wing 3 0 0 Integer
$E$18 Plant 1, OT Wing 4 0 0 Integer
$F$18 Plant 1, OT Wing 5 0 0 Integer
$B$19 Plant 2, RT Wing 1 0 9000 Integer
$C$19 Plant 2, RT Wing 2 0 0 Integer
$D$19 Plant 2, RT Wing 3 0 8000 Integer
$E$19 Plant 2, RT Wing 4 0 0 Integer
$F$19 Plant 2, RT Wing 5 0 3000 Integer
$B$20 Plant 2, OT Wing 1 0 0 Integer
$C$20 Plant 2, OT Wing 2 0 0 Integer
$D$20 Plant 2, OT Wing 3 0 0 Integer
$E$20 Plant 2, OT Wing 4 0 0 Integer
$F$20 Plant 2, OT Wing 5 0 5000 Integer

Constraints
Cell Name Cell Value Formula Status Slack
$B$21 Wing 1 9000 $B$21>=$B$22 Binding 0
$C$21 Wing 2 13000 $C$21>=$C$22 Binding 0
$D$21 Wing 3 11000 $D$21>=$D$22 Binding 0
$E$21 Wing 4 15000 $E$21>=$E$22 Binding 0
$F$21 Wing 5 8000 $F$21>=$F$22 Binding 0
$G$17 Plant 1, RT sum 27000 $G$17<=$H$17 Binding 0
$G$18 Plant 1, OT sum 4000 $G$18<=$H$18 Not Binding 3000
$G$19 Plant 2, RT sum 20000 $G$19<=$H$19 Binding 0
$G$20 Plant 2, OT sum 5000 $G$20<=$H$20 Binding 0
$B$17 Plant 1, RT Wing 1 0 $B$17>=0 Binding 0
$C$17 Plant 1, RT Wing 2 9000 $C$17>=0 Not Binding 9000
$D$17 Plant 1, RT Wing 3 3000 $D$17>=0 Not Binding 3000
$E$17 Plant 1, RT Wing 4 15000 $E$17>=0 Not Binding 15000
$F$17 Plant 1, RT Wing 5 0 $F$17>=0 Binding 0
$B$18 Plant 1, OT Wing 1 0 $B$18>=0 Binding 0
$C$18 Plant 1, OT Wing 2 4000 $C$18>=0 Not Binding 4000
$D$18 Plant 1, OT Wing 3 0 $D$18>=0 Binding 0
$E$18 Plant 1, OT Wing 4 0 $E$18>=0 Binding 0
$F$18 Plant 1, OT Wing 5 0 $F$18>=0 Binding 0
$B$19 Plant 2, RT Wing 1 9000 $B$19>=0 Not Binding 9000
$C$19 Plant 2, RT Wing 2 0 $C$19>=0 Binding 0
$D$19 Plant 2, RT Wing 3 8000 $D$19>=0 Not Binding 8000
$E$19 Plant 2, RT Wing 4 0 $E$19>=0 Binding 0
$F$19 Plant 2, RT Wing 5 3000 $F$19>=0 Not Binding 3000
$B$20 Plant 2, OT Wing 1 0 $B$20>=0 Binding 0
$C$20 Plant 2, OT Wing 2 0 $C$20>=0 Binding 0
$D$20 Plant 2, OT Wing 3 0 $D$20>=0 Binding 0
$E$20 Plant 2, OT Wing 4 0 $E$20>=0 Binding 0
$F$20 Plant 2, OT Wing 5 5000 $F$20>=0 Not Binding 5000
$B$17:$F$20=Integer
 Scenario 3: Assuming that Plant 3 will be closed

VARIABLE COST & DISTRIBUTION COST

Wing 1 Wing 2 Wing 3 Wing 4 Wing 5

Plant 1, RT 3.3 3.24 3.29 3.26 3.36 Plant 1, RT
Plant 1, OT 4.02 3.96 4.01 3.98 4.08
Plant 2, RT 3.18 3.3 3.28 3.34 3.35 Plant 2, RT
Plant 2, OT 3.88 4 3.98 4.04 4.05
Plant 3, RT

Wing 1 Wing 2 Wing 3 Wing 4 Wing 5 sum SUPPLY

Plant 1, RT 0 9000 3000 15000 0 27000 27000
Plant 1, OT 0 4000 0 0 0 4000 7000
Plant 2, RT 9000 0 8000 0 3000 20000 20000
Plant 2, OT 0 0 0 0 5000 5000 5000
9000 13000 11000 15000 8000 56000
DEMAND 9000 13000 11000 15000 8000

vc+distribution cost 188930

 FC
Plant Operating
Not Operating

Plant 1, RT 14000 6000

Plant 2, RT 12000 5000

Plant 3, RT 15000 7500

total 222430