GROUP 8 – Section B

BSG Assignment 2

Members  Roll No

Saurabh Kumar  19BM63008

Sankalp Srivastava  19BM63018

Rahul Ganesh  19BM63026

Karthik Dasari  19BM63060

Ankit Mirajkar 19BM63062

Location of Facilities - Distribution Center

Summary
Deciding the location of a new plant, warehouse or other facility is an important and commonly
discussed problem as long term capital expenditure is involved, apart from strategic implications of
the potential locations chosen. Uncertainties in transporation costs from the chosen location to the
supply points are also required to be taken into consideration, apart from operating costs and capital
investment. The model we have built analyzes the costs associated with 5 potential distribution
centres (warehouses to store goods) and enables us to select the optimal location with the least
investment.
Discussion
We have selected 5 potential locations in some Indian states (Maharashtra, Jharkhand, West Bengal,
etc.) for a new distribution center. The costs of transportation and operations will be different for
each state, and the capital investment will also vary for every site, as shown in the Model Parameters
worksheet. Other expenses such as Gas Prices, Number of Employees, Years of Operation, KwH per
Year and Electricity Costs will all remain constant, irrespective of the location chosen.
In the Model worksheet, we have listed 147 delivery points that must receive deliveries from the
chosen distribution center. Due to differences in geographical locations, these cities will receive
deliveries at a different rate per week. We have considered factors such as detours, poor road
conditions and indirect routes from distribution center to the supply centres in calculation of
Distance per week.
Initially, in Row 5, we can see that no center has been selected. By entering 1 in any of the Decision
cells in L8:L12, we can enter a center into Row 5. (Note: only select one center at a time, leaving the
other four decision variable cell values as zero)
When we test each location, the model recalculates the Distances for the supply points as well as the
cost cells in Row 5 with the data from the Model Parameters sheet. By testing each center, we can
determine the location that offers the lowest Total Cost.