U6-assignment

Finding the Minimum Cost Solution Suppose that you are an analyst for Global, Inc. You have three factories that supply a single product to three warehouses. Your goal is to find the minimum cost solution that meets the following constraints and costs. You may solve this problem with any computer tool available to you, including Palisade Decision Tools Evolver or Excel Solver.

Shipping Cost per Unit from Factory to Warehouse

Warehouse 1 Warehouse 2 Warehouse 3

Factory 1 3 1 999

Factory 2 4 2 4

Factory 3 999 3 3

Note: “999” depicts a route that is impractical to implement.

Factories • Factory 1 has capacity of 5,000

units. • Factory 2 has capacity of 7,000

units. • Factory 3 has capacity of 3,000

units.

Warehouses • Warehouse 1 has demand of

7,000 units. • Warehouse 2 has demand of

3,000 units. • Warehouse 3 has demand of

5,000 units.

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Write a 3- to 4-page paper about formulating this problem. Show your formulation of the problem and show your optimal solution.

1. Increase the capacity of Factory 1 from 5,000 to 6,000. • Rerun the linear programming. • What effect does this have on the total cost and the optimal solution?

2. Return the capacity of Factory 1 to 5,000 and increase capacity of Factory 2 to 8,000. • Rerun the linear programming. • What effect does this have on the total cost and the optimal solution? • What are the practical implications to a supply chain manager from this

experiment? • Describe any assumptions made in this model.

3. Explain the managerial implications of your solution. 4. Explain the formulation in business terms.

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