Where should ABC locate its plant? (Hint: Use Gravity Model and Excel Solver). Identify some of the influencing factors that affect ABC’s network design decision.

1. ABC is going to build a new manufacturing plant to serve five market regions. ABC has four supply sources. The coordinates of location, the demand of each market region, maximum units from each supply source and the shipping cost from each supply source or to each market region are shown below.

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Supply Chain Management LGMT 683

Problem Set 1

 

  1. ABC is going to build a new manufacturing plant to serve five market regions. ABC has four supply sources. The coordinates of location, the demand of each market region, maximum units from each supply source and the shipping cost from each supply source or to each market region are shown below.
Supply Sources Shipping Cost ($/Ton Mile) Supply  (Tons)  X Coordinate  Y Coordinate
S1 1.5 180 450 820
S2 1 220 280 900
S3 2 140 600 400
S4 2 170 850 700
Markets Shipping Cost ($/Ton Mile) Demand

(Tons)

 X Coordinate  Y Coordinate
M1 1 110 100 100
M2 1.5 70 200 300
M3 2.5 85 1000 100
M4 3 90 600 1100
M5 2 65 800 900

 

  1. Where should ABC locate its plant? (Hint: Use Gravity Model and Excel Solver).
  2. Identify some of the influencing factors that affect ABC’s network design decision.

 

 

  1. Find the optimal allocation of demand to production facilities for the data given in the following table. (Hint: Use the model for allocating demand to existing facilities. First, formulate the problem and then use Excel Solver to find the optimal results.)
Supply
Location
Demand Location Monthly
Capacity (Ki)
Production and Transportation
Cost ($ per unit)
1 2 3
1 2.0 1.0 1.7 17,000
2 0.9 2.0 1.3 20,000
3 1.8 2.4 1.6 29,000
Monthly
Demand (Dj)
11,000 8,500 15,000