A company currently ships products from 5 plants to 4 warehouses. The company is considering the option of closing down one or more plants. This would increase distribution cost but perhaps lower overall cost. What plants, if any, should the company close? Transportation Costs (per 1000 products) Plant 1 Plant 2 Plant 3 Plant 4 Plant 5 Warehouse 1 $4,000 $2,000 $3,000 $2,500 $4,500 Warehouse 2 $2,500 $2,600 $3,400 $3,000 $4,000 Warehouse 3 $1,200 $1,800 $2,600 $4,100 $3,000 Warehouse 4 $2,200 $2,600 $3,100 $3,700 $3,200 Demand from warehouses are: Demand Warehouse 1 15,000 Warehouse 2 18,000 Warehouse 3 14,000 Warehouse 4 20,000 Capacity of plants are: Plant 1 Plant 2 Plant 3 Plant 4 Plant 5 Capacity 20,000 22,000 17,000 19,000 18,000 Fixed operating costs for each plants: Plant 1 Plant 2 Plant 3 Plant 4 Plant 5 Fixed Cost $12,000 $15,000 $17,000 $13,000 $16,000

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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A company currently ships products from 5 plants to 4 warehouses. The company is considering the option of closing down one or more plants. This would increase distribution cost but perhaps lower overall cost. What plants, if any, should the company close?


Transportation Costs (per 1000 products)
		Plant 1	Plant 2	Plant 3	Plant 4	Plant 5
	Warehouse 1	$4,000	$2,000	$3,000	$2,500	$4,500
	Warehouse 2	$2,500	$2,600	$3,400	$3,000	$4,000
	Warehouse 3	$1,200	$1,800	$2,600	$4,100	$3,000
	Warehouse 4	$2,200	$2,600	$3,100	$3,700	$3,200


	Demand from warehouses are:
		Demand
	Warehouse 1	15,000
	Warehouse 2	18,000
	Warehouse 3	14,000
	Warehouse 4	20,000




Capacity of plants are:
		Plant 1	Plant 2	Plant 3	Plant 4	Plant 5
	Capacity	20,000	22,000	17,000	19,000	18,000



Fixed operating costs for each plants:
		Plant 1	Plant 2	Plant 3	Plant 4	Plant 5
	Fixed Cost	$12,000	$15,000	$17,000	$13,000	$16,000