TelecomOne has manufacturing plants located in Baltimore, Memphis, and Wichita and serves markets in Atlanta, Boston, and Chicago. HighOptic serves markets in Denver, Omaha, and Portland from plants located in Cheyenne and Salt Lake City. Supply city Baltimore Cheyenne Salt Lake City Memphis Wichita Monthly demand (K units) Demand city Production & Transportation Cost (SK/ K units) Atlanta Boston Chicago Denver Omaha Portland 1,675 400 685 1,630 1,160 2,800 18 1,460 1,940 970 100 495 1,200 1,925 2,400 1,425 500 950 800 380 1,355 543 1,045 665 2,321 1,646 700 508 311 14 6 7 922 1,797 10 8 11 Monthly Monthly capacity fixed costs (SK) (K units) 24 27 22 31 7,650 3,500 5,000 4,100 2,200 Managers in both companies must decide how to allocate demand to production facilities as demand and costs change.

Practical Management Science
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TelecomOne has manufacturing plants located in Baltimore,
Memphis, and Wichita and serves markets in Atlanta, Boston,
and Chicago. HighOptic serves markets in Denver, Omaha,
and Portland from plants located in Cheyenne and Salt Lake
City.
Supply city
Baltimore
Cheyenne
Salt Lake City
Memphis
Wichita
Monthly demand (K units)
Demand city
Production & Transportation Cost (SK/ K units)
Atlanta Boston Chicago Denver Omaha Portland
1,675 400 685 1,630 1,160 2,800
1,460 1,940 970 100 495
18
1,200
24
500
800
27
1,925 2,400 1,425
380 1,355 543
1,646 700 508
950
1,045 665 2,321 22
922
311
1,797
31
10
8
14
6
7
11
Monthly Monthly
capacity fixed costs
(K units)
(SK)
7,650
3,500
5,000
4,100
2,200
Managers in both companies must decide how to allocate
demand to production facilities as demand and costs change.
Transcribed Image Text:TelecomOne has manufacturing plants located in Baltimore, Memphis, and Wichita and serves markets in Atlanta, Boston, and Chicago. HighOptic serves markets in Denver, Omaha, and Portland from plants located in Cheyenne and Salt Lake City. Supply city Baltimore Cheyenne Salt Lake City Memphis Wichita Monthly demand (K units) Demand city Production & Transportation Cost (SK/ K units) Atlanta Boston Chicago Denver Omaha Portland 1,675 400 685 1,630 1,160 2,800 1,460 1,940 970 100 495 18 1,200 24 500 800 27 1,925 2,400 1,425 380 1,355 543 1,646 700 508 950 1,045 665 2,321 22 922 311 1,797 31 10 8 14 6 7 11 Monthly Monthly capacity fixed costs (K units) (SK) 7,650 3,500 5,000 4,100 2,200 Managers in both companies must decide how to allocate demand to production facilities as demand and costs change.
n→ Number of factory locations
m→ Number of markets or demand points
D; =→ Annual demand from market j
K₁ → Capacity of factory i
Cij → Cost of producing and shipping one unit from factory i
to market j (cost includes production, inventory, and
transportation)
Transcribed Image Text:n→ Number of factory locations m→ Number of markets or demand points D; =→ Annual demand from market j K₁ → Capacity of factory i Cij → Cost of producing and shipping one unit from factory i to market j (cost includes production, inventory, and transportation)
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