Your company is a manufacturer of wave-runner personal watercraft. Currently, you have committed to serving the U.S. customer market by manufacturing the products at two pro- duction facilities. One is in Monterrey, Mexico (MON) and the other is located in Newnan, Georgia (NEW). Production capacity is larger in MON and is currently 160 units per week. Production capacity at NEW is 110 units per week. Your demand planning team has grouped retail customers into eight (8) major customer markets across the U.S. and you refer to them as C1, C2, ..., C8. Weekly demand in each customer market is given as follows: C1 C2 C3 C4 C5 C6 C7 C8 Weekly Demand 18 30 40 12 20 65 15 50 After production, units are first shipped to one of three distribution centers. The distri- bution centers are located in Harrisburg, PA (HAR); Atlanta (ATL); and San Bernardino, CA (SB). Orders from partner retailers from each of the 8 markets are filled from the distri- bution center(s). This study will focus on determining good plans for distributing units from produc- tion facilities to distribution centers and then to the customer markets. Suppose that the value of an average wave-runner unit is $6,000 and that the company uses a 22% inventory carrying-cost rate per year. All freight transportation is conducted by truckload trucking, and each truckload can carry Q = 25 finished wave-runner units. Each of your truckload carriers charges a minimum of $525 per shipment regardless of the distance, but a higher rate per truckload is charged for longer distances by multiplying a cost per mile by the mileage traveled. The attached spreadsheet specifies the average mileage between the production facilities and the distribution centers, and then from the distribution centers to each cus- tomer market. Note that HAR is never used for customers in markets C7 or C8, and SB is never used for customers in C1, C2, or C3. The spreadsheet also gives the order lead time in days between all pairs of locations. When computing the average distribution cost per unit between any two locations, you decide to assume that units are transported in full loads and to also include a pipeline inventory charge based on the lead time. For the truckload per mile rates, your preferred carrier provides individual rates for all of the plant-to-DC lanes but they charge the same rate per mile for all outbound lanes from each individual DC. The spreadsheet shows correct cost computations from the production facilities to the DCs, but leaves it up to you to compute the DC-to-customer market costs per unit shipped.

Your company is a manufacturer of wave-runner personal watercraft. Currently, you have committed to serving the U.S. customer market by manufacturing the products at two pro- duction facilities. One is in Monterrey, Mexico (MON) and the other is located in Newnan, Georgia (NEW). Production capacity is larger in MON and is currently 160 units per week. Production capacity at NEW is 110 units per week. Your demand planning team has grouped retail customers into eight (8) major customer markets across the U.S. and you refer to them as C1, C2, ..., C8. Weekly demand in each customer market is given as follows: C1 C2 C3 C4 C5 C6 C7 C8 Weekly Demand 18 30 40 12 20 65 15 50 After production, units are first shipped to one of three distribution centers. The distri- bution centers are located in Harrisburg, PA (HAR); Atlanta (ATL); and San Bernardino, CA (SB). Orders from partner retailers from each of the 8 markets are filled from the distri- bution center(s). This study will focus on determining good plans for distributing units from produc- tion facilities to distribution centers and then to the customer markets. Suppose that the value of an average wave-runner unit is $6,000 and that the company uses a 22% inventory carrying-cost rate per year. All freight transportation is conducted by truckload trucking, and each truckload can carry Q = 25 finished wave-runner units. Each of your truckload carriers charges a minimum of $525 per shipment regardless of the distance, but a higher rate per truckload is charged for longer distances by multiplying a cost per mile by the mileage traveled. The attached spreadsheet specifies the average mileage between the production facilities and the distribution centers, and then from the distribution centers to each cus- tomer market. Note that HAR is never used for customers in markets C7 or C8, and SB is never used for customers in C1, C2, or C3. The spreadsheet also gives the order lead time in days between all pairs of locations. When computing the average distribution cost per unit between any two locations, you decide to assume that units are transported in full loads and to also include a pipeline inventory charge based on the lead time. For the truckload per mile rates, your preferred carrier provides individual rates for all of the plant-to-DC lanes but they charge the same rate per mile for all outbound lanes from each individual DC. The spreadsheet shows correct cost computations from the production facilities to the DCs, but leaves it up to you to compute the DC-to-customer market costs per unit shipped.

Algebra for College Students

10th Edition

ISBN:9781285195780

Author:Jerome E. Kaufmann, Karen L. Schwitters

Publisher:Jerome E. Kaufmann, Karen L. Schwitters

Chapter11: Systems Of Equations

Section11.CT: Test

Problem 24CT

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Question

Question 2
For this part of the problem, we will consider how to resupply the three distribution centers
from the production facilities in Monterrey (MON) and Newnan (NEW). Based on the out-
bound distribution plan from part 1, suppose that each week we decide to ship 60 units to
HAR, 100 units to ATL, and 90 units to SB.
1. Formulate and solve a new transportation problem MCNF model to determine the
least cost plan for distributing wave-runner units from the two plants to the three
DCs. Your formulation can again be a network drawing, labeled with the appropriate
costs and net supply values. What is the total cost per week of your plan and the
average distribution cost per unit?

2. The costs that you use for this question, like those for Question 1, assume transporta-
tion in full truckloads and include pipeline inventory costs per unit shipped. What
costs are ignored?
3. Examining your solution, you notice that two of the DCs only receive inbound ship-
ments from a single plant. Suppose you would like to ensure that each DC receives
at least one full truckload a week from each plant; your idea is that this may increase
resiliency in case one of your plants faces a disruption. Add lower bounds to arc flow
variables (except for arcs into a sink node) to model this additional constraint. What
is the new total cost of your plan and the average distribution cost per unit?

Your company is a manufacturer of wave-runner personal watercraft. Currently, you have
committed to serving the U.S. customer market by manufacturing the products at two pro-
duction facilities. One is in Monterrey, Mexico (MON) and the other is located in Newnan,
Georgia (NEW). Production capacity is larger in MON and is currently 160 units per week.
Production capacity at NEW is 110 units per week.
Your demand planning team has grouped retail customers into eight (8) major customer
markets across the U.S. and you refer to them as C1, C2, ..., C8. Weekly demand in each
customer market is given as follows:
C1 C2 C3 C4 C5 C6 C7 C8
Weekly Demand 18 30 40 12 20 65 15 50
After production, units are first shipped to one of three distribution centers. The distri-
bution centers are located in Harrisburg, PA (HAR); Atlanta (ATL); and San Bernardino,
CA (SB). Orders from partner retailers from each of the 8 markets are filled from the distri-
bution center(s).
This study will focus on determining good plans for distributing units from produc-
tion facilities to distribution centers and then to the customer markets. Suppose that the
value of an average wave-runner unit is $6,000 and that the company uses a 22% inventory
carrying-cost rate per year. All freight transportation is conducted by truckload trucking,
and each truckload can carry Q = 25 finished wave-runner units. Each of your truckload
carriers charges a minimum of $525 per shipment regardless of the distance, but a higher rate
per truckload is charged for longer distances by multiplying a cost per mile by the mileage
traveled. The attached spreadsheet specifies the average mileage between the production
facilities and the distribution centers, and then from the distribution centers to each cus-
tomer market. Note that HAR is never used for customers in markets C7 or C8, and SB is
never used for customers in C1, C2, or C3. The spreadsheet also gives the order lead time in
days between all pairs of locations. When computing the average distribution cost per unit

between any two locations, you decide to assume that units are transported in full loads and
to also include a pipeline inventory charge based on the lead time. For the truckload per
mile rates, your preferred carrier provides individual rates for all of the plant-to-DC lanes
but they charge the same rate per mile for all outbound lanes from each individual DC. The
spreadsheet shows correct cost computations from the production facilities to the DCs, but
leaves it up to you to compute the DC-to-customer market costs per unit shipped.

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