Operations Management: Sustainability and Supply Chain Management (12th Edition)
Operations Management: Sustainability and Supply Chain Management (12th Edition)
12th Edition
ISBN: 9780134130422
Author: Jay Heizer, Barry Render, Chuck Munson
Publisher: PEARSON
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Chapter C, Problem 1DQ

Question:

1. What are the three information needs of the transportation model?

Expert Solution & Answer
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Summary Introduction

To determine: The information needs of the transportation model.

Introduction: The major objective of the transportation problem is to minimize the distributing cost of a product from a source to an origin. Transportation problem is one of the types of linear programming.

Explanation of Solution

The three informational needs of the transportation model are as follows:

  • The shipping cost to ship one unit from each origin to a destination
  • The origin points and supply points, per period, at each period
  • The destination points and demand points, per period, at each period.

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The S&OP team at Kansas Furniture, led by David Angelow, has received estimates of demand requirements as shown in the table. Assuming one-time stockout costs for lost sales of $100 per unit, inventory carrying costs of $20 per unit per month, and zero beginning and ending inventory, evaluate the following plan on an incremental cost basis: Plan A: Produce at a steady rate (equal to minimum requirements) of 1,100 units per month and subcontract additional units at a $65 per unit premium cost. Subcontracting capacity is limited to 800 units per month. (Enter all responses as whole numbers). Ending Month Demand Production Inventory Subcontract (Units) 1 July 1300 1,100 0 2 August 1150 1,100 0 3 September 1100 1,100 0 4 October 1600 1,100 0 5 November 1900 1,100 0 6 December 1200 1,100 0
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