Golden Chemicals needs to ship products to its 20 customers. Table 3 .docx - Golden Chemicals needs to ship products to its 20 customers Table 3 shows

# Golden Chemicals needs to ship products to its 20 customers. Table 3 .docx

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Golden Chemicals needs to ship products to its 20 customers. Table 3 shows annual demand of each customer. Golden Chemicals uses Highway King, a trucking company, for all its shipments. Each truck has a maximum capacity of 40,000 pounds. Highway King charges a fixed rate, \$350 per truck, regardless of the quantity shipped on the truck. Highway King charges an additional \$50 for each drop-off. Thus, for example, if a truck makes one drop-off, the total charge would be \$400. If a truck makes four drop-offs, the total charge would be \$550. Demand of each customer is constant, i.e., it does not change from month to month. For each customer, the amount of chemicals (in pounds) shipped to the customer in different shipments is the same. Golden Chemicals has many shipping options. It can send truckloads to each customer to replenish inventory and meet the demand; there is only one drop-off in each shipment. Alternatively,

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Unformatted text preview: Golden Chemicals can send truckloads to a group of customers. For instance, if a shipment delivers to all 12 small customers, there are 12 drop-offs in the shipment. For another example, Golden Chemicals can send truckloads to a group of three medium and one large customers. Different shipping options might incur different cost. Please formulate a mathematical model to help Golden Chemicals identify the shipping option that minimizes the annual shipment cost while meeting demand. A shipping option determines which customer(s) form a group (each customer joins only one group), the number of groups, and the shipping frequency (number of shipments in a year) for each group. Table 3. Customer Demand for Golden Chemicals. | Customer Type | Number of Customers | Customer Demand (pounds per year per customer) Small 12,000 Medium 60,000 Large 2 144,000 12 6...
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