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Problem Analysis

# Problem Analysis - production capacity • If we close...

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The annual demand for vehicles is 38,000 from all warehouses, so we have to produce enough to supply the demand. With all plants open, our total costs minimized (TCM) = \$6,750,714.00 If we close only Plant 1 our TCM = \$4,650,862 If we close only Plant 2 our TCM = \$5,900,866.00 If we close only Plant 3 our TCM = \$4,950,750.00 If we close only Plant 4 our TCM = \$5,650,782.00 If we close only Plant 5 our TCM = \$5,850,722.00 So, we realize our biggest cost savings by closing Plant 1. However, we can also close another plant and still supply the demand. We cannot, however, close a total of 3 plants and have enough
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Unformatted text preview: production capacity. • If we close Plant 1 & Plant 2 our TCM = \$3,801,120.00 • If we close Plant 1 & Plant 3, we cannot solve as an integer. • If we close Plant 1 & Plant 4 our TCM = \$3,551,098.00 • If we close Plant 1 & Plant 5 our TCM = \$3,750,970.00 So, we realize our biggest cost savings by closing Plant 1 & Plant 4 for a total cost of \$3,551,098.00 • Plant 2 will produce 10,000 vehicles to Warehouse B and 8,000 vehicles to Warehouse C. • Plant 3 will produce 6,000 vehicles to Warehouse A. • Plant 5 will produce 4,000 vehicles to Warehouse B and 10,000 vehicles to Warehouse D....
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