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solution

Bennet and Daughter Case

Bennet and Daughter Inc, is a manufacturer of small electric
motors. They originally started their manufacturing plant in
Longbourne, MA. Since inception they have grown to become one of
the top suppliers of small electric motors in all of New
England.

Distribution Centers:

They started their first distribution center near New London, RI
and eventually started a second one in Harrisburg, PA and third one
recently in Peoria, IL. They also recently opened a manufacturing
plant near Canton, OH.

The Manufacturing plants:

The costs of making the motors depends on the plant. The cost of
manufacturing a motor in the Canton plant is $11.00. The Longbourne
plant uses older technologies and so the cost of manufacturing
there is higher and is $11.75/motor. The product ion capacity at
the Longbourne plant is 15,000 motors/quarter and the production
capacity at the Canton plant is 25000 motors/quarter. There are no
shipments allowed from the Canton plant to the New London
distribution center. The shipping costs from the plants to the
distribution centers are as follows:

New London Harrisburg Peoria
Longbourne 3.2 2.2 4.2
Canton 3.9 1.2

Demand Locations:

The company serves seven market locations. The expected demand
at each location is as follows:

Market Locations Demand
Boston 6500
Providence 7500
Stamford 3000
Pittsburgh 4500
Daton 4000
Chicago 8000
Detroit 5000

The cost of shipping from each distribution center to each
customer location is given below. Note that some of the
distribution centers can’t serve some of the demand locations.
Those pairs are indicated by a dash.

Boston Providence Stamford Pittsburgh Daton Chicago Detroit
New London 1 0.5 0.7 2
Harrisburg 2.2 1.9 2.1 1 1.3 1.5 1.7
Peoria 2.1 1.7 1.2 2

The problem is to figure out the optimal way to manufacture and
distribute the motors to satisfy all the demand. We have to find
out which plants serve which distribution centers and which
distribution centers serve which demand locations.

The Report:

Make recommendations to Mr. Bennet and his daughter Elizabeth
that optimizes their supply chain. Your report should include the
following:

  1. If the company doesn’t change its supply chain what will the
    total cost of manufacturing and transportation be the next quarter?
    Are there any plants that have excess capacity? If so, by how
    much?
  2. If the company is willing to drop the distribution center
    requirement and let any distribution center serve any customer zone
    what is the total cost? (The new transportation cost table is given
    below). Are there any plants that have excess capacity? If so, by
    how much?
Boston Providence Stamford Pittsburgh Daton Chicago Detroit
New London 1 0.5 0.7 2 2.5 2.8 2.7
Harrisburg 2.2 1.9 2.1 1 1.3 1.5 1.7
Peoria 3 2.8 2.7 2.1 1.7 1.2 2

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