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solution

The CoolAire Company manufactures air conditioners that are sold to five different retail customers across the United States. The company is evaluating its manufacturing and logistics strategy to ensure that it is operating in the most efficient manner possible. The company can produce air conditioners at six plants across the country and stock these units in any of four different warehouses. The cost of manufacturing and shipping a unit between each plant and warehouse is summarized in the following table along with the monthly capacity and fixed cost of operating each plant.

Warehouse

1

Warehouse

2

Warehouse 3

Warehouse 4

Fixed Cost

Capacity

Plant 1

$700

$1,000

$900

$1,200

$55,000

300

Plant 2

$800

$500

$600

$700

$40,000

200

Plant 3

$850

$600

$700

$500

$45,000

300

Plant 4

$600

$800

$500

$600

$50,000

250

Plant 5

$500

$600

$450

$700

$42,000

350

Plant

6

$700

$600

$750

$500

$40,000

400

Similarly, the per-unit cost of shipping units from each warehouse to each customer is given in the following table, along with the monthly fixed cost of operating each warehouse.

Customer

1

Customer

2

Customer 3

Customer 4

Customer 5

Fixed Cost

Warehouse 1

$40

$80

$60

$90

$50

$40,000

Warehouse

2

$60

$50

$75

$40

$35

$50,000

Warehouse 3

$55

$40

$65

$60

$80

$35,000

Warehouse 4

$80

$30

$80

$50

$60

$60,000

The monthly demand from each customer is summarized next:

Customer 1

Customer 2

Customer 3

Customer 4

Customer 5

Demand

200

300

200

150

250

CoolAire would like to determine which plants and warehouses it should operate to meet demand in the most cost-effective manner.

a. Create a spreadsheet model for this problem and solve it.

b. Which plants and warehouses should CoolAire operate?

c. What is the optimal shipping plan?

(PLEASE BE SPECIFIC AS TO ALL FORMULAS AND WHAT CELLS THEY GO IN)

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