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The Audiofile Company produces boomboxes. However, the company has decided to subcontract out the production of the speakers needed for the boomboxes. Three vendors are available to supply the speakers. Their price for each shipment of 1,000 speakers is shown below:

Vendor

Price

1

$22,500

2

22,700

3

22,300

Each shipment would go to one of the company’s two warehouses. In addition to the price for each shipment, each vendor would charge a shipping cost for which is has its own formula based on the mileage to the warehouse. These formulas and the mileage data are shown below.

Vendor

Charge per Shipment

Warehouse 1

Warehouse 2

1

$300+ $0.40 per mile

1,600 miles

400 miles

2

$200+$0.50 per mile

500 miles

600 miles

3

$500+$0.20 per mile

2,000 miles

1,000 miles

Whenever one of the company’s two factories needs a shipment of speakers to assemble into the boomboxes, the company hires a trucker to bring the shipment in from one of the warehouses. The cost per shipment is given below, along with the number of shipments needed per month at each factory.

Unit Shipping Costs

Factory 1

Factory 2

Warehouse 1

$200

$700

Warehouse 2

$400

$500

Monthly Demand

10

6

Each vendor is able to supply as many as 10 shipments per month. However, because of shipping limitations, each vendor is only able to send a maximum of six shipments per month to each warehouse. Similarly, each warehouse is only able to send a maximum of six shipments per month to each factory.

Management wants to develop a plan for each month regarding how many shipments (if any) to order from each vendor, how many of those shipments should go to each warehouse, and then how many shipments each warehouse should send to each factory. The objective is to minimize the sum of the purchase costs (including the shipping charge) and the shipping costs from the warehouse to the factories.

Formulate and solve a spreadsheet optimization model for the company’s problem.

* Please post the answer file as an attachment here or send as an email.

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