Assignment: The Darby Company Manufactures and Distributors

BA561 winter 2006 LP Case Notes 1. This is an individual engagement. As stated in the syllabus you must do your own work or you result fail the class. 2. You can use whatever softw be you wish to execute the analysis, but the assignment was designed under the assumption that you would be victimization the LINDO softw be use for LP in BA555. 3. The project is due at the branch of class in week four (February 1). The Case The Darby Company manufactures and distributes meters utilize to measure electric power consumption. The caller started with a small exertion go under in El Paso, Texas and gradually built a guest base throughout Texas.A diffusion meaning (DC) was established in Ft. deserving, Texas and subsequently as business expanded to the North, a befriend dissemination center was established in Santa Fe, New Mexico. The El Paso plant was expanded when the company began marketing its meters in Arizona, California, Nevada and Utah. With the growth of the West Coas t business, the Darby Company unresolved a third distribution center in Las Vegas, Nevada and adept cardinal course of instructions ago opened a second manufacturing plant in San Bernardino, California. Manufacturing salute differ between the companys two work facilities.The cost of separately meter produced at the El Paso plant is $10. 50. The San Bernardino plant is more efficient and produces meters at $10. 00 a unit of measurement. Due to the companys rapid growth, not much attention has been paid to the efficiency of the distribution system, but Darbys management has decided that it is time to extension this issue. The cost of shipping a meter from each of the plants to each of the three distribution centers is shown in Table 1. every year production capacity is 30,000 units at the El Paso plant and 20,000 units at the San Bernardino plant.Note that no shipments are allowed from the San Bernardino plant to the Ft. Worth distribution center. The company facilitates ni ne customer zones from the three distribution centers. The forecast of the go of meters needed in each customer zone for the future(a) year is go onn in Table 2. The Unit costs of shipping from each distribution center to each customer zone is given in Table 3. Note that some of the distribution centers can not serve veritable customer zones. In the current distribution strategy train at the Dallas, San Antonio, Wichita and Kansas metropolis customer zones is satisfied by shipments from the Ft.Worth DC. In a similar manner the Denver, Salt Lake City and Phoenix customer zones are served by the Santa Fe DC. And the Los Angles and San Diego customer zones are satisfied by the Las Vegas DC. To touch on how many units to make at each plant, the customer quest forecasts are aggregated at the distribution centers and a transportation model is utilise to minimize the costs of shipping from the production plants to the distribution centers. Issues the company wants you to address 1. If the company does not change its distribution strategy what go forth its manufacturing and distribution costs be for the following quarter? . Suppose the company is involuntary to change its distribution strategy so that customer zones could be served from any distribution center for which costs are available. Would this reduce total costs? If so by how much? Would you make this change? Please be sure to examine all supply chain implications beyond just extend dollars saved. 3. The company wants to explore the potential of direct shipping from the plants to certain customer zones. Specifically the shipping cost is $. 30 per unit from San Bernardino to Los Angeles and $. 70 from San Bernardino to San Diego.The cost for direct shipments from El Paso to San Antonio is $3. 50 per unit. Should the company do direct shipping? If so on which routes? 4. In 3 years demand is expected to gain increased 30% on average crosswise all customers. At that time the company expects to have sat urated the markets they directly serve (in former(a) words additional growth will have to come from new markets). It will cost 3 dollars a unit to increase capacity at the El Paso plant and 4 dollars a unit at the San Bernardino plant. How much capacity, if any, would you add to each plant to carry out future demand?Instructions 1. When answering the fountainheads it is expected that you address the following a. What is the mathematically optimal way to meet all demands and constraints at the stripped-down cost? You must use LP to answer this question. b. The LP model gives you the minimum cost solution. What assumptions are you making if you implement the optimal solution from the model? At a minimum pleases be sure to consider i. Quality ii. delivery reliability and speed iii. Managing logistics iv. Optimizing the supply chain v.Customer satisfaction 2. You must pervert in a disk (floppy, cd or dvd) that contains all models you used to compose the paper. The disk should con tain the models and the solutions. Assignments that are not accompanied by a disk with the models and solutions will lose 30%. You can not turn your models and solutions in late. 3. You may use any software support by the COB you wish- but Dr. Pagell will be using LINDO. 4. Your assignment will have an appendix where the models are explained, Please use ordinary LP nomenclature (let statements and the like).If the professor can not figure out what the variables in your models represent you will lose points. 5. You will have a second appendix with a print out of your results. If you run multiple models you will need to print out results from all of the runs. 6. When it comes to format you do what you study is best to answer the questions with the following expectations / limitations a. You will turn in a well written, grammatically correct, sensiblely consistent paper. b. Presentation will be professional. Everything should be typed, easy to read, laid out in a logical manner, and so on. . Make sure you tell the reader where to find information. For display case if you are using a dual price to answer a question say so. And tell the reader where to find this information in the paper. I am not going to guess where information comes from. d. This is a paper not a 4 questions test. I expect you to write a paper that integrates all four questions. Papers where each question is in its own stand alone section with no linkages to other sections of the paper will get lower drifts than papers that integrate the information.Grades Your grade will be based on the proper formulation, solution and variant of the models. Formulation and solutions will be worth 70% of your grade and comment will be 30% of your grade. The instructor reserves the right to give bonus points to students who come up with very elegant formulations. Table 1 deportation cost per unit from production facilities to distribution centers Ft. Worth DC Santa Fe DC Las Vegas DC El Paso Plant $ 3. 0 $ 2. 20 $ 4. 20 San Bernardino Plant - $ 3. 90 $ 1. 20 Table 2 Yearly demand forecast Customer regularize Demand in meters Dallas 6300 San Antonio 4880 Wichita 2130 Kansas City 1210 Denver 6120 Salt Lake City 4830 Phoenix 2750 Los Angles 8580 San Diego 4460 Table 3 Shipping costs from DCs to customer zones in dollars ($) Customer Zone DC Dallas San Antonio Wichita Kansas City Denver Salt Lake City Phoenix Los Angles San Diego Ft. Worth . 3 2. 1 3. 1 4. 4 6. 0 - - - - Santa Fe 5. 2 5. 4 4. 5 6. 0 2. 7 4. 7 3. 4 3. 3 2. 7 Las Vegas - - - - 5. 4 3. 3 2. 4 2. 1 2. 5