3. A European manufacturer of industrial furniture has a factory located in Muni

Question

3. A European manufacturer of industrial furniture has a factory located in Munich and four warehouses in Western Europe. The warehouses collect customer orders, which are then shipped from the factory. Upon receipt, the warehouse distrib- utes customer orders using small trucks. Daily denand at each of the four warehouses along with distance from Munich is shown following: Warehouse Milan Paris Copenhagen Madrid Daily Demand (kg) 25,000 35,000 20,000 20,000 Distance (km) 800 1,000 600 1,300 All shipments are by truck. Three truck sizes are available with capacities of 40,000 kg (small), 60,000 kg (medium), and 80,000 kg (large). Transportation costs for the three types of trucks are as follows: Small: 1000.1x euros Medium: 125 0.1x euros Large: 150 + 0.1x euros where x is the distance to be traveled in kilometers. For replenishment frequency varying between one and four days for each warehouse, identify the optimal transportation option and the associated cost. What other factors should be consid- ered before deciding on the replenishment frequency?

Explanation / Answer

So it makes perfect sense to use the Large trucks to reduce the total cost. The associalted cost is mentioned above.

Few other factors those would also play a role are:

DD D S=100+0.1*D C is given F =ROUNDUP(365*DD/C,0) S*F M=100+0.1*D C is given F =ROUNDUP(365*DD/C,0) M*F L =100+0.1*D C is given F =ROUNDUP(365*DD/C,0) L*F Min Tot cost Warehouse Daily Demand Distance Small Capacity Freq Tot Cost Medium Capacity Freq Tot Cost Large Capacity Freq Tot Cost Min Optimal Milan 25000 800 180 40000 229 41220 205 60000 153 31365 230 80000 115 26450 26450 Large Paris 35000 1000 200 40000 320 64000 225 60000 213 47925 250 80000 160 40000 40000 Large Copenhagen 20000 600 160 40000 183 29280 185 60000 122 22570 210 80000 92 19320 19320 Large Madrid 20000 1300 230 40000 183 42090 255 60000 122 31110 280 80000 92 25760 25760 Large

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