1. (15pts)TelecomOne and HighOptic are two manufacturers of telecommunication eq

Question

1. (15pts)TelecomOne and HighOptic are two manufacturers of telecommunication equipment TelecomOne has manufacturing plants located in Baltimore, Memphis, and Wichita and serves markets in Atlanta, Boston, and Chicago. HighOptic serves markets in Denver, Omaha, Sacramento, and Portland from plants located, Reno, Cheyenne and Salt Lake City. Plant capacities, market demand, variable production and transportation cost per thousand units shipped, and fixed cost per month at each plant are shown in the table below. In addition, every product sold in Atlanta, Boston and Chicago generates a revenue of S3,500 (per 1000 units). The rest of the markets also bring in a revenue of S3,300 (per 1000 units) each, irrespective of the supply city or manufacturer Inputs - Cost, Capacities, Demands (for TelecomOptics) Demand City Production and Transportation Cost per 1000 Units Fixed Cost Supply City Atlanta Boston Chicago Denver Omaha Sacramento Portland (S)Capacity Baltimore Cheyenne Salt Lake Reno Memphis Wichita Demand 685 1630 1160 495 950 615 665 311 2415 600 415 85 830 825 2800 7650 1200 3500 800 5000 5100 4100 1797 2200 18 24 27 25 1675 400 1460 1940 1925 2400 1525 2420 3801355 9221646 100 500 350 543 1045 508 6 970 1425 812 302 2321 700 31 10 14 Managements at both companies have decided to merge the two companies into a single entity to be called TelecomOptic. As part of the merger agreement, it has been decided that each market will receive supplies from one and only one supply city. However, a supply city can supply more than one market if necessary It believes that significant benefits will result if the two networks are merged appropriately. TelecomOptic will have six factories from which to serve seven markets. Management is debating whether all six factories are needed. It has assigned your supply chain team to study the network for the combined company and identify the plants that could be shut down to minimize cost. Solve. and interpret the results. 2. (1Opts) Based on your solution in problem 1, what is the total production and transportation cost?

Explanation / Answer

Hence cost of production at wichita is less. So entire demand of Atlanta can be delivered by Wichita.

Now Wichita has surplus of 21

For Bostan

Hence cost of production at wichita is less. So entire demand of Bostan can be delivered by Wichita.

Now Wichita has surplus of 13

For Chicago

Wichita can supply only 13 units, hence entire supply can be supplied from cheyenne.

Spare in cheyenne is 10 units

For Denner

entire demand can be supplied from cheyenne

For Ohmaga

entire demand can be supplied from Memphis

Memphis spare is 15

For Sacramento

Entire supply can be provided by Memphis

For Portland

Hence entire products can be supplied from Reno.

Hence Plants in Salt Lake and Baltimore can be closed.

Total cost = $ 24753

Production cost + Shipping cost per 1000 units Supply city Atlanta Boston Chicago Denver Omaha Sacramento Portland Fixed cost Capacity Baltimore 1675 400 685 1630 1160 2415 2800 7650 18 cheyenne 1460 1940 970 100 495 600 1200 3500 24 Salt Lake 1925 2400 1425 500 950 415 800 5000 27 Reno 1525 2420 812 350 615 85 302 5100 25 Memphis 380 1355 543 1045 665 830 2321 4100 22 wichita 922 1646 700 508 311 825 1797 2200 31 Demand 10 8 14 6 7 11 11

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