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545 M S L P

The Audiofile Company plans to subcontract speaker production for its boomboxes and has three vendors to choose from, each with specific pricing and shipping formulas. The company needs to develop a monthly shipment plan to minimize costs while adhering to shipping limitations from vendors to warehouses and from warehouses to factories. The document outlines the need for a network diagram, a minimum cost flow problem formulation, and a spreadsheet model to solve the logistics challenge.

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294 views3 pages

545 M S L P

The Audiofile Company plans to subcontract speaker production for its boomboxes and has three vendors to choose from, each with specific pricing and shipping formulas. The company needs to develop a monthly shipment plan to minimize costs while adhering to shipping limitations from vendors to warehouses and from warehouses to factories. The document outlines the need for a network diagram, a minimum cost flow problem formulation, and a spreadsheet model to solve the logistics challenge.

Uploaded by

antran.31231023503
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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The Audiofile Company produces boomboxes.

However, management 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.

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

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 next, along with the number of shipments
needed per month at each factory.

Each vendor is able to supply as many as 10 shipments per month. However, because of
shipping limitations, each vendor is able to send a maximum of only 6 shipments per month
to each warehouse. Similarly, each warehouse is able to send a maximum of only 6
shipments per month to each factory.
Management now 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 warehouses to the factories.
(a) Draw a network that depicts the company’s supply network. Identify the supply nodes,
transshipment nodes, and demand nodes in this network.
(b) Formulate this problem as a minimum cost flow problem by inserting all the necessary
data into this network. Also include a dummy demand node that receives (at zero cost) all
the unused supply capacity at the vendors.
(c) Formulate and solve a spreadsheet model for this problem.

SOLUTION

(a)

(b)

(c)

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