DryIce, Inc., is a manufacturer of air conditioners anticipates nationwide demand in thousands of units for the
Question:
DryIce, Inc., is a manufacturer of air conditioners anticipates nationwide demand in thousands of units for the next year to be160 in the East, 100 in the South,120 in the Midwest, and 180 in the West. The product is delivered to the customers from a regional Distribution Center (DC) whose coordinates are shown in the data below. DryIce has selected four potential plant sites—A, B, C and D. Plant opened in any city would have a capacity of 300 thousand units per year. For each potential location, the annual fixed costs for the plants, coordinates, the variable costs per unit, and the shipping costs to each of the four DC are shown in the table below. PLEASE POST THE WHOLE EXCEL SOLUTION
Plant | Shipping Costs to DC in Regions ($/unit) | VC | Fixed cost | Coordinates | ||||
Locations | East | South | Midwest | West | Per unit | thousands | X, Y | |
New York | 7 | 9 | 10 | 11 | $200 | $800/yr | 700,700 | |
Chicago | 9 | 8 | 5 | 10 | $200 | $700/yr | 500,800 | |
Atlanta | 10 | 7 | 4 | 9 | $180 | $500/yr | 600,400 | |
San Diego | 9 | 6 | 8 | 5 | $220 | $700/yr | 300,300 | |
Coordinates | 800,700 | 400,500 | 400,800 | 200,400 | ||||
- Where should the plant be opened and at what capacity each should be operated assuming that we ship directly from each open plant various DCs?
- Specify the shipping schedule for part a) and the summary of costs:
Plant | Regions | Remaining | |||
Locations | East | South | Midwest | West | Capacity |
New York | |||||
Chicago | |||||
Atlanta | |||||
San Diego | |||||
Demand Met |
Total Annual Shipping Cost : _______________________________________
Total Annual Variable Cost: _________________________________________
Total annual Fixed Cost: _____________________________________________
Total Annual Cost: ____________________________________________
The company is thinking about building a hub where items could be shipped in bulk from the operating plants and the hub and then to the DCs in each region. The shipping costs from any plant to hub would $ .01/unit/mile and from hub to any DC would be $.015/unit/mile. What would best hub location and does it make economic sense to build the hub? Why?
Financial and Managerial Accounting Information for Decisions
ISBN: 978-0078025761
6th edition
Authors: John Wild, Ken Shaw, Barbara Chiappetta