SC Consulting, a supply chain consulting firm, must decide on the location of its home offices. Its clients are located primarily in the 16 states listed in Table 5-5. There are four potential sites for home offices: Los Angeles, Tulsa, Denver, and Seattle. The annual fixed cost of locating an office in Los Angeles is $165,428, Tulsa is $131,230, Denver is $140,000, and Seattle is $145,000. The expected number of trips to each state and the travel costs from each potential site are shown in Table 5-5.

Each consultant is expected to take at most 25 trips each year.

a. If there are no restrictions on the number of consultants at a site and the goal is to minimize costs, where should the home offices be located and how many consultants should be assigned to each office? What is the annual cost in terms of the facility and travel?

b. If, at most, 10 consultants are to be assigned to a home office, where should the offices be set up? How many consultants should be assigned to each office? What is the annual cost of this network?

c. What do you think of a rule by which all consulting projects out of a given state are assigned to one home office? How much is this policy likely to add to cost compared to allowing multiple offices to handle a single state?

Transcribed Image Text:

Table 5-5 Travel Costs and Number of Trips for SC Consulting Travel Costs ($) State Washington Oregon California Idaho Nevada Montana Wyoming Utah Arizona Colorado New Mexico North Dakota South Dakota Nebraska Kansas Oklahoma Los Angeles 150 150 75 150 100 175 150 150 75 150 125 300 300 250 250 250 Tulsa 250 250 200 200 200 175 175 150 200 125 125 200 175 100 75 25 Denver 200 200 150 125 125 125 100 100 100 25 75 150 125 125 75 125 Seattle 25 75 125 125 150 125 150 200 250 250 300 200 200 250 300 300 Number of Trips 40 35 100 25 40 25 50 30 50 65 40 30 20 30 40 55 Table 5-5 Travel Costs and Number of Trips for SC Consulting Travel Costs ($) State Washington Oregon California Idaho Nevada Montana Wyoming Utah Arizona Colorado New Mexico North Dakota South Dakota Nebraska Kansas Oklahoma Los Angeles 150 150 75 150 100 175 150 150 75 150 125 300 300 250 250 250 Tulsa 250 250 200 200 200 175 175 150 200 125 125 200 175 100 75 25 Denver 200 200 150 125 125 125 100 100 100 25 75 150 125 125 75 125 Seattle 25 75 125 125 150 125 150 200 250 250 300 200 200 250 300 300 Number of Trips 40 35 100 25 40 25 50 30 50 65 40 30 20 30 40 55

Answer rating: 100% (QA)

A consulting company wants to decide the location of its offices The four potential sites n for homes offices are LA TL DV and ST and number of client... View the full answer