(BDI) supplies specialty mirrors that are sold in five different cities from three different factories. BDI needs to build new distribution center(s) to better serve the customers and minimize the transportation cost. The unit rate of transportation cost, annual shipments, and location coordinates for all of the existing facilities are given in the worksheet labeled ?Part II-Q1a? and ?Part II-Q1b.? BDI has not decided if building a single DC or two DCs is better for the company, given that the fixed location costs are unknown at this point. To help BDI with its decision, build two separate models determining the coordinates for the location(s) of the distribution center(s) and the corresponding flows through these distribution centers. For what level of fixed facility costs, would the two-DC model be better?

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2 (a) 3 A 4 5 6 7 8 9 10 11 12 13 14 Single DC location 15 X Supply Points Demand Points 16 Y 17 18 Total Cost 19 B Cities Three Rivers, MI Fort Wayne, IN Wheeling, WV Columbus, OH Ashland, KY Kingsport, TN Akron, OH Roaneke, VA Optimal C $/Ton Mile Fn 0.85 0.90 0.95 1.25 1.25 1.75 1.75 1.5 D Tons Kn (or) Dn (tons shipped) E Coordinates Xn 2 184,000.00 92,000.00 12 100,000.00 15 70,000.00 4 35,000.00 6 9,000.00 110,000.00 152,000.00 F 13 15 yn 16 12 4 10 12 18 5 G Distance-Optimal 2 (a) 3 A 4 5 6 7 8 9 10 11 12 13 14 Single DC location 15 X Supply Points Demand Points 16 Y 17 18 Total Cost 19 B Cities Three Rivers, MI Fort Wayne, IN Wheeling, WV Columbus, OH Ashland, KY Kingsport, TN Akron, OH Roaneke, VA Optimal C $/Ton Mile Fn 0.85 0.90 0.95 1.25 1.25 1.75 1.75 1.5 D Tons Kn (or) Dn (tons shipped) E Coordinates Xn 2 184,000.00 92,000.00 12 100,000.00 15 70,000.00 4 35,000.00 6 9,000.00 110,000.00 152,000.00 F 13 15 yn 16 12 4 10 12 18 5 G Distance-Optimal

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The twoDC model would be better when the fixed facility costs are lower than the savings in transportation costs To determine the breakeven point for ... View the full answer