Case Study Andrew$$Carter$,$ Inc.

Andrew$$Carter$,$ Inc. $($A$$C$),$ is a major Canadian producer and distributor of outdoor lighting fixtures. Its fixture is distributed throughout North America and has been in high demand for several years. The company operates three plants that manufacture the fixture and distribute it to five distribution centers $($warehouses$).$

During the present recession, A$$C has seen a major drop in demand for its fixture as the housing market has declined. Based on the forecast of interest rates, the head of operations feels that demand for housing and thus for its product will remain depressed for the foreseeable future. A$$C is considering closing one of its plants, as it is now operating with a forecasted excess capacity of $34,000$ units per week. The forecasted weekly demands for the coming year are

If A$$C shuts down any plants, its weekly costs will change, as fixed costs are lower for a nonoperating plant. Table $9\mathrm{.}5$ shows production costs at each plant, both variable at regular time and overtime and fixed when operating and shut down. Table $9\mathrm{.}6$ shows the distribution cost from each plant to each warehouse $($distribution center$).$

Discussion Question

$1.$Evaluate the various configurations of operating and closed plants that will meet weekly demand. Determine which configuration minimizes total costs.

$2.$Discuss the implications of closing a plant.