Question: The maximum distance policy is no longer being considered. Instead, Mr. Parker informs Janet that SunnyWorld is considering to build a new warehouse, W-4, but

The maximum distance policy is no longer being considered. Instead, Mr. Parker informs Janet that SunnyWorld is considering to build a new warehouse, W-4, but they are unsure of what capacity this new warehouse should have. Consider that all other warehouses' capacities will remain the same as described in the problem statement. Consider also that the W-4 will be built to fulfill only the necessary monthly capacity to minimize the total costs (inbound + outbound costs). The distances from W-4's potential location to the other facilities are presented below.

Table 4: W-4's distances to other facilities (Km)

Warehouse/Facilities Plant Store 1 Store 2 Store 3 Store 4 Store 5 Store 6
W-4 402 180 150 227 470 388 390

Consider that the cost per kilometer is 0.6 Euros per box of phone cases from the plant to the W-4, and 1.8 Euros per box of phone cases from the W-4 to the retailers.

PART 1) Based on this, what is the minimum monthly capacity in units Janet should advise for W-4?

PART 2) What is the minimum monthly total cost for this new optimized network design (including inbound and outbound costs)?

PART 3)

After presenting her initial findings to Mr. Parker, he reminds her that the warehouses' fixed costs are missing in the analysis. He provides the data in the table below and asks her to incorporate these into the analysis and run the optimization model again. Mr. Parker asks to still consider W-4 in the analysis, but now with a given capacity of 1100 units per month.

Table 5: Warehouse's fixed cost (Euros)

Warehouse Fixed cost
W-1 7800
W-2 19500
W-3 13500
W-4 18800

Based on this information, what is the minimum monthly total cost for the new optimized network design (including inbound, outbound and fixed costs)?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!