MAN6927
Problem 1: Transportation network planning (8 marks)
GoodsWest is a manufacturing company headquartered in Western Australia. It has five plants which serve different states. Tables 1-3 show the necessary data on the fixed cost of operating plants and the variable manufacturing and transportation costs.
Table 1. Fixed cost of operating plants and their annual production capacity
Plant |
Fixed cost (AUD) |
Annual capacity (units) |
P1 |
30,000 |
3,000 |
P2 |
20,000 |
3,000 |
P3 |
15,000 |
2,000 |
P4 |
25,000 |
2,500 |
P5 |
30,000 |
3,500 |
Table 2. Annual demand at each market (units)
Market |
WA |
NT |
QLD |
NSW |
VIC |
ACT |
SA |
TAS |
Asia |
Demand |
3000 |
1000 |
1500 |
1300 |
1500 |
350 |
1500 |
850 |
2000 |
Table 3. Transportation cost of every unit (AUD)
|
WA |
NT |
QLD |
NSW |
VIC |
ACT |
SA |
TAS |
Asia |
P1 |
10 |
10 |
20 |
35 |
14 |
30 |
20 |
25 |
10 |
P2 |
25 |
15 |
10 |
25 |
20 |
25 |
15 |
25 |
20 |
P3 |
35 |
10 |
25 |
20 |
25 |
20 |
25 |
25 |
20 |
P4 |
15 |
15 |
12 |
15 |
20 |
20 |
15 |
15 |
25 |
P5 |
20 |
15 |
20 |
25 |
15 |
30 |
30 |
20 |
15 |
Note 1: Every question is independent of the previous ones. It means that to answer each question, suppose that it is the only question.
Note 2. Explain your findings for each question in simple terms.
1. How many products should be transported from each manufacturer to each market to minimise the total cost for GoodsWest?
2. What is the total cost for GoodsWest in the optimal situation?
3. From Australian markets, WA, VIC, and SA want to be single-sourced. What are the optimal transportation quantities and the total cost in this case?
4. Due to the recent changes, demand in TAS has increased to 1200 and Asian demand has decreased to 1500. What is the optimal transportation planning in this case? Which plant should be closed to minimise the total cost?
5. GoodsWest is considering feeding the Asian market just from P4 and P5. What are the cost implications of this decision?
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