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CDG, Inc. a major manufacturer of fertilizer has 5 production plants. CDG buys Spice which is an essential chemical used in all of its production facilities, from a centrally located distribution center (DC).

The consumption rates of Spice at the plants are as follows:
Plant No. Usage (lbs per day)
1 220
2 100
3 300
4 200
5 180

Spice costs: $2.00 per lb
CDG holding costs rate of $.30 per dollar per year for all purchased materials
Chemical can be shipped via truck from the DC to each plant individually, for which a fixed cost of $2,000 and a "drop off" cost of $100 would be incurred. Alternately, a single truck (load capacity of 60,000 lbs) can be routed to deliver Spice to all 5 plants in a single trip, at a fixed cost of $3,500, in addition to a drop off charge of $100 for each delivery location.

The following delivery policy proposals for this chemical are being contemplated:

A. Transport the EOQ quantity to each plant individually, as needed
B. Send one full truckload of Spice to supply all the plants simultaneously in a single trip, on a periodic basis
C. Send 4 full truckloads simultaneously to all the plants, each truck visiting all the locations sequentially, to deliver at each plant, periodically.


Solution Summary

The expert examines transporting EOQ quantity to each plant individually.