A toy manufacturing company currently maintains plants in Atlanta and Tulsa that supply to retail centers in Los Angeles and New York. Because of expanding demand, the company has decided to build a third plant and has narrowed the choice to one of two cities, Seattle or Baltimore. The distribution costs, as well as plant capacity and retailer demand, are shown in the table:
Retail Stores Manufacturing Plant Demand
Atlanta Tulsa Seattle Baltimore
Los Angeles $ 8.00 $ 4.00 $ 5.00 $ 4.00 800
New York $ 5.00 $ 7.00 $ 6.00 $ 6.00 1200
Capacity 600 900 500 500
Solve the given problem scenario for the toy manufacturer by recommending the most suited new location to establish the plant. Formulate and set up the problem using the most appropriate technique in Excel Solver.
The Excel set-up should provide clearly labeled values used for the decision variables, constraints, and objective function.
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This solution shows step-by-step calculations to determine which new potential location should be selected for new plant development. Factors that are considered are retailer demand and minimization of distribution cost. Toy manufacturing company wants to decide which of the new potential locations should be selected for a new plant to satisfy retailer demand and minimize distribution cost. The problem is formulated and solved using integer programming with binary variables. The solve process is demonstrated using Excel solver.