Considering opening warehouses in four cities in canada

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Reference no: EM132253362

Company ABC is considering opening warehouses in four cities in Canada: Ottawa, Toronto, Calgary and Winnipeg. Each warehouse can ship 100 units per day. The daily fixed cost of keeping each warehouse open is $400 for Ottawa, $500 for Toronto, $300 for Calgary and $350 for Winnipeg. Region 1 of the country requires 80 units per day, region 2 requires 70 units per day and region 3 requires 40 per day. The costs (including production and shipping costs) of sending one unit from plant to a region are shown below in the table. The company wants to meet daily demands at a minimum cost subject to the preceding information and following restrictions:

To ($):

From------ Region 1 ----------Region 2 --------Region 3

Ottawa --------20---------------- 40------------------- 50

Toronto------- 48---------------- 15-------------------- 26

Calgary -------26---------------- 35------------------- 18

Winnipeg---- 24----------------- 50------------------- 35

a) If Ottawa warehouse is opened, then Calgary warehouse must be opened.

b) At most two warehouses can be opened

c) Either Winnipeg or Calgary warehouse must be opened. The company wants to minimize the daily cost of meeting demand.

1. Formulate algebraically a Binary/Integer Programming (BIP) model for this problem. (Write out full algebraic BIP model)

2. Use Excel Solver to solve the resulting BIP. (Include both formulation and answer report)

3. Describe clearly the optimal solution to this problem using a managerial statement to make a recommendation to the leadership of company ABC.

Reference no: EM132253362

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