Determine the optimal assignment of suppliers to divisions

Assignment Help Operation Management

Reference no: EM13919057

Hatcher Enterprises uses a chemical called Rbase in production operations at five divi- sions. Only six suppliers of Rbase meet Hatcher's quality control standards. All six sup- pliers can produce Rbase in sufficient quantities to accommodate the needs of each division. The quantity of Rbase needed by each Hatcher division and the price per gallon charged by each supplier are as follows:

Division	Demand (1000s of gallons)	Supplier	Price per Gallon ($)
1	40	1	12.60
2	45	2	14.00
3	50	3	10.20
4	35	4	14.20
5	45	5	12.00
		6	13.00

The cost per gallon (in dollars) for shipping from each supplier to each division is provided in the following table:

Division	1	2	3	4	5	6
1	2.75	2.50	3.15	2.80	2.75	2.75
2	0.80	0.20	5.40	1.20	3.40	1.00
3	4.70	2.60	5.30	2.80	6.00	5.60
4	2.60	1.80	4.40	2.40	5.00	2.80
5	3.40	0.40	5.00	1.20	2.60	3.60

Hatcher believes in spreading its business among suppliers so that the company will be less affected by supplier problems (e.g., labor strikes or resource availability). Company policy requires that each division have a separate supplier.

a. For each supplier-division combination, compute the total cost of supplying the division's demand.

b. Determine the optimal assignment of suppliers to divisions.

Reference no: EM13919057

Questions Cloud

Cost-volume-profit (cvp) analysis : For what is cost-volume-profit (CVP) analysis used? What are some of the key underlying assumptions that make CVP analysis useful for decision makers? Why might decision makers use CVP analysis?

Record the events under an accounting equation : Prepare an income statement, balance sheet, and statement of cash flows for the 2013 accounting period.

Advantages and disadvantages of standard costs : What are some of the advantages and disadvantages of standard costs? How do managers determine what the standard cost should be? Describe the effect of inaccurate standard costs on financial reporting.

Prescribe to help stabilizing mood swings : Gail suffers from bipolar disorder. Which drug is Gail's doctor likely to prescribe to help stabilize her mood swings?

Determine the optimal assignment of suppliers to divisions : For each supplier-division combination, compute the total cost of supplying the division's demand. Determine the optimal assignment of suppliers to divisions.

Possible customer returns or account adjustments : On July 15, Mann Company sold $600,000 in accounts receivable for cash of $500,000. The factor withheld 10% of the cash proceeds to allow for possible customer returns or account adjustments. An Allowance for Bad Debts of $80,000 had previously been ..

How differentiation strategies help achieve a competitive : Michael Porter suggests the strength of a company ought to be classified into two components: cost advantage and differentiation. How can differentiation strategies help achieve a competitive advantage for small e-businesses?

Positive learning experience for you : Select an instance when someone criticized you and describe your experience in a one page paper. Did you interpret the person's remarks as a personal attack? Did you try to learn from what the person was telling you? What extent was this a positi..

Formulate a linear programming model of the given problem : Formulate a linear programming model of this problem. Solve the linear program to determine the optimal shipping plan.

User Account

All Pages