Determine the distribution to minimize the total cost, Financial Management

Assignment Help:

A pharmaceutical company, named "XYZ", plans to deliver trials to three different clinics (C1, C2, and C3). The trials are used for the emergency treatments so XYZ must fulfill all trial requirements. XYZ has 3 deliver trucks. Each truck can ship 200 trials per trip. Depending on the distance between XYZ and its clinics, the shipping cost may be different. Usually, it takes a week to deliver, i.e., if we decide to deliver in Week 1, the clinic will receive the trials in Week 2 and the truck will be available in Week 2.  Each clinic has a dedicated space for holding the left-over trials. The holding cost per trial is around ten cents per week. To simplify the question, XYZ can produce as many trials as we want in any week. Currently, XYZ just ship when the clinics don't have any inventory. However, it costs higher and sometimes the trials in the clinics may be out of stocks. XYZ asks our help and provide the following data. Please use the optimization skills learned in OR 541 and help XYZ improve the distribution plan.

The demand data is as follows.

Weeks

1

2

3

4

5

6

7

8

9

10

C1

0

0

220

70

60

150

30

130

60

70

C2

0

150

30

50

50

10

450

100

50

80

C3

0

50

160

40

200

170

0

30

30

120

The shipping cost may depend on the distance. The following data is the shipping cost per trip.

Shipping cost per trip($)

C1

C2

C3

XYZ manufacturing facility

150

200

250

The space in the clinics is shown in the following table.

Inventory Limitation

C1

C2

C3

 

225

150

100

 

Please provide a report to manager that answers the following:

I. Formulate the problem to determine the distribution in order to minimize the total cost.  Please provide a mathematical description of the model.

II. Follow the formulation in Part I and solve this problem using MPL as a Mixed Integer optimization problem.  Please provide the .mpl file.

III. If we fix the truck deliver plan (not including the amount of trials in each trip), the problem will become a linear optimization problem. Please comment on the sensitivity of the solution you obtained in part II. to changes in cost coefficients.

IV.  Please comment on the sensitivity of the solution you obtained in Part III, i.e., to changes in the constraint data, e.g., to increase the inventory limitation.

V. Given this analysis, what is your recommendation to the company?

VI. (Open question) The actual demand data may not be known when we optimize.  In XYZ, the actual demand may have +10% or -10% variation. The manager would like to also consider this factor in the optimization model. Do you have any suggestion? How do we do?


Related Discussions:- Determine the distribution to minimize the total cost

Leverage, Evaluate the importance of leverage of financial management on a ...

Evaluate the importance of leverage of financial management on a small scale company.

Expansion financing, The securing of the working capital needed for the sup...

The securing of the working capital needed for the support of raises in accounts receivable and inventory related with an organizations initial expansion time.

Advanced Accounting, Balance Sheets Peony Ltd. Aster Ltd. ...

Balance Sheets Peony Ltd. Aster Ltd. Assets: Cash $ 62,500 $ 25,000 Accounts receivable 187,500 200,000 Inventori

Fundamentals of structured product engineering, Fundamentals of Structured ...

Fundamentals of Structured Product Engineering 1. (a) Let r m denote the m month swap rate (or Libor rate). Subsequently the 3 × n month forward rate f (3 ×n )

Walters model, A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U a...

A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U and fixed cost amount to Rs.1,70,000 it finances all its assets by equity funds. It pays 40% tax on its income. Z Ltd is

Double declining balance method , Suppose that the business uses the double...

Suppose that the business uses the double declining balance method to depreciate  its equipment (a)  Determine the net book value, depreciation expense, and accumulated deprecia

Eurocurrency, Eurocurrency A currency on deposit outside its country o...

Eurocurrency A currency on deposit outside its country of source. Such deposits are well known as external currencies, international currencies or xenocurrencies.

Calculate the average interest rate , At the end of 1922, your great grandf...

At the end of 1922, your great grandfather (g.g.f.) established a trust fund to be used in order to help a later generation of the family obtain a university education. The ultimat

Participants in hedge funds, Participants in Hedge Funds: The Sponsor ...

Participants in Hedge Funds: The Sponsor and the Investors Sponsors are promoters and generally, they hold a profit share on percentage for the capital invested in the Fun

Traditional approach to valuation, Under this approach of Valuation, ...

Under this approach of Valuation, all cash flows are discounted using single interest rate (discount rate).  For example: Consider the 5-year (7.00 percent) Treas

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd