NETWORK DESIGN AT COOL WIPES

CURRENT FACILITY
CHICAGO FOR NEW PLANT
Wipes line Wipes line
capacity 5 million units capacity 2 million units
fixed cost $5 million a year fixed cost $2.2 million a year
variable cost $10 per unit variable cost $10 per unit

Ointment line Ointment line

capacity 1 million units capacity 1 million units
fixed cost $1.5 million a year fixed cost $1.5 million a year
variable cost $20 per unit variable cost $20 per unit

REGIONAL DEMAND (IN 1000)

ZONE WIPES DEMAND OINTMENT DEMNAD

Northwest 500000 50000 6.32
Southwest 700000 90000 6.32
Upper Midwest 900000 120000 3.68
Lower Midwest 800000 65000 4.04
Northeast 1000000 120000 5.76
Southeast 600000 70000 5.96
Total Demand 4500000 515000

TRANSPORTATION COST PER UNIT

Northwest Southwest Upper Midwest Lower Midwest

chicago 6.32 6.32 3.68 4.04
Princeton 6.6 6.6 5.76 5.92
Atlanta 6.72 6.48 5.92 4.08
Los Angeles 4.36 3.68 6.32 6.32
Northeast Southeast
5.76 5.96
3.68 4.08
4.04 3.64
6.72 6.6
With the existing system: A plant in Chicago, the

Considering
1. Fixed cost
2. variable cost
3. transportation cost

Sheet: Q1.1
Has the calculation for the same.
m: A plant in Chicago, the total cost of the network is calculated.

the same.
TOTAL COST FOR THE EXISTING NETWORK
CHICAGO
Wipes Line
capacity 5000 units in 1000
fixed cost 5000000 per year
variable cost 10 per unit
Total transportation cost 23464000
TOTAL COST(WIPES) 73464000

Ointment line
capacity 1000 units in 1000
fixed cost 1500000 per year
variable cost 20 per unit
Total transportation cost 2697400
TOTAL COST(OINTMENT) 14497400

TOTAL COST 87961400

Adding new plants: The total cost of the network is ca

Considering
1. Fixed cost
2. variable cost
3. transportation cost

Sheets:
Q2.1
Has the calculation for the total cost, with the existing

Q2.2
Has the calculation for the total cost, with the half the

Q2.3
Has the calculation for the total cost, with double the
 cost of the network is calculated.

otal cost, with the existing transportation cost.

otal cost, with the half the transportation cost.

otal cost, with double the transportation cost than the exisiting.
ADDING A NEW PLANT
WIPES
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 16.32 16.32 13.68 14.04 15.76
Princeton 16.6 16.6 15.76 15.92 13.68
Atlanta 16.72 16.48 15.92 14.08 14.04
Los Angeles 14.36 13.68 16.32 16.32 16.72
Demand 500000 700000 900000 800000 1000000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 0 0 900000 800000 0
Princeton 0 0 0 0 1000000
Atlanta 0 0 0 0 0
Los Angeles 500000 700000 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 3300000
Princeton 1000000
Atlanta 1400000
Los Angeles 800000
Northwest Southwest Upper Midwest Lower Midwest Northeast
Unmet Demand 0 0 0 0 0

Objective Function
cost 73764000

OINTMENT
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 26.32 26.32 23.68 24.04 25.76
Princeton 26.6 26.6 25.76 25.92 23.68
Atlanta 26.72 26.48 25.92 24.08 24.04
Los Angeles 24.36 23.68 26.32 26.32 26.72
Demand 50000 90000 120000 65000 120000
DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 0 0 120000 65000 120000
Princeton 0 0 0 0 0
Atlanta 0 0 0 0 0
Los Angeles 50000 90000 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 625000
Princeton 0
Atlanta 0
Los Angeles 860000
Northwest Southwest Upper Midwest Lower Midwest Northeast
Unmet Demand 0 0 0 0 0

Objective Function
cost 15661800

TOTAL COST 89425800

Southeast Fixed cost $ capacity (UNITS)
The transportation and the unit variable cost per unit are
15.96 5000000 5000000 added.
14.08 2200000 2000000 say: 16.32= 10(variable cost)+6.32(transportation cost)
13.64 2200000 2000000
16.6 2200000 2000000
600000

Southeast plants(1=open)
0 1
0 1
600000 1
0 1

Southeast
0

Southeast Fixed cost $ capacity (UNITS)

25.96 1500000 1000000
24.08 1500000 1000000
23.64 1500000 1000000
26.6 1500000 1000000
70000
Southeast plants(1=open)
70000 1
0 0
0 0
0 1

Southeast
0
cost per unit are

portation cost)
TRANSPORTATION COST HALF
WIPES
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 13.16 13.16 11.84 12.02 12.88
Princeton 13.3 13.3 12.88 12.96 11.84
Atlanta 13.36 13.24 12.96 12.04 12.02
Los Angeles 12.18 11.84 13.16 13.16 13.36
Demand 500000 700000 900000 800000 1000000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 500000 466666.667 900000 800000 1000000
Princeton 0 0 0 0 0
Atlanta 0 233333.333 0 0 0
Los Angeles 0 0 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 1333333.333333
Princeton 0
Atlanta 1166666.666667
Los Angeles 0
Northwest Southwest Upper Midwest Lower Midwest Northeast
Unmet Demand 0 0 0 0 0

Objective Function
cost 63254666.66667

OINTMENT
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 23.16 23.16 21.84 22.02 22.88
Princeton 23.3 23.3 22.88 22.96 21.84
Atlanta 23.36 23.24 22.96 22.04 22.02
Los Angeles 22.18 21.84 23.16 23.16 23.36
Demand 50000 90000 120000 65000 120000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwest Northeast
 chicago 50000 89999.999 120000 65000 120000
Princeton 0 0 0 0 0
Atlanta 0 0 0 0 0
Los Angeles 0 0.00103833 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 485000.0010383
Princeton 0
Atlanta 0
Los Angeles -0.0010383252
Northwest Southwest Upper Midwest Lower Midwest Northeast
Unmet Demand 0 0 0 0 0

Objective Function
cost 13148699.99863

TOTAL COST 76403366.67

Southeast Fixed cost $ capacity (UNITS)
12.98 5000000 5000000
12.04 2200000 2000000
11.82 2200000 2000000
13.3 2200000 2000000
600000

Southeast plants(1=open)
0 1
0 0
600000 1
0 0

Southeast
0

Southeast Fixed cost $ capacity (UNITS)

22.98 1500000 1000000
22.04 1500000 1000000
21.82 1500000 1000000
23.3 1500000 1000000
70000

Southeast plants(1=open)
 70000 1
0 0
0 0
0 0

Southeast
0
TRANSPORTATION COST DOUBLE
WIPES
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwe
chicago 22.64 22.64 17.36 18.08
Princeton 23.2 23.2 21.52 21.84
Atlanta 23.44 22.96 21.84 18.16
Los Angeles 18.72 17.36 22.64 22.64
Demand 500000 700000 900000 800000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwe
chicago 500000 700000 900000 800000
Princeton 0 1.127779E-10 0 0
Atlanta 0 0 0 0
Los Angeles 0 2.720161E-12 0 0

CONSTRAINTS
Supply Excess capacity
chicago 2100000
Princeton -1.153330210357E-10
Atlanta 400000
Los Angeles -2.72016053309641E-12
Northwest Southwest Upper Midwest Lower Midwe
Unmet Demand 0 0 0 0

Objective Function
cost 92904000

OINTMENT
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwe
chicago 32.64 32.64 27.36 28.08
Princeton 33.2 33.2 31.52 31.84
Atlanta 33.44 32.96 31.84 28.16
Los Angeles 28.72 27.36 32.64 32.64
Demand 50000 90000 120000 65000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwe
 chicago 0 0 120000 65000
Princeton 0 0 0 0
Atlanta 0 0 0 0
Los Angeles 50000 90000 0 0

CONSTRAINTS
Supply Excess capacity
chicago 625000
Princeton 0
Atlanta 0
Los Angeles 860000
Northwest Southwest Upper Midwest Lower Midwe
Unmet Demand 0 0 0 0

Objective Function
cost 18023600

TOTAL COST 110927600

Northeast Southeast Fixed cost $ capacity (UNITS)
21.52 21.92 5000000 5000000
17.36 18.16 2200000 2000000
18.08 17.28 2200000 2000000
23.44 23.2 2200000 2000000
1000000 600000

Northeast Southeast plants(1=open)

0 0 1
2.5551E-12 0 0
1000000 600000 1
0 0 0

Northeast Southeast
0 0

Northeast Southeast Fixed cost $ capacity (UNITS)

31.52 31.92 1500000 1000000
27.36 28.16 1500000 1000000
28.08 27.28 1500000 1000000
33.44 33.2 1500000 1000000
120000 70000

Northeast Southeast plants(1=open)

 120000 70000 1
0 0 0
0 0 0
0 0 1

Northeast Southeast
0 0
Redesigning the network: The total cost

Considering
1. Fixed cost
2. variable cost
3. transportation cost

Sheets:
Q3.1
Has the calculation for the total cost, wi

Q3.2
Has the calculation for the total cost, wi

Q3.3
Has the calculation for the total cost, wi
e network: The total cost of the network is calculated with the optimal solution.

t
on cost

ation for the total cost, with the existing transportation cost.

ation for the total cost, with the half the transportation cost.

ation for the total cost, with double the transportation cost than the exisiting.
NEW NETWORK DESIGN
WIPES
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 16.32 16.32 13.68 14.04 15.76
Princeton 16.6 16.6 15.76 15.92 13.68
Atlanta 16.72 16.48 15.92 14.08 14.04
Los Angeles 14.36 13.68 16.32 16.32 16.72
Demand 500000 700000 900000 800000 1000000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 0 0 900000 800000 0
Princeton 0 0 0 0 0
Atlanta 0 0 0 0 1000000
Los Angeles 500000 700000 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 300000
Princeton 0
Atlanta 400000
Los Angeles 800000
Northwest Southwest Upper Midwest Lower Midwest Northeast
Unmet Demand 0 0 0 0 0

Objective Function
cost 69124000

OINTMENT
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 32.64 32.64 27.36 28.08 31.52
Princeton 33.2 33.2 31.52 31.84 27.36
Atlanta 33.44 32.96 31.84 28.16 28.08
Los Angeles 28.72 27.36 32.64 32.64 33.44
Demand 50000 90000 120000 65000 120000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 0 0 0 0 0
 Princeton 0 0 0 0 0
Atlanta 50000 90000 120000 65000 120000
Los Angeles 0 0 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 0
Princeton 0
Atlanta 485000
Los Angeles 0
Northwest Southwest Upper Midwest Lower Midwest Northeast
Unmet Demand 0 0 0 0 0

Objective Function
cost 17068800

TOTAL COST 86192800

Southeast Fixed cost $ capacity (UNITS)
15.96 2200000 2000000
14.08 2200000 2000000
13.64 2200000 2000000
16.6 2200000 2000000
600000

Southeast plants(1=open)
0 1
0 0
600000 1
0 1

Southeast
0

Southeast Fixed cost $ capacity (UNITS)

31.92 1500000 1000000
28.16 1500000 1000000
27.28 1500000 1000000
33.2 1500000 1000000
70000

Southeast plants(1=open)
0 0
 0 0
70000 1
0 0

Southeast
0
TRANSPORTATION COST HALF
WIPES
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 13.16 13.16 11.84 12.02 12.88
Princeton 13.3 13.3 12.88 12.96 11.84
Atlanta 13.36 13.24 12.96 12.04 12.02
Los Angeles 12.18 11.84 13.16 13.16 13.36
Demand 500000 700000 900000 800000 1000000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 0 0 900000 800000 0
Princeton 0 0 0 0 1000000
Atlanta 0 0 0 0 0
Los Angeles 500000 700000 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 300000
Princeton 400000
Atlanta 0
Los Angeles 800000
Northwest Southwest Upper Midwest Lower Midwest Northeast
Unmet Demand 0 0 0 0 0

Objective Function
cost 60314000

OINTMENT
DEMAND AND SUPPLY
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 23.16 23.16 21.84 22.02 22.88
Princeton 23.3 23.3 22.88 22.96 21.84
Atlanta 23.36 23.24 22.96 22.04 22.02
Los Angeles 22.18 21.84 23.16 23.16 23.36
Demand 50000 90000 120000 65000 120000

DECISION VARIABLE
Northwest Southwest Upper Midwest Lower Midwest Northeast
chicago 0 0 0 0 0
 Princeton 0 0 0 0 0
Atlanta 50000 90000 120000 65000 120000
Los Angeles 0 0 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 0
Princeton 0
Atlanta 485000
Los Angeles 0
Northwest Southwest Upper Midwest Lower Midwest Northeast
Unmet Demand 0 0 0 0 0

Objective Function
cost 13117200

TOTAL COST 73431200

Southeast Fixed cost $ capacity (UNITS)
12.98 2200000 2000000
12.04 2200000 2000000
11.82 2200000 2000000
13.3 2200000 2000000
600000

Southeast plants(1=open)
0 1
600000 1
0 0
0 1

Southeast
0

Southeast Fixed cost $ capacity (UNITS)

22.98 1500000 1000000
22.04 1500000 1000000
21.82 1500000 1000000
23.3 1500000 1000000
70000

Southeast plants(1=open)
0 0
 0 0
70000 1
0 0

Southeast
0
TRANSPORTATION COST DOUBLE
WIPES
DEMAND AND SUPPLY
Northwest Southwest Upper Midwe Lower MidweNortheast
chicago 22.64 22.64 17.36 18.08 21.52
Princeton 23.2 23.2 21.52 21.84 17.36
Atlanta 23.44 22.96 21.84 18.16 18.08
Los Angeles 18.72 17.36 22.64 22.64 23.44
Demand 500000 700000 900000 800000 1000000

DECISION VARIABLE
Northwest Southwest Upper MidweLower MidweNortheast
chicago 0 0 900000 800000 0
Princeton 0 0 0 0 0
Atlanta 0 0 0 0 1000000
Los Angeles 500000 700000 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 300000
Princeton 0
Atlanta 400000
Los Angeles 800000
Northwest Southwest Upper MidweLower MidweNortheast
Unmet Demand 0 0 0 0 0

Objective Function
cost 86648000

OINTMENT
DEMAND AND SUPPLY
Northwest Southwest Upper Midwe Lower MidweNortheast
chicago 32.64 32.64 27.36 28.08 31.52
Princeton 33.2 33.2 31.52 31.84 27.36
Atlanta 33.44 32.96 31.84 28.16 28.08
Los Angeles 28.72 27.36 32.64 32.64 33.44
Demand 50000 90000 120000 65000 120000

DECISION VARIABLE
Northwest Southwest Upper MidweLower MidweNortheast
chicago 0 0 0 0 0
 Princeton 0 0 0 0 0
Atlanta 50000 90000 120000 65000 120000
Los Angeles 0 0 0 0 0

CONSTRAINTS
Supply Excess capacity
chicago 0
Princeton 0
Atlanta 485000
Los Angeles 0
Northwest Southwest Upper MidweLower MidweNortheast
Unmet Demand 0 0 0 0 0

Objective Function
cost 17068800

TOTAL COST 103716800

Southeast Fixed cost $ capacity (UNITS)
21.92 2200000 2000000
18.16 2200000 2000000
17.28 2200000 2000000
23.2 2200000 2000000
600000

Southeast plants(1=open)
0 1
0 0
600000 1
0 1

Southeast
0

Southeast Fixed cost $ capacity (UNITS)

31.92 1500000 1000000
28.16 1500000 1000000
27.28 1500000 1000000
33.2 1500000 1000000
70000

Southeast plants(1=open)
0 0
 0 0
70000 1
0 0

Southeast
0