A joint GCC Company manufactures and distributes Skg Portable Gas Cylinders (PGC), used for outdoors and home cooking. The company started with a small production plant in Musaffah then gradually built-up a customer-base throughout the GCC region, via a distribution center in Khalifa Industrial Zone in Abu Dhabi (KIZAD). Later when business expanded, the company started using another distribution center in Jabal Ali- Dubai to distribute the PGCs to its customers in the region. The company pays quarterly fixed admin costs of $40,000 and $35,000 for utilizing the distribution centers in Kizad and Jabal Ali, respectively. Just 18 months ago the company opened two more production plant in Dubai (Al Quoz) and Ras Al Khaimah (RAK). Manufacturing costs differ between the company's production plants. The cost of each PGC produced at Musoffah plant is $105. However, the AlQuoz and RAK plant utilize newer and more efficient equipment, as a result, the manufacturing cost per PGC unit is $5 less than the Musoffah plant. Due to the company's rapid growth, not much attention has been paid to the efficiency of the distribution system, and management has decided it is time to address this issue in its three plants and two distribution centers. The cost of shipping a PGC to KIZAD from Musaffah and Al Quoz is $7 and $8 respectively. Similarly, the cost of shipping a PGC to Jabal Ali from Al Quoz and RAK is $4 and $12 respectively. There are no shipments allowed from RAK to KIZAD nor from Musaffah to Jabal All The Quarterly production capacity is 30,000 PGCs at the Musaffah plant and 20,000 PGCs at the RAK and AlQouz plants. Note that no shipments are allowed from the RAK plant to the Kizad distribution center or from Musaffah to plant to Jabal Ali distribution center. The company serves nine customer zones from the two distribution centers. The forecast of the number of PCs needed in each customer zone for the next quarter is shown below. Customer Zone Dhahran Manama Riyadh Kuwait Jeddah Salalah Muscat Nizwa Sohar Demand 6.100 4880 2130 1210 6120 4830 2750 8580 4460 The selling price is standardized at $200 per PGC and the unit costs of shipping from each distribution center to each customer zone are given in dollars in the table below. Customer Zones Center Dhahran Manama Riyadh Jeddah Kuwait Muscat Nizwa Sohar Salalah KIZAD 14 19 18 25 29 9 8 5 22 Jabal Ali 16 17 20 26 25 10 6 24 In the current distribution system demand at the Dhahran, Manama, Riyadh, Jeddah, and Kuwait customer zones is satisfied by shipments from KIZAD distribution center. In a similar manner, the Muscat, Nizwa, Sohar, and Salalah customer zones are served by the Jabal All distribution center. The company would like to determine how many PCs to ship from each plant, to satisfy the forecasted aggregated quarterly demand at the customer zones through the distribution centers to maximize the total profit. (1) Relax the company's current distribution strategy for the next quarter by dropping the distribution center limitations; that is, customer zones could be served by any of the distribution centers. Provide the new optimal solution that would minimize the total costs for the following quarter indicating the expected amount of loss or gain to be achieved from relaxing the current distribution strategy. (2) The company wants to explore the possibility of satisfying some of the customer demands directly from the RAK production plant to the customer zones in Sohar and Nizwa at a direct shipping cost of $25 per unit. Adjust the model in (1) to consider the option of shipping PCs directly from RAK to Nizwa and Sohar. Indicate if the total shipping costs would be further reduced by considering these direct plant- customer shipments? (3) Over the next five years, the company is anticipating 20% growth in the demand for the PCs. In addition, they wanted consider the utilization of only one distribution center (Kizador Jabal Ali) to ship the PGCS to the nine customer zones. Modify your model in (1) to reflect the above two additional conditions then resolve the model and comment on your new results (do they really need to increase some of the plant capacities and/or can they do that by using one distribution center only)? (4) Utilize the sensitivity report(s) and solver table(s) results to analyze the original case and make recommendations for improving the original distribution system that you provided in (1). Use your own free style analysis based on what you learnt in class to come up with relevant set of recommendations for the GCC Company. The recommendations must be supported by the results of your analysis. (5) In addition to the optimal solutions that are financially feasible, suggest at least two alternative strategies/solutions that could be more socially responsible and/or environmentally sound. Consider the impact of these alternatives on the profitability of the business decision and develop a comprehensive recommendation A joint GCC Company manufactures and distributes Skg Portable Gas Cylinders (PGC), used for outdoors and home cooking. The company started with a small production plant in Musaffah then gradually built-up a customer-base throughout the GCC region, via a distribution center in Khalifa Industrial Zone in Abu Dhabi (KIZAD). Later when business expanded, the company started using another distribution center in Jabal Ali- Dubai to distribute the PGCs to its customers in the region. The company pays quarterly fixed admin costs of $40,000 and $35,000 for utilizing the distribution centers in Kizad and Jabal Ali, respectively. Just 18 months ago the company opened two more production plant in Dubai (Al Quoz) and Ras Al Khaimah (RAK). Manufacturing costs differ between the company's production plants. The cost of each PGC produced at Musoffah plant is $105. However, the AlQuoz and RAK plant utilize newer and more efficient equipment, as a result, the manufacturing cost per PGC unit is $5 less than the Musoffah plant. Due to the company's rapid growth, not much attention has been paid to the efficiency of the distribution system, and management has decided it is time to address this issue in its three plants and two distribution centers. The cost of shipping a PGC to KIZAD from Musaffah and Al Quoz is $7 and $8 respectively. Similarly, the cost of shipping a PGC to Jabal Ali from Al Quoz and RAK is $4 and $12 respectively. There are no shipments allowed from RAK to KIZAD nor from Musaffah to Jabal All The Quarterly production capacity is 30,000 PGCs at the Musaffah plant and 20,000 PGCs at the RAK and AlQouz plants. Note that no shipments are allowed from the RAK plant to the Kizad distribution center or from Musaffah to plant to Jabal Ali distribution center. The company serves nine customer zones from the two distribution centers. The forecast of the number of PCs needed in each customer zone for the next quarter is shown below. Customer Zone Dhahran Manama Riyadh Kuwait Jeddah Salalah Muscat Nizwa Sohar Demand 6.100 4880 2130 1210 6120 4830 2750 8580 4460 The selling price is standardized at $200 per PGC and the unit costs of shipping from each distribution center to each customer zone are given in dollars in the table below. Customer Zones Center Dhahran Manama Riyadh Jeddah Kuwait Muscat Nizwa Sohar Salalah KIZAD 14 19 18 25 29 9 8 5 22 Jabal Ali 16 17 20 26 25 10 6 24 In the current distribution system demand at the Dhahran, Manama, Riyadh, Jeddah, and Kuwait customer zones is satisfied by shipments from KIZAD distribution center. In a similar manner, the Muscat, Nizwa, Sohar, and Salalah customer zones are served by the Jabal All distribution center. The company would like to determine how many PCs to ship from each plant, to satisfy the forecasted aggregated quarterly demand at the customer zones through the distribution centers to maximize the total profit. (1) Relax the company's current distribution strategy for the next quarter by dropping the distribution center limitations; that is, customer zones could be served by any of the distribution centers. Provide the new optimal solution that would minimize the total costs for the following quarter indicating the expected amount of loss or gain to be achieved from relaxing the current distribution strategy. (2) The company wants to explore the possibility of satisfying some of the customer demands directly from the RAK production plant to the customer zones in Sohar and Nizwa at a direct shipping cost of $25 per unit. Adjust the model in (1) to consider the option of shipping PCs directly from RAK to Nizwa and Sohar. Indicate if the total shipping costs would be further reduced by considering these direct plant- customer shipments? (3) Over the next five years, the company is anticipating 20% growth in the demand for the PCs. In addition, they wanted consider the utilization of only one distribution center (Kizador Jabal Ali) to ship the PGCS to the nine customer zones. Modify your model in (1) to reflect the above two additional conditions then resolve the model and comment on your new results (do they really need to increase some of the plant capacities and/or can they do that by using one distribution center only)? (4) Utilize the sensitivity report(s) and solver table(s) results to analyze the original case and make recommendations for improving the original distribution system that you provided in (1). Use your own free style analysis based on what you learnt in class to come up with relevant set of recommendations for the GCC Company. The recommendations must be supported by the results of your analysis. (5) In addition to the optimal solutions that are financially feasible, suggest at least two alternative strategies/solutions that could be more socially responsible and/or environmentally sound. Consider the impact of these alternatives on the profitability of the business decision and develop a comprehensive recommendation