Microsys Corp is located in Seattle, Washington. The company has developed the WebSurfer, a low cost email and Web-surfing appliance. This product is manufactured at four plants, located in Atlanta, Kansas City, Seattle, and Austin. After production, Websurfers are shipped to three warehouses, located in Nashville San Jose and Houston. Microsys sells the Websurfer through retail channel. In particular, five different retailers sell the Websurfer Sears, Best Buy, Frys, Staples, and Office Max. Microsys makes weekly shipments to the main warehouses of these five retailers. The shipping cost from each plant to each warehouse, along with the production cost and weekly production capacity at each plant are given in the table below:

The shipping cost from each warehouse to each customer, the variable cost (cost per unit moved through the warehouse), the capacity (maximum number of units that can be moved through the warehouse per week) for each warehouse, and the weekly demand for each customer are given in the table below:

Formulate and solve a linear programming model in a spreadsheet to determine the plan for weekly production and distribution of the Websurfer from the various plants, through the warehouses, to the customers that will minimize total costs. Prepare a report to include:

1a. Your production and distribution plan. (breakdown costs by production and shipping)

1b. Is Atlanta shipping to San Jose? How many units? If not, by how much the cost in this route would have to improve to be economically feasible?

1c. If you could produce one more unit at any of the plants, which one would be more cost effective (lowest marginal cost of production)? What would be the impact of this additional unit in the total cost?

1d. Which of the retail stores is the least cost effective to produce and deliver (highest marginal cost to supply)? By how much would total cost increase if this store wanted one more unit delivered?

1e. If a manager decides to spend money to increase capacity in San Jose warehouse by another 100 units, would you agree?

1f. How many units are being shipped from Atlanta to Nashville? If costs to produce and ship in this route goes up by $0.5, would you still use this route?

The VP of Marketing and Operations is considering saving money by closing some of Microsyss production facilities and/or warehouses. She indicated to you that there is a fixed cost to operate each plant and each warehouse as indicated in the table below, and needs your analysis to determine which plants and/or warehouses to close to see if there is an opportunity to further reduce (minimize) production and distribution costs.

Include a binary variable in the model in the model to determine which plants and or/warehouses to close and determine a new plan that minimizes total production and distribution cost. Prepare a new report which will include:

1g. The new production and distribution plan. (breakdown costs by production and shipping)

1h. What is the effect (on total cost) of closing some of the facilities.

1i. For strategic considerations, management decided that either Atlanta or Kansas City should not be closed simultaneously. That is, at least one should be open at any given time. What would be the network effect in terms of total cost?

1j. Using the model in 2a) management wants to investigate the proposal of closing Houston distribution center if the Austin plant is scheduled to be open. How would this option change the results in 2a) in terms of total cost?

Plant Nashville 30 25 45 30 Atlanta Kansas City Seattle | Austin Shipping Cost ($/unit) San Jose Houston 40 50 45 30 50 30 Production Cost ($/unit) 208 214 215 210 Capacity (units/week) 200 300 300 400 40 55 Shipping Cost ($/unit) Best Buy Fry's Staples Variable Cost ($/unit) Capacity (units/week) Warehouse Sears 45 25 30 25 Office Max 20 40 50 15 5 300 500 500 L3s 15 Nashville 40 San Jose 15 Houston 50 Customer demand (per 100 week) 40 300 150 Plant Atlanta Kansas City Seattle Austin Fixed cost ($/week) 8,000 19.000 9,000 10,000 Warehouse Nashville San Jose Houston Fixed cost ($/week) 4,000 5,000 5.000 Plant Nashville 30 25 45 30 Atlanta Kansas City Seattle | Austin Shipping Cost ($/unit) San Jose Houston 40 50 45 30 50 30 Production Cost ($/unit) 208 214 215 210 Capacity (units/week) 200 300 300 400 40 55 Shipping Cost ($/unit) Best Buy Fry's Staples Variable Cost ($/unit) Capacity (units/week) Warehouse Sears 45 25 30 25 Office Max 20 40 50 15 5 300 500 500 L3s 15 Nashville 40 San Jose 15 Houston 50 Customer demand (per 100 week) 40 300 150 Plant Atlanta Kansas City Seattle Austin Fixed cost ($/week) 8,000 19.000 9,000 10,000 Warehouse Nashville San Jose Houston Fixed cost ($/week) 4,000 5,000 5.000