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Question 1: 15 marks Jubail Trading Company wants to distribute their stocks to four of their retailers through their distribution centers (DC). The company
Question 1: 15 marks Jubail Trading Company wants to distribute their stocks to four of their retailers through their distribution centers (DC). The company has four warehouses with three-distribution centers. The stocks from the distribution center is delivered to the retailers. The capacity of the warehouse and the shipping costs in SAR from the warehouse to the DC and from the DC to the retailers is given in the table below: Warehouse Distribution centers 1 2 3 Capacity 1 3 6 5 800 2 2 5 7 640 3 4 5 8 480 4 3 7 6 700 Customer demand and shipping costs per unit in SAR from each warehouse to each customer are given in the table below: Distribution center 1 Retailers 1 2 3 4 2 3 8 7 2 5 5 7 8 3 4 7 6 4 Demand 1000 450 550 480 As a second option, the company decides to remove the DC and deliver the stocks from the warehouse directly to the retailers. The capacities and shipping cost in SAR from the warehouse to the retailer is given below: Warehouse Retailer 1 2 3 4 Capacity 1 8 5 7 4 800 2 7 4 8 5 640 3 5 7 9 6 480 4 6 6 6 7 700 Demand 1000 450 550 480 Demand Draw a network for the two options of transshipment and transportation models. b. Develop the linear program models for both the options c. Determine the optimal solution for shipping the orders from the warehouses to the retailer using transshipment and transportation methods focusing to minimize the total shipping and processing costs. d. Identify if there is any capacity that cannot meet the retailer's demand, vice versa. e. Is there any distribution center that can be closed. Using transportation and transshipment method solve the problem and present a report to the management by recommending the model that incurs optimal shipments cost.
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