SC Consulting, a supply chain consulting firm, must decide on the location of its home offices. Its clients are located primarily in the 16 states listed in Table 5-5. There are four potential sites for home offices: Los Angeles, Tulsa, Denver, and Seattle. The annual fixed cost of locating an office in Los Angeles is $165,428, Tulsa is $131,230, Denver is $140,000, and Seattle is $145,000. The expected number of trips to each state and the travel costs from each potential site are shown in Table 5-5. Each consultant is expected to take at most 25 trips each year. a. If there are no restrictions on the number of consultants at a site and the goal is to minimize costs, where should the home offices be located and how many consultants should be assigned to each office? What is the annual cost in terms of the facility and travel? b. If, at most, 10 consultants are to be assigned to a home office, where should the offices be set up? How many consultants should be assigned to each office? What is the annual cost of this network? c. What do you think of a rule by which all consulting projects out of a given state are assigned to one home office? How much is this policy likely to add to cost compared to allowing multiple offices to handle a single state? Table 5-5 Travel Costs and Number of Trips for SC Consulting Travel Costs (5) Number State Los Angeles Tulsa Denver Seattle of Trips Washington 150 200 Oregon California Idaho 150 125 Nevada 100 150 Montana Wyoming Utah Arna Colorado New Mexico 125 North Dakota 300 South Dakota 300 Nebraska Kansas 250 Oklahoma 250 150 150 125 200 250 250 SC Consulting, a supply chain consulting firm, must decide on the location of its home offices. Its clients are located primarily in the 16 states listed in Table 5-5. There are four potential sites for home offices: Los Angeles, Tulsa, Denver, and Seattle. The annual fixed cost of locating an office in Los Angeles is $165,428, Tulsa is $131,230, Denver is $140,000, and Seattle is $145,000. The expected number of trips to each state and the travel costs from each potential site are shown in Table 5-5. Each consultant is expected to take at most 25 trips each year. a. If there are no restrictions on the number of consultants at a site and the goal is to minimize costs, where should the home offices be located and how many consultants should be assigned to each office? What is the annual cost in terms of the facility and travel? b. If, at most, 10 consultants are to be assigned to a home office, where should the offices be set up? How many consultants should be assigned to each office? What is the annual cost of this network? c. What do you think of a rule by which all consulting projects out of a given state are assigned to one home office? How much is this policy likely to add to cost compared to allowing multiple offices to handle a single state? Table 5-5 Travel Costs and Number of Trips for SC Consulting Travel Costs (5) Number State Los Angeles Tulsa Denver Seattle of Trips Washington 150 200 Oregon California Idaho 150 125 Nevada 100 150 Montana Wyoming Utah Arna Colorado New Mexico 125 North Dakota 300 South Dakota 300 Nebraska Kansas 250 Oklahoma 250 150 150 125 200 250 250
