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The Martin - Beck Company operates a plant in St . Louis with an annual capacity of 3 0 , 0 0 0 units. Product

The Martin-Beck Company operates a plant in St. Louis with an annual capacity of 30,000 units. Product is shipped to regional distribution centers located in Boston, Atlanta, and Houston. Because of an anticipated increase in demand, Martin-Beck plans to increase capacity by constructing a new plant in one or more of the following cities: Detroit, Toledo, Denver, or Kansas City. The estimated annual fixed cost and the annual capacity for the four proposed plants are as follows:
Proposed Plant Annual Fixed Cost Annual Capacity
Detroit $175,00040,000
Toledo $300,00010,000
Denver $375,00020,000
Kansas City $500,00030,000
The companys long-range planning group developed forecasts of the anticipated annual demand at the distribution centers as follows:
Distribution Center Annual Demand
Boston 30,000
Atlanta 20,000
Houston 20,000
The shipping cost per unit (in dollars) from each plant to each distribution center is as follows:
Distribution Centers
Plant Site Boston Atlanta Houston
Detroit 523
Toledo 434
Denver 975
Kansas City 1042
St. Louis 843
(a) Develop a mixed-integer programming model that could be used to help Martin-Beck determine which new plant or plants to open in order to satisfy anticipated demand. Solve the model and answer the following questions. What is the optimal cost?
$
What is the optimal set of plants to open?
- Select your answer -
(b) Using equation 15.1, find a second-best solution. What is the optimal set of plants to open?
- Select your answer -
What is the increase in cost versus the best solution from part (a)?
$

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