Question 2. [35 points] Lifeline’s current nationwide demand…
Question 2. [35 points] Lifeline’s current nationwide demands are shown in Table1. Managers at Lifeline are designing the manufacturing network and have selected five potential sites- Philadelphia, Atlanta, Minneapolis, Portland, and Nashville. Plants could have a capacity of 200,000, 300,000, or 400,000 units. The annual fixed costs at the five locations and the transport costs are shown in Table 2. Lifeline has a single sourcing strategy such that facilities at a single location supply to a demand location. Where should Lifeline build its factories and how large should they be? Note that Lifeline can build multiple facilities in a location. [10 points] Define all the decision variables and cost parameters that you need to construct the model. [10 points] Set up the optimization model and write down the mathematical formulation, including the objective function and all constraints. [15 points] Solve the model in Excel and briefly describe the optimal solution you found. Table 1 Nationwide demands Demand Locations demands New York City 310,000 Raleigh 160,000 Chicago 280,000 Dallas 240,000 Seattle 290,000 Table 2 Production and Transport Costs for Lifeline Supply Locations Philadelphia Atlanta Minneapolis Portland Nashville Annual Fixed Costs ($) Capacity of 200k 6,000,000 5,500,000 5,600,000 6,100,000 6,800,000 Capacity of 300k 8,000,000 7,800,000 7,900,000 8,200,000 8,800,000 Capacity of 400k 10,000,000 9,200,000 9,300,000 10,200,000 10,800,000 Transport Costs ($/unit) New York City 211 232 238 299 226 Raleigh 226 212 230 280 198 Chicago 240 251 204 257 210 Dallas 281 220 270 288 212 Seattle 300 327 279 193 286
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