K's Brewery is currently brewing in three different locations: Koblenz, Bamberg and Oldenburg (please consult the map for the location of these cities). The firm is considering building a fourth brewery in either Magdeburg or Zwickau, as demand is outpacing capacity. The attached file includes production and transportation costs, as well as maximum monthly capacity for each of the facilities. Using the forecast for next month's production as obtained in part a), determine if Magdeburg or Zwickau is the better location for an additional brewery (with respect to total production and transportation costs). Determine also how much beer should be brewed where and which brewery will deliver to which region.
Hint: based on the given information, you need to determine how to serve the forecasted demand given the available capacity. Two separate models are needed: one including the new brewery in Magdeburg, the other with the new brewery in Zwickau. (Total points 21)
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Forecast |
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| Northeast |
1480 |
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| Northwest |
995 |
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| Southeast |
1075 |
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| Southwest |
1825 |
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| Production cost |
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New Brewery location |
| Market |
Koblenz |
Bamberg |
Oldenburg |
Magdeburg |
Zwickau |
| Northeast |
€ 1,600 |
€ 1,500 |
€ 1,800 |
€ 1,400 |
€ 1,600 |
| Northwest |
€ 1,600 |
€ 1,500 |
€ 1,800 |
€ 1,400 |
€ 1,600 |
| Southeast |
€ 1,600 |
€ 1,500 |
€ 1,800 |
€ 1,400 |
€ 1,600 |
| Southwest |
€ 1,600 |
€ 1,500 |
€ 1,800 |
€ 1,400 |
€ 1,600 |
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| Capacity |
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| in thousand cases |
1,200 |
1,800 |
1,200 |
1,700 |
1,500 |
| Transportation cost |
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New Brewery Location |
| Market |
Koblenz |
Bamberg |
Oldenburg |
Magdeburg |
Zwickau |
| Northeast |
€ 550 |
€ 450 |
€ 400 |
€ 200 |
€ 250 |
| Northwest |
€ 350 |
€ 500 |
€ 250 |
€ 300 |
€ 350 |
| Southeast |
€ 200 |
€ 210 |
€ 450 |
€ 300 |
€ 300 |
| Southwest |
€ 400 |
€ 300 |
€ 300 |
€ 450 |
€ 400 |