Assignment:
The MedCo is a company located in Ottawa that produces medical equipment used in Operating Rooms. The company has an annual capacity of 30,000 units of the product. Product is shipped to regional distribution centres located in Montreal, Kingston, and Oshawa.
Because of anticipated increase in demand, MedCo plans to increase capacity by constructing a new plant in one or more of the following cities: Toronto, Hamilton, Quebec City, or London. The estimated annual fixed cost and the annual capacity for the four proposed plants are as follows:
The MedCo's long-range planning group developed forecasts of the anticipated annual demand at the distribution centers as follows:
The shipping cost per unit (in thousand dollars) from each plant to each distribution center is shown in the table below. A decision must be made as to which new plant or plants will be constructed.
a) Formulate algebraically the mixed-integer/binary programming model that could be used to help Martin-Beck determine which new plant or plants to open in order to satisfy anticipated demand.
b) Solve the model you formulated in part a) using Excel Solver (Provide a printout of the corresponding "Excel Spreadsheet" and the "Answer Report"). What is the optimal cost? What is the optimal set of plant(s) to open and how many units will be shipped from the each plant to the distribution center?