Assignment: The Darby Company Manufactures and Distributors
BA561 –winter 2006
LP Case
Notes:
1. This is an individual assignment. As stated in the syllabus you must do your own work or you will fail the class. 2. You can use any software you wish to perform the analysis, but the assignment was designed under the assumption that you would be using the LINDO software used for LP in BA555. 3. The project is due at the beginning of class in week four (February 1).
The Case:
The Darby Company manufactures and distributes meters used to measure electric power consumption. The company started with a small production plant in El Paso, Texas and gradually built a customer base throughout Texas. A distribution center (DC) was established in Ft. Worth, Texas and later as business expanded to the North, a second distribution center was established in Santa Fe, New Mexico.
The El Paso plant was expanded when the company began marketing its meters in Arizona, California, Nevada and Utah. With the growth of the West Coast business, the Darby Company opened a third distribution center in Las Vegas, Nevada and just two years ago opened a second manufacturing plant in San Bernardino, California.
Manufacturing costs differ between the company’s two production facilities. The cost of each meter produced at the El Paso plant is $10.50. The San Bernardino plant is more efficient and produces meters at $10.00 a unit.
Due to the company’s rapid growth, not much attention has been paid to the efficiency of the distribution system, but Darby’s management has decided that it is time to address this issue. The costs of shipping a meter from each of the plants to each of the three distribution centers is shown in Table 1.
Yearly production capacity is 30,000 units at the El Paso plant and 20,000 units at the San Bernardino plant. Note that no shipments are allowed from the San Bernardino plant to the Ft. Worth distribution center.
The company serves nine customer zones from the three distribution centers. The
LP Case
Notes:
1. This is an individual assignment. As stated in the syllabus you must do your own work or you will fail the class. 2. You can use any software you wish to perform the analysis, but the assignment was designed under the assumption that you would be using the LINDO software used for LP in BA555. 3. The project is due at the beginning of class in week four (February 1).
The Case:
The Darby Company manufactures and distributes meters used to measure electric power consumption. The company started with a small production plant in El Paso, Texas and gradually built a customer base throughout Texas. A distribution center (DC) was established in Ft. Worth, Texas and later as business expanded to the North, a second distribution center was established in Santa Fe, New Mexico.
The El Paso plant was expanded when the company began marketing its meters in Arizona, California, Nevada and Utah. With the growth of the West Coast business, the Darby Company opened a third distribution center in Las Vegas, Nevada and just two years ago opened a second manufacturing plant in San Bernardino, California.
Manufacturing costs differ between the company’s two production facilities. The cost of each meter produced at the El Paso plant is $10.50. The San Bernardino plant is more efficient and produces meters at $10.00 a unit.
Due to the company’s rapid growth, not much attention has been paid to the efficiency of the distribution system, but Darby’s management has decided that it is time to address this issue. The costs of shipping a meter from each of the plants to each of the three distribution centers is shown in Table 1.
Yearly production capacity is 30,000 units at the El Paso plant and 20,000 units at the San Bernardino plant. Note that no shipments are allowed from the San Bernardino plant to the Ft. Worth distribution center.
The company serves nine customer zones from the three distribution centers. The