Linear Programming
472
Chapter 10
Case Problem 2
Distribution and Network Models
Supply Chain Design
The Darby Company manufactures and distributes meters used to measure electric power consumption. The company started with a small production plant in EI Paso and gradually built a customer base throughout Texas. A distribution center was established in Fort Worth,
Texas, and later, as business expanded, a second distribution center was established in Santa
Fe, New Mexico.
The EI 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 and just two years ago openeda second production plant in San Bernardino, California.
Manufacturing costs differ between the company's production plants. The cost of each meter produced at the EI Paso plant is $10.50. The San Bernardino plant utilizes newerand more efficient equipment; as a result, manufacturing costs are $0.50 per meter less thanat the EI Paso plant.
Due to the company's rapid growth, not much attention had been paid to the efficiency of its supply chain, but Darby's management decided that it is time to address this issue.
The cost of shipping a meter from each of the two plants to each of the three distribution centers is shown in Table 10.10.
The quarterly production capacity is 30,000 meters at the older EI Paso plant and 20,000 meters at the San Bernardino plant. Note that no shipments are allowed from the San
Bernardino plant to the Fort Worth distribution center.
The company serves nine customer zones from the three distribution centers. The forecast of the number of meters needed in each customer zone for the next quarter is shownin
Table 10.11.
TABLE 10.10
SHIPPING COST PER UNIT FROM PRODUCTION PLANTS TO
DISTRIBUTION CENTERS (IN $)
Distribution Center
Fort
Worth
Plant
EI Paso
San Bernardino
TABLE 10.11
Santa
Fe
Chapter 10
Case Problem 2
Distribution and Network Models
Supply Chain Design
The Darby Company manufactures and distributes meters used to measure electric power consumption. The company started with a small production plant in EI Paso and gradually built a customer base throughout Texas. A distribution center was established in Fort Worth,
Texas, and later, as business expanded, a second distribution center was established in Santa
Fe, New Mexico.
The EI 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 and just two years ago openeda second production plant in San Bernardino, California.
Manufacturing costs differ between the company's production plants. The cost of each meter produced at the EI Paso plant is $10.50. The San Bernardino plant utilizes newerand more efficient equipment; as a result, manufacturing costs are $0.50 per meter less thanat the EI Paso plant.
Due to the company's rapid growth, not much attention had been paid to the efficiency of its supply chain, but Darby's management decided that it is time to address this issue.
The cost of shipping a meter from each of the two plants to each of the three distribution centers is shown in Table 10.10.
The quarterly production capacity is 30,000 meters at the older EI Paso plant and 20,000 meters at the San Bernardino plant. Note that no shipments are allowed from the San
Bernardino plant to the Fort Worth distribution center.
The company serves nine customer zones from the three distribution centers. The forecast of the number of meters needed in each customer zone for the next quarter is shownin
Table 10.11.
TABLE 10.10
SHIPPING COST PER UNIT FROM PRODUCTION PLANTS TO
DISTRIBUTION CENTERS (IN $)
Distribution Center
Fort
Worth
Plant
EI Paso
San Bernardino
TABLE 10.11
Santa
Fe