Table 5-3 HighOptic

Inputs - Costs, Capacities, Demands (HighOptic)

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Demand City
Production and Transportation Cost per 1000 Units
Atlanta
Boston
Chicago
Denver Omaha
1,675
400
685
1,630
1,160
1,460
1,940
970
100
495
1,925
2,400
1,425
500
950
380
1,355
543
1,045
665
922
1,646
700
508
311
10
8
14
6
7

Portland
2,800
1,200
800
2,321
1,797
11

Demand City - Production Allocation (1000 Units)

Atlanta
Boston
Chicago
Denver Omaha
0
0
0
0
0
0
0
0
6
7
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Plants
Portland (1=open)
0
0
1
11
1
0
0

Fixed CapaCost ($)

city
7,650
18
3,500
24
5,000
27
4,100
22
2,200
31

Decision Variables
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Unmet Demand

Excess Capacity
18
11
16
22
31
Atlanta
Boston
10
8

Objective Function
Cost =
$

Chicago
14

Denver
0

Omaha
0

Portland
0

Optimal Demand Allocation for HighOptic (part of Table 5-3)

21,365
1. Using Data | Analysis | Solver, solve the demand allocation
problem for HighOptic

Table 5-3 HighOptic

Table 5-3 TelecomOne

Inputs - Costs, Capacities, Demands (TelecomOne)

Demand City
Production and Transportation Cost per 1000 Units
Atlanta
Boston Chicago
Denver Omaha
1,675
400
685
1,630
1,160
1,460
1,940
970
100
495
1,925
2,400
1,425
500
950
380
1,355
543
1,045
665
922
1,646
700
508
311
10
8
14
6
7

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Portland
2,800
1,200
800
2,321
1,797
11

Fixed CapaCost ($)

city
7,650
18
3,500
24
5,000
27
4,100
22
2,200
31

Decision Variables
Demand City - Production Allocation (1000 Units)
Atlanta
Boston Chicago
Denver Omaha
0
8
2
0
0
0
0
0
0
0
0
0
0
0
0
10
0
12
0
0
0
0
0
0
0

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita

Portland
0
0
0
0
0

Plants
(1=open)
1
0
0
1
1

Excess Capacity
8
24
27
0
31

Unmet Demand

Atlanta
0

Boston
0

Chicago
0

Denver
6

Omaha
7

Portland
11

Objective Function
Cost =
$

28,836
1. Using Data | Analysis | Solver, solve the demand allocation

Optimal Demand Allocation for TelecomOne (part of Table 5-3)

problem for HighOptic

Table 5-3)
on

Table 5-3 TelecomOne

Merged Network with All Plants

Inputs - Costs, Capacities, Demands (for TelecomOptic)

Demand City
Production and Transportation Cost per 1000 Units
Atlanta Boston Chicago Denver
Omaha Portland
1,675
400
685
1,630
1,160
2,800
1,460
1,940
970
100
495
1,200
1,925
2,400
1,425
500
950
800
380
1,355
543
1,045
665
2,321
922
1,646
700
508
311
1,797
10
8
14
6
7
11

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Fixed
Cost ($)
7,650
3,500
5,000
4,100
2,200

Decision Variables
Demand City - Production Allocation (1000 Units)
Atlanta Boston Chicago Denver
Omaha
0
8
2
0
0
0
0
0
6
0
0
0
0
0
0
10
0
12
0
0
0
0
0
0
7

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita

Excess Capacity
8
18
16
0
24

Unmet Demand

Atlanta
0

Objective Function
Cost =
$

48,913

Total Available Capacity

Boston Chicago
0
0

Denver
0

Omaha
0

Portland
0
0
11
0
0

Plants
(1=open)
1
1
1
1
1

122

Portland
0

Evaluating the Merged Network with All Plants open

In this worksheet we evaluate the performance of the merged network
if all plants are kept open. To do so solve the model using Solver.
The reduction in total cost relative to the sum of the costs of the independent
networks (from the previous two worksheets) represents the synergies
obtained simply be reallocating demand in the merged network.

Capacity
18
24
27
22
31

Evaluating the Merged Network with All Plants open

In this worksheet we evaluate the performance
of the
Merged Network
with merged
All Plants network
if all plants are kept open. To do so solve the model using Solver.
The reduction in total cost relative to the sum of the costs of the independent
networks (from the previous two worksheets) represents the synergies
obtained simply be reallocating demand in the merged network.

Figure 5-12

Inputs - Costs, Capacities, Demands (for TelecomOptic)

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Demand City
Production and Transportation Cost per 1000 Units
Atlanta
Boston Chicago
Denver Omaha
1,675
400
685
1,630
1,160
1,460
1,940
970
100
495
1,925
2,400
1,425
500
950
380
1,355
543
1,045
665
922
1,646
700
508
311
10
8
14
6
7

Portland
2,800
1,200
800
2,321
1,797
11

Demand City - Production Allocation (1000 Units)

Atlanta
Boston Chicago
Denver Omaha
0
8
2
0
0
0
0
0
6
7
0
0
0
0
0
10
0
12
0
0
0
0
0
0
0

Plants
Portland (1=open)
0
1
11
1
0
0
0
1
0
0

Fixed
Cost ($)
7,650
3,500
5,000
4,100
2,200

Decision Variables
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita

Excess Capacity
8
0
0
0
0

Unmet Demand

Atlanta
0

Objective Function
Cost =
$

47,401

Boston
0

Chicago
0

Denver
0

Omaha
0

Portland
0

Building Figure 5-12

Using Data | Analysis | Solver, solve the model to obtain Figure 5-12.
Observe that the plants in Wichita and Salt lake are shut to further lower cost relative
to keeping all plants open.

Building Figure 5-12

Figure 5-12
Using Data | Analysis | Solver, solve the model to obtain Figure 5-12.
Observe that the plants in Wichita and Salt lake are shut to further lower cost relative
to keeping all plants open.

Figure 5-12

Capacity
18
24
27
22
31

Figure 5-12

Table 5-4 Single Sourcing

Inputs - Costs, Capacities, Demands (Table 11.4 for TelecomOptic)

Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita
Demand

Demand City
Production and Transportation Cost per 1000 Units
Atlanta Boston Chicago Denver Omaha
Portland
1,675
400
685
1,630
1,160
2,800
1,460
1,940
970
100
495
1,200
1,925
2,400
1,425
500
950
800
380
1,355
543
1,045
665
2,321
922
1,646
700
508
311
1,797
10
8
14
6
7
11

Fixed
Cost ($)
7,650
3,500
5,000
4,100
2,200

Demand City Supplied (1 indicates Cities Supplied)

Atlanta Boston Chicago Denver Omaha
Portland
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
1
1
0
0
0
0
0
0
1
0
1
0

Plants
(1=open)
0
0
1
1
1

Decision Variables
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita

Resulting Production Allocation

Demand City - Production Allocation (1000 Units)
Supply City
Atlanta Boston Chicago Denver Omaha
Portland
Baltimore
0
0
0
0
0
0
Cheyenne
0
0
0
0
0
0
Salt Lake
0
0
0
6
0
11
Memphis
10
8
0
0
0
0
Wichita
0
0
14
0
7
0
Constraints
Supply City
Baltimore
Cheyenne
Salt Lake
Memphis
Wichita

Excess Capacity
0
0
10
4
10

Demand

Atlanta
1

Objective Function
Cost =
$

49,717

Boston Chicago
1
1

Denver
1

Omaha
1

Portland
1

Building Table 5-4

Using Data | Analysis | Solver, solve the model to obtain Table 5-4.
Compare with Figure 5-12 to see the additional cost of single sourcing.

Capacity
18
24
27
22
31