Problem:
You are in a business of producing and selling cowboys t-shirts. There are two factories that produce these t-shirts; one is located in Stillwater and another at OKC. Each month, STW factory produces 500 units and OKC factory produces 400 units.
You also own 3 outlets where you sell your t-shirts to the customers. One is located at Edmond, second at Guthrie and third at Tulsa. Demands at each location are:
Edmond: 400
Guthrie: 600
Tulsa: 350
You produce a total of 900 units in OKC and STW but your demand is 1350. So, you have to make a decision where to establish a new factory that can produce the remaining required units.
Obviously, our objective function is to minimize the transportation cost. Transportation cost of sending one unit of t-shirt from factory to all outlets is given in the shipping cost matrix below.
|
Edmond
|
Guthrie
|
Tulsa
|
|
STW
|
8
|
3
|
7
|
|
OKC
|
5
|
10
|
9
|
You just two options: First is to open at Cushing and second at Ponca City.
Transportation costs from Cushing to all other outlets are:
Cushing - Edmond: $6
Cushing- Guthrie: $8
Cushing - Tulsa: $7
Transportation costs from Ponca City to all other outlets are:
PC - Edmond: $10
PC- Guthrie: $6
PC - Tulsa: $4
Question 1) What decision you will make?
Solve the problem and show all work.