The Total Weekly Cost For Supplying Bolts For IndustryCo Discussion

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– Supplier 1: U.S. Ainbolt – Unit cost: $2.50$ \$/case Capacity 9,500 cases/week – Supplier 2: Der Bolt, Thun – Unit cost: $3.20$ \$/case Capacity 10,000 cases/week – Supplier 3: Li Tningbolt – Unit cost: $1.90$/$ case Capacity 7,000 cases/week – Supplier 4: M. Bolton – Unit cost: $2.80$/$ case Capacity 9,000 cases/week You are trying to plan the weekly flow of bolts from these suppliers to your factories. Based on the current contract with your transportation carrier, the unit transportation cost for a case of bolts is $$0.05$ per mile from any of the suppliers to any of the factories. The distances between the four suppliers and the three factories are given in the table below. To help, we build a preliminary spreadsheet model to solve the problem, See Excel file Problem1-xlsx. Plug-in the formula in the required cells. To check if your Excel model is correct plug in a “1” for each decision variable. Your total cost should be $390.25$. 1. Currently, the factories operate independently. Disregarding any of the other factories, which supplier should Factory 2 select in order to have the lowest total (purchase and transport) cost for them? 2. You want to take a holistic view of bolt sourcing instead of having each factory select its supplier on its own. You decide to create a model to help you select the optimal sourcing assignment for all of the factories for the XA21R45 bolts. Based on this optimization model answer the following questions: a. What is the total weekly cost for supplying bolts for IndustryCo? Be sure to include the purchase price as well as the transportation costs. b. Based on your optimization model, which supplier should Factory 2 select in order to have the lowest total (purchase and transport) cost for IndustryCo? c. You decide to re-negotiate with Supplier 1 (U.S. Ainbolt) to increase their capacity. They agree to increase it to 14,000 cases per week. How many cases per week does Supplier 1 (U.S. Ainbolt) send to Factory 2 in the new optimal solution? d. Based on this new optimization model, what is the total weekly cost for supplying bolts for IndustryCo? Be sure to include the purchase price as well as the transportation costs. The Total Weekly Cost For Supplying Bolts For IndustryCo Discussion

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