Solving network design problem

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cnqneb1975

Business Finance

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Solving a Network Design Problem

This assignment requires you to use a mixed integer program to solve a network design problem.

  1. Refer to the "Hands on Excel" discussion on pages 53–56 of the Supply chain Networks textbook.
  2. Download the attached MIP 9 City Example Excel file .
  3. Ensure that Solver has been enabled on your PC. This may require you to turn Solver on in the "Add-Ins" area of Excel. For instructions on how to do this, you can go to the Office Support page and do a search for "Excel Solver Add-in."
  4. Develop an answer to question 6 on page 61. In addition, solve the model with four locations.
  5. Develop a 4-page document that includes:
    • Quantitative answers to the questions raised in the text.
    • Explanations of what these solutions mean in business terms.
    • An explanation of the managerial implications to your solutions.
    • Answers to the following questions:
      • Consider the change in total distance as you move from two, to three, to four locations. How significant an improvement does the firm achieve in each step?
      • What change to your results do you see in parts C and D of question 6?
      • What service level impacts do you foresee as you move from two, to three, to four locations?

As you complete your assignment, be sure your paper meets the following guidelines:

  • Written communication: Written communication is free of errors that detract from the overall message.
  • APA formatting: All resources and citations should be formatted according to current APA style and formatting guidelines.
  • Length: 4 typed, double-spaced pages.
  • Font size and type: 10-point Arial.
  • Introduction and conclusion are required

Refer to the attached scoring guide for this assignment to ensure you meet the grading criteria

Unformatted Attachment Preview

Objective - Set of Cities Chicago Atlanta New York St. Louis Detroit Cincinnati Pittsburgh Charlotte Boston
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Explanation & Answer

Attached.

Running Head: SOLVING NETWORK DESIGN PROBLEM

SOLVING NETWORK DESIGN PROBLEM

Name

Course

Professor

Date

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SOLVING NETWORK DESIGN PROBLEM

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SOLVING NETWORK DESIGN PROBLEM

Introduction

A facility’s location is a crucial aspect in its effectiveness when it comes to reaching the target
market, implying that the location should be an optimal site for the facility. Selecting a set of various
locations for facilities and then assigning spatially distributed sets of demands to the respective facilities is
a means for optimizing the specified measurable aspects that will inform the decision for the location of
the facilities. Careful modeling of a supply chain network using the distance-based approach can help to
solve complex problems and develop good solutions to any issue inherent in a supply chain network. This
paper presents a distance-based approach to solving problems in a network design problem and
highlights the managerial implications of such solutions.

a: What are the best two locations with the given demand?

Given the demand, the best two locations would be Chicago and New York. This is so because of
the four locations that are allowed in the model, Chicago and New York have the largest demand points,
that is, 2,870,000 for Chicago and 8,450,000 for New York. From the sensitivity analysis, it is apparent
that the high demand points reduce the total cost of serving the customers, which is advantageous to the
firm. The sensitivity report shows that supplying products between Chicago and New York leads to a
reduced cost of $4,818,400,000. In view of these figures, it means that Chicago and New York have the
highest potential of pulling customer locations closer to the organization. Ensuring that the firm is closer to
locations with a lot of demand is imperative an aspect for the success of the organization (Watson, Lewis,
Cacioppi & Jayaraman, 2013).

Therefore, considering the best locations in terms of the nature of demand, New York and
Chicago would have be the best two locations since a higher demand implies an extensive market for the
entity in business terms. The managerial implication is that the firm should pursue locations with the
highest demand points, as this will enable the firm to serve more customers, generate more revenue and
achieve productivity and efficiency in its supply chain. High demand point means more customers and

SOLVING NETWORK DESIGN PROBLEM

3

therefore, the best action that can be undertaken by the firm is to increase the number of warehouses of
facilities so that the organization can be able to stock more products that can be able to meet the existing
demand and any potential increases (Watson, Lewis, Cacioppi & Jayaraman, 2013).

b. What are the best three locations with the given demand? How much did the average distance
decrease?

The best three locations with the given demand are New York, Chicago and Detroit. In this case,
these three locations have the highest demands, with New York having a demand of 8,450,000, Chicago
having a demand of 2,870,000 and Detroit having a demand of 901,000. Facility location should
essentially be in a place with high demand, as this aspect will provide an opportunity to maximize
coverage. From the sensitivity analysis, it is apparent that the high demand points reduce the total cost of
serving the customers, which is advantageous to the firm. As one moves from two, to three, to four
locations, the total distance decreases. According to Watson, Lewis, Cacioppi & Jayaraman
(2013) demand served with locations that are close to the firm increase when a new and optimal facility is
added to the network.

When the average distance between the firm and the locations is improved, there is a higher
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