Operations and Supply Chain Management The Core

474 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
exhibit 14.7
400
300
Plant Location Matrix
Plant C (275, 380)
Plant B (100, 300)
Plant D (172, 263)
PLANT COMPRESSORS REQUIRED PER YEAR
A 6,000
B 8,200
C 7,000
Y
200
100
Plant A (150, 75)
100 200
X
300 400
If IPS follows the plan presented by Solver, it will spend a little over $4 million to ship its products
to its customers next year. The recommended plan should not be too surprising—Denver
primarily satisfies the West Cost demand, Chicago serves the middle of the country, and Baltimore
serves the East. This makes sense given the reality that transportation costs increase as distance
traveled increases. Further, we can see that both Denver and Baltimore will max out their capacity
in this plan, with Chicago using only about 75 percent of capacity.
LO14–3 SOLVED PROBLEM 3
Cool Air, a manufacturer of automotive air conditioners, currently produces its XB-300 line at three
different locations: plant A, plant B, and plant C. Recently, management decided to build all compressors,
a major product component, in a separate dedicated facility, plant D.
Using the centroid method and the information displayed in Exhibit 14.7, determine a location for
plant D. Assume a linear relationship between volumes shipped and shipping costs (no premium charges).
Solution
​d​ 1x ​ = 150
​d​ 2x ​ = 100​ ​d​ 1y ​ = 75
​d​ 2y ​ = 300​ ​
​V​ 1 ​ = 6,000
​V​ 2 ​ = 8,200​
​d​ 3x ​ = 275 ​d​ 3y ​ = 380 ​V​ 3 ​ = 7,000
​C​ x ​ = ​ ______ Σ​d​ ix​V​ i ​ = ​ _____________________________________
(150 × 6,000) + (100 × 8,200) + (275 × 7,000)
​ = 171.9
Σ​V​ i ​ 6,000 + 8,200 + 7,000
​
​C​ y ​ = ​ Σ​d​ ​
iy​V​ i ​
______ ​ = ​ ____________________________________
(75 × 6,000) + (300 × 8,200) + (380 × 7,000)
​ = 262.7
Σ​V​ i ​ 21,200
DISCUSSION QUESTIONS
Plant D[C x , C y ] = D[172, 263]
LO14–1
1. What motivations typically cause firms to initiate a facilities location or relocation
project?
2. List five major reasons why a new electronic components manufacturing firm
should move into your city or town.
LO14–2 3. Recent figures show that almost 60 percent of the volume of freight movements in
the United States ship by truck. Railroads are far more fuel efficient on a ton-mile