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Telecom Optic

Telecomone and HighOptic are telecom equipment manufacturers that must decide how to allocate production across their facilities to minimize costs. They are considering merging and operating as one company, TelecomOptic, from their five factories. Analyzing the production capacities, market demands, and costs shows allocating equal amounts to each plant minimizes total costs of $145,960 for the merged company.

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lais contier
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108 views5 pages

Telecom Optic

Telecomone and HighOptic are telecom equipment manufacturers that must decide how to allocate production across their facilities to minimize costs. They are considering merging and operating as one company, TelecomOptic, from their five factories. Analyzing the production capacities, market demands, and costs shows allocating equal amounts to each plant minimizes total costs of $145,960 for the merged company.

Uploaded by

lais contier
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Telecomone e HighOptic are two different companies that manufacture telecommunication equipments.

Telecomone has focu


USA and has manufacturing facilities in Baltimore, Memphis and Wichita. Telecomone serves markets in Atlanta, Boston and C
targeted the western half ot the USA and serves markets in Denver, Omaha and Portland from plants located in Cheyenne and
capacities, market demand and costs (both fixed and variable) per thousand units are shown in table 1.
Each year, managers in both companies must decide how to allocate demand to their production facilities as demand and cost

a) Considering that no plant will be closed, calculate the network design that allocates the demand optimizing the c
companies independently.
b) Consider now that the two companies have decided to merge their opeations in a single firm, called TelecomOpti
five factories and will serve the six markets. If no plant is closed, calculate the optimal network design.
c) Is there really any need for the five factories, or can any be closed? What is the best network design in this new sc

Demand city
Capacity Monthly
Production and transportation costs fixed
costs
(thousand
units) Thousand
Plants Atlanta Boston Chicago Denver Omaha Portland
$
Baltimore 1,675 400 685 1,630 1,160 2,800 18 7,650
Memphis 380 1,355 543 1,045 665 2,321 22 4,100
Wichita 922 1,646 700 508 311 1,797 31 2,200
Cheyenne 1,460 1,940 970 100 495 1,200 24 3,500
Salt Lake City 1,925 2,400 1,425 500 950 800 27 5,000
Monthly 10 8 14 6 7 11
demand
(thousand
units)
ments. Telecomone has focused on the eastern half of
kets in Atlanta, Boston and Chicago. HighOptic has
nts located in Cheyenne and SaltLake City. Plant
ble 1.
acilities as demand and costs change.

demand optimizing the costs for each one of the

e firm, called TelecomOptic. Telecomone will have


work design.
work design in this new scenario?
Telecomone e HighOptic are two different companies that manufacture telecommunication equipments. Telecomone has focu
manufacturing facilities in Baltimore, Memphis and Wichita. Telecomone serves markets in Atlanta, Boston and Chicago. HighO
the USA and serves markets in Denver, Omaha and Portland from plants located in Cheyenne and SaltLake City. Plant capacitie
and variable) per thousand units are shown in table 1.
Each year, managers in both companies must decide how to allocate demand to their production facilities as demand and cost

a) Considering that no plant will be closed, calculate the network design that allocates the demand optimizing the c
independently.
b) Consider now that the two companies have decided to merge their opeations in a single firm, called TelecomOpti
factories and will serve the six markets. If no plant is closed, calculate the optimal network design.
c) Is there really any need for the five factories, or can any be closed? What is the best network design in this new sc

Demand city
Capacity
Production and transportation costs
(thousand
units)
Plants Atlanta Boston Chicago Denver Omaha Portland

Baltimore 1,675 400 685 18


Memphis 380 1,355 543 22
Wichita 922 1,646 700 31
Cheyenne 100 495 1,200 24
Salt Lake City 500 950 800 27
10 8 14 6 7 11
Monthly demand (thousand units)

Variable Costs 123,510

Fixed Costs 22,450

Total cost 145,960

Demand city

Production
QUANTITY
QUANTITY
(thousand
Plants Atlanta Boston Chicago Denver Omaha Portland units)
Baltimore 10 10 10 30
Memphis 10 10 10 30
Wichita 10 10 10 30
Cheyenne 10 10 10 30
Salt Lake City 10 10 10 30
Effective Monthly demand 30 30 30 20 20 20
(thousand units)
nts. Telecomone has focused on the eastern half of USA and has
Boston and Chicago. HighOptic has targeted the western half ot
tLake City. Plant capacities, market demand and costs (both fixed

lities as demand and costs change.

emand optimizing the costs for each one of the companies

rm, called TelecomOptic. Telecomone will have five


esign.
ork design in this new scenario?

Monthly
fixed
costs
Thousand
$
7,650
4,100
2,200
3,500
5,000

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