Question 1:

Sunchem, a manufacturer of printing inks, has five manufacturing plants worldwide. Their locations and
capacities are shown in Table 5-7 along with the cost of producing 1 ton of ink at each facility. The
production costs are in the local currency of the country where the plant is located. The major markets
for the inks are North America, South America, Europe, Japan, and the rest of Asia. Demand at each
market and transportation costs from each plant to each market in U.S. dollars are shown in Table 5-7.
The expected exchange rates are shown in Table 5-8. Management must come up with a production
plan for the next year.
a. Build a Mixed-Integer Linear Programming model which minimize the total cost based on this
problem (Indices, Parameters, Decision Variables, Objective function, Constraints should be also
included).
b. How much should each plant produce and which markets should each plant supply? What is the
total cost for this production strategy?
c. If no plant can run below 50 percent of capacity, which constraints should be added or revised?
Then, how much should each plant produce and which markets should each plant supply? What
is the total cost for this production strategy?

a. MILP model:
● Indices:
i: index of Market (i=1,…,5)
j: index of Plant (j=1,…,5)
● Parameters:
 Tij: Transportation cost from Plant i to Market j (USD)
Ci: Capacity of Plant i (Tons)
Pi: Production cost per Ton at Plant i (local currency)
Ei: Exchange rate of local currency at Plant i to USD
Dj: Demand at Market j (Tons)
● Decision variables:
xij: Production quantity of demand at Market j assign to Plant i
yij: Binary, =0 if some demand at Market j assign to Plant I, =0 if otherwise

● Objective function:
i j i j
Minimize ∑ ∑ T ij × x ij + ∑ ∑ Pi × E i × x ij
1 1 1 1
or
i j i j
Minimize ∑ ∑ T ij × y ij + ∑ ∑ P i × E i × xij
1 1 1 1
 Constraints:
i
(1) ∑ x ij=D j , for j=1, … , 5
1
j
(2) ∑ x ij ≤ K i , for i=1 , … , 5
1

● CPLEX Code:

//Indices:
int numPlant=5;
int numMarket=5;
range Plant=1..numPlant;
range Market=1..numMarket;

//Parameters:
float T[Plant][Market]=[[600,1300,2000,1200,1700],
[1300,600,1400,1400,1300],
[2000,1400,300,2100,900],
[1200,1400,2100,800,2100],
[2200,1300,1000,2300,800]];
float C[Plant]=[185,475,50,200,80];
float P[Plant]=[10000,15000,1800000,13000,400000];
float E[Plant]=[1,0.502,0.0093,0.562,0.023];
float D[Market]=[270,200,120,190,100];

//Decision Variables:
dvar int+ x[Plant][Market];

//Objective function:
minimize sum(i in Plant,j in Market)T[i][j]*x[i][j] + sum(i in Plant,j in Market)P[i]*E[i]*x[i][j];
//Constraints:
subject to{
//Constraint 1:
forall(j in Market){
sum(i in Plant)x[i][j] == D[j];
}

//Constraint 2:
forall(i in Plant){
sum(j in Market)x[i][j] <= C[i];
}
}

b. The optimal order strategy:

x[i][j] Market, j
1. North 4. South
Plant, i America 2. Europe 3. Japan America 5. Asia
1. United States 125 0 0 0 0
2. Germany 135 200 120 0 20
3. Japan 0 0 0 0 0
4. Brazil 10 0 0 190 0
5. India 0 0 0 0 80

● Total cost: USD 7,816,450

● CPLEX code:
● //Indices:
● int numPlant=5;
● int numMarket=5;
● range Plant=1..numPlant;
● range Market=1..numMarket;
●
● //Parameters:
● float T[Plant][Market]=[[600,1300,2000,1200,1700],
● [1300,600,1400,1400,1300],
● [2000,1400,300,2100,900],
● [1200,1400,2100,800,2100],
● [2200,1300,1000,2300,800]];
● float C[Plant]=[185,475,50,200,80];
● float P[Plant]=[10000,15000,1800000,13000,400000];
● float E[Plant]=[1,0.502,0.0093,0.562,0.023];
● float D[Market]=[270,200,120,190,100];
●
● //Decision Variables:
● dvar int+ x[Plant][Market];
 ●
● //Objective function:
● minimize sum(i in Plant,j in Market)T[i][j]*x[i][j] + sum(i in Plant,j in Market)P[i]*E[i]*x[i][j];
●
● //Constraints:
● subject to{
● //Constraint 1:
● forall(j in Market){
● sum(i in Plant)x[i][j] == D[j];
● }
●
● //Constraint 2:
● forall(i in Plant){
● sum(j in Market)x[i][j] <= C[i];
● sum(j in Market)x[i][j] >= (1/2)*C[i];
● }
● }
c. Constraint (2) should be revised as below:
j
1
× K ≤ ∑ xij ≤ K i , for i=1, … , 5
2 i 1

The optimal order strategy:

x[i][j] Market, j
1. North 4. South
Plant, i America 2. Europe 3. Japan America 5. Asia
Plant, i 1 2 3 4 5
1. United States 100 0 0 0 0
2. Germany 160 200 95 0 20
3. Japan 0 0 25 0 0
4. Brazil 10 0 0 190 0
5. India 0 0 0 0 80

● Total cost: USD 7,974,950

Question 2:

Given the dataset of a supply-demand network in the following table:

Location X co-ordinates Y co-ordinates Supply or demand

Supplier 1 59 45 70
Supplier 2 11 5 70
 Supplier 3 37 25 24
Supplier 4 6 23 52
Warehouse 1 64 21 71
Warehouse 2 28 7 31
Warehouse 3 17 60 67
Warehouse 4 9 6 21
Warehouse 5 43 38 49
Warehouse 6 8 42 24
Solution:
a. Use Center of Gravity (COG) method to find a new location for building new Distribution Center
without cost in consideration.
∑ XiW i ∑Y i Wi
X 0= ; Y 0=
∑Wi ∑Wi

Location X co-ordinates Y co-ordinates Supply or X*W Y*W

demand
Supplier 1 59 45 70 4130 3150
Supplier 2 11 5 70 770 350
Supplier 3 37 25 24 888 600
Supplier 4 6 23 52 312 1196
Warehouse 1 64 21 71 4544 1491
Warehouse 2 28 7 31 868 217
Warehouse 3 17 60 67 1139 4020
Warehouse 4 9 6 21 189 126
Warehouse 5 43 38 49 2107 1862
Warehouse 6 8 42 24 192 1008
Total 479 15139 14020
X0 Y0
31.6054 29.2693
3 1

A good place to start looking for locations is around (31.6, 29.27). No warehouse is close to this location,
so it might be better to look for an entirely new location at (X0, Y0) =(31.6, 29.27).

b. Given the transportation costs of Supplier i={1,2,3,4} and Warehouse j={1,2,3,4,5,6} are
respectively ($/Ton Mile): (1.4,0.4,1.6,0.3,1.4,0.7,0.6,0.3,1.8,1.7). Calculate the Total
Transportation Cost of this supply-demand network.

To calculate the distance, we apply Euclidean Distance:

√ 2
Distance= ( x−x n ) + ( y− y n )
2
Location X co-ordinates Y co-ordinates Supply or $/Ton Distance Cost
demand Mile
Supplier 1 59 45 70 1.4 31.5898 3095.803016
3
Supplier 2 11 5 70 0.4 31.8368 891.4309661
2
Supplier 3 37 25 24 1.6 6.87956 264.1753231
6
Supplier 4 6 23 52 0.3 26.3617 411.2434006
6
Warehouse 64 21 71 1.4 33.4333 3323.276343
1 6
Warehouse 28 7 31 0.7 22.5592 489.536478
2 8
Warehouse 17 60 67 0.6 34.0249 1367.80095
3
Warehouse 9 6 21 0.3 32.4417 204.3829345
4 4
Warehouse 43 38 49 1.8 14.3548 1266.09618
5 3
Warehouse 8 42 24 1.7 26.8195 1094.236429
6 2
Total 12407.98202

c. Use Excel Solver to find a new location for building new Distribution Center to minimize the
Total Transportation Cost.
Location X co-ordinates Y co-ordinates Supply or $/Ton Distance Cost
demand Mile
Supplier 1 59 45 70 1.4 17.4642 1711.496421
5
Supplier 2 11 5 70 0.4 45.9673 1287.086633
8
Supplier 3 37 25 24 1.6 14.3178 549.8043288
2
Supplier 4 6 23 52 0.3 39.9249 622.8289011
3
Warehouse 64 21 71 1.4 27.0185 2685.64011
1 1
Warehouse 28 7 31 0.7 34.4383 747.3122105
2 5
Warehouse 17 60 67 0.6 34.0587 1369.162664
3 7
Warehouse 9 6 21 0.3 46.6904 294.1499618
4 7
Warehouse 43 38 49 1.8 0 0
 5
Warehouse 8 42 24 1.7 35.2278 1437.29546
6 3
64 60 Total 10704.77669
Optimal x 43
Optimal y 38
Question 3: Given the dataset of a supply network in the following table:

Location X co-ordinates Y co-ordinates Supply or demand

Site 1 59 45 70
Site 2 11 5 70
Site 3 37 25 24
Site 4 6 23 52
Supplier 1 64 21 71
Supplier 2 28 7 31
Supplier 3 17 60 67
Supplier 4 9 6 21
Supplier 5 43 38 49
Supplier 6 8 42 24

a. Calculate the Euclidean distance from every potential site to every supplier

Site1 Site 2 Site 3 Site 4

Warehouse 1 24.52 55.36 27.29 58.03
Warehouse 2 49.04 17.12 20.12 27.20
Warehouse 3 44.60 55.33 40.31 38.60
Warehouse 4 63.41 2.24 33.84 17.26
Warehouse 5 17.46 45.97 14.32 39.92
Warehouse 6 51.09 37.12 33.62 19.10
b. Calculate the load-distance value for every potential site.

n
LD = ∑ I i d i
i=1
Site1 Site 2 Site 3 Site 4
Warehouse 1 24.52 55.36 27.29 58.03
Warehouse 2 49.04 17.12 20.12 27.20
Warehouse 3 44.60 55.33 40.31 38.60
Warehouse 4 63.41 2.24 33.84 17.26
Warehouse 5 17.46 45.97 14.32 39.92
Warehouse 6 51.09 37.12 33.62 19.10
Load Distance 9662.433487 11358.50351 7481.581565 10327.331

c. Conclude on the best site with the lowest load-distance value.

Site 3 has the lowest load-distance value, therefore choose site 3 as the best site.
Question 4:

Beika Tower Shopping Mall would like to build up a new Distribution Center to deliver orders to 6 cities,
with locations, distances and demands shown in the following figure.

a. Write off the distance matrix between these locations.

b. Find the Single Median with the lowest total cost of weight-distance.

City Demand

A 97

B 121

C 100

D 60

E 84

F 87

a.

To A B C D E F Demand
From
A 0 3 2 8 10 13 97
B 3 0 1 5 7 10 121
C 2 1 0 6 8 11 100
D 8 5 6 0 2 5 60
E 10 7 8 2 0 3 84
F 13 10 11 5 3 0 87
b.
For example : Weight – distance of city A is: 90*0 + 120*3 + 110*2 + 65*8 + 80*10 + 95*13 = 3135

To Deman
A B C D E F
From d
A 0 3 2 8 10 13 97
B 3 0 1 5 7 10 121
C 2 1 0 6 8 11 100
D 8 5 6 0 2 5 60
E 10 7 8 2 0 3 84
F 13 10 11 5 3 0 87
Total 3014 2149 2304 2584 2998 4123

B has the lowest total cost, therefore we choose city B

Question 5:

Beika Tower Shopping Mall would like to build up a new Distribution Center to deliver orders to 6 cities,
with locations, distances and demands shown in the following figure.

a. Calculate the distance matrix.

b. Where should you locate a logistics center that gives the shortest travel distance over the
network?
c. Where should they build the minimum number of depots to give maximum travel distance of 3
kilometers to any other city?

(Hint: Consider this question as a Set Covering Problem)

City Demand

A 97
 B 121

C 100

D 60

E 84

F 87

a.

b In conclusion, logistics center should locate at city D to give the shortest travel distances over the
network.

c. To give maximum travel distance of 3 kilometers to any other city, the possible distance matrix is:

A F C B E
A 0 2 3
B 3 1 0
C 2 0 1
D 2
E 3 0
F 0 3
Maximu 3 3 2 1 3
m
 We can choose E and A, E and B, E and C with the maximum travel time of 3 kilometers.