Cosmos Bottling Case

Henry C. Co Technology and Operations Management, California Polytechnic and State University

Cosmos Case (Henry C. Co)

Alternatives
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In case you have not figured it out yet

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There are six feasible alternatives (i.e., with combined capacity greater than or equal to year 2000 demand).

1. 2. 3. 4. 5. 6.

Atlanta, Atlanta, Atlanta, Atlanta, Atlanta, Atlanta,

Buffalo, Buffalo, Buffalo, Buffalo, Buffalo, Buffalo,

Chicago, Detroit + Cincinnati. Chicago, Detroit +Richmond. Chicago, Detroit +St. Louis. Detroit + Cincinnati. Detroit +Richmond. Detroit +St. Louis.
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Cosmos Case (Henry C. Co)

Fixed and variable costs

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Exhibit IV gives the fixed cost and variable labor cost of each plant.

Other variable costs include:

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Shipping costs of finished goods Raw material costs (syrup) Shipping costs of syrup

Cosmos Case (Henry C. Co)

Shipping costs of finished goods

Cosmos Case (Henry C. Co)

Syrup & labor costs

Cosmos Case (Henry C. Co)

Total Unit Costs

Cosmos Case (Henry C. Co)

Allocation Matrix

Cosmos Case (Henry C. Co)

Setting Up the Allocation Matrix

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Column I: Sum of Column B to Column H. For example, I69 = SUM(B69:H69) Line 94: Sum of Line 69 to Line 93. For example, B94 = SUM(B69:B93) The allocations are in thousand cases. Therefore, unit costs must be multiplied by 1,000. Cell B96: Total cost of Atlanta = SUMPRODUCT(B41:B65,B69:B93)*1000 Copy and paste Cell B96 onto Cells C96:H96) Cell I96: Total system cost =SUM(B96:H96). This is the target to be minimized.
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The annual fixed cost

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Line 95 shows the supply of each plant

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Supply = 0, if the plant is not activated If suppy > 0, there is an annual fixed cost

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Line 97 shows fixed cost of each plant Cell I97: sum of fixed cost, wherever supply >0

Cell I99 =SUM(I96:I97)

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Run Solver for each alternative

1. 2. 3.

Starting with blank (zero) allocation. The target is to minimize total cost (look, it is cell I96!). By changing what?
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The columns corresponding to the facilities listed in the alternative. For example, in alternative 1, we are looking at the columns for Atlanta, Buffalo, Chicago, Detroit and Cincinnati. Demand must be satisfied. Supply can not be exceeded.

4.

Constraints?
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5.

Option: non-negative, auto scaling, linear model

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Solver

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Download Excel worksheet

Click HERE.

Cosmos Case (Henry C. Co)

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