“Old Balance” shoes

Shoes manufacturer “Old Balance” has been operating its regular every-day business with 4 warehouses and 7 sales points ( warehouse capacities, sales points’ demands and transportation costs among them are presented in the table).
Yet, one day due to intense hipster protests one of the stores was destroyed and another one expanded:

  • Sales point 3 was destroyed (demand: 2500 -> 0)
  • Sales point 7 expanded (demand 1800 -> 5000)
Costs SP1 SP2 SP3 SP4 SP5 SP6 SP7 Supply
W1 5 2 11 6 5 6 1 3000
W2 2 20 4 5 9 7 11 1200
W3 6 4 7 6 8 20 9 5500
W4 16 5 14 7 8 9 10 700
Demand 800 1400 2500 200 1700 2000 1800
New demand 800 1400 0 200 1700 2000 5000

Using the Transportation Model please calculate the following:

  1. The optimum total logistics costs with the initial demand;
  2. The optimum total logistics costs with the new demand, if the demand in store 6 and the expanded store 7 has to be satisfied;
  3. Total “Old Balance” savings/loss due to hipster protests (changes in demand).

Solution:

  1. 54,600 EUR
  2. 56,700 EUR
  3. Loss of 2,100 EUR

By: Benas Bizevičius

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s