FACILITIES LOCATION

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OF CHAPTER 6 - FACILITIES LOC
SEPARATE W

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HAPTER 6 - FACILITIES LOCATION. EACH SOLUTION IS IN A
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Problem 1

Score
Sl. No. Factor for consideration (out of 100)
1 Nearness to port 80
2 Existence of supplier infrastructure 70
3 Availability of skilled labour 90
4 Government policies and local taxes 50
5 Projected cost of operations 60
6 Quality of road infrastructure 70
7 Availability of educational infrasturcture 40

Sl. No. Factor for consideration Site 1 Site 2 Site 3 Basis

1 Nearness to port 70 Kms 130 Kms 95 Kms Actual Data
2 Existence of supplier infrastructure 60 80 85 Score out of 100
3 Availability of skilled labour 50 70 85 Score out of 100
4 Government policies and local taxes 70 45 60 Score out of 100
5 Projected cost of operations Rs. 200 Lacs Rs. 180 Lacs Rs. 170 Lacs Actual Data
6 Quality of road infrastructure 80 90 70 Score out of 100
7 Availability of educational infrasturcture 60 80 80 Score out of 100

Relative Importance of the factors:

Score (out of
Sl. No. Factor for consideration 100) Relative Weight
1 Nearness to port 80 0.17
2 Existence of supplier infrastructure 70 0.15
3 Availability of skilled labour 90 0.2
4 Government policies and local taxes 50 0.11
5 Projected cost of operations 60 0.13
6 Quality of road infrastructure 70 0.15
7 Availability of educational infrasturcture 40 0.09
8 Sum of all Factor Ratings 460 1
Conversion of Actual Data to score out of 100

Sl. No. Factor for consideration Site 1 Site 2 Site 3 Sum

1 Nearness to port (Kms) actual 70 130 95 295
1 Nearness to port (score out of 100) 24 44 32 100
5 Projected cost of operations (Rs.in Lacs) - actual 200 180 170 550
5 Projected cost of operations (score out of 100) 36 33 31 100

Final Rankings:

Sl. No. Factor for consideration Relative Weight Site 1 Site 2 Site 3
1 Nearness to port 0.17 24 44 32
2 Existence of supplier infrastructure 0.15 60 80 85
3 Availability of skilled labour 0.2 50 70 85
4 Government policies and local taxes 0.11 70 45 60
5 Projected cost of operations 0.13 36 33 31
6 Quality of road infrastructure 0.15 80 90 70
7 Availability of educational infrasturcture 0.09 60 80 80

Weighted scores:

Sl. No. Factor for consideration Site 1 Site 2 Site 3

1 Nearness to port 4.08 7.48 5.44
2 Existence of supplier infrastructure 9 12 12.75
3 Availability of skilled labour 10 14 17
4 Government policies and local taxes 7.7 4.95 6.6
5 Projected cost of operations 4.68 4.29 4.03
6 Quality of road infrastructure 12 13.5 10.5
7 Availability of educational infrasturcture 5.4 7.2 7.2
52.86 63.42 63.52

Therefore location 3 is ranked first closely followed by site 2. Since the margin separating them is
small, these two sites can be subject to further detailed investigations.
ION
ting them is
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What-if ??
Problem 2
Change the weight (W) and see
Given the impact on the solution
Transport Cost (Rs/Tonne) 300

The locations of the demand points & annual demand are(tonnes):

(a) x y W Wx Wy
Zone 1 15 22 200 3,000 4,400
Zone 2 10 40 130 1,300 5,200
Zone 3 35 15 80 2,800 1,200
Zone 4 50 5 120 6,000 600
Zone 5 40 35 170 6,800 5,950
700 19,900 17,350
Centroid 28 25

Existing Supply Points

xi yi Wi Distance
Zone 1 15 22 200 Zone 1 13.71
Zone 2 10 40 130 Zone 2 23.90
Zone 3 35 15 80 Zone 3 11.79
Zone 4 50 5 120 Zone 4 29.27
Zone 5 40 35 170 Zone 5 15.43

(b) LDj Value 12,927.70

Total Cost 3,878,310.00
at-if ??

ight (W) and see

n the solution
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Problem 3 What if

Given Change Transportation cost to see

Transportation cost (Rs/tonne) 300 impact on cost values!!

Existing Supply Points Candidates for proposed facility

xi yi Wi Xj Yj
Zone 1 15 22 200 Centroid 28 25
Zone 2 10 40 130 1 20 40
Zone 3 35 15 80 2 40 25
Zone 4 50 5 120 3 35 45
Zone 5 40 35 170

Dij Values
Centroid 1 2 3
Zone 1 13.34 18.68 25.18 30.48
Zone 2 23.43 10.00 33.54 25.50
Zone 3 12.21 29.15 11.18 30.00
Zone 4 29.73 46.10 22.36 42.72
Zone 5 15.62 20.62 10.00 11.18

LDj Values
Centroid 1 2 3
12,914.20 16,405.06 14,673.91 18,837.32

Cost Values
LD Cost 3,874,259 4,921,517 4,402,174 5,651,197
Opn cost 2,500,000 2,250,000 1,875,000 2,050,000
Total cost 6,374,259 7,171,517 6,277,174 7,701,197

Least Cost is Rs. 6,277,174

corresponding to location 3
Financial benefit 97,085
NEXT SOLUTION

cost to see
!!
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Problem 4

Hyderabad Mysore Madras Kochi Pune Vizag Supply

60 70 10 30 90 90
Warehouse A 1900
70 25 40 55 80 100
Warehouse B 1800
50 80 45 75 85 30
Warehouse C 3300
80 40 50 45 90 60
Warehouse D 1300
Demand 1750 750 2000 1800 1200 800 8300

The Least cost schedule (obtained using solver, for details see below) is as follows:

Hyderabad Mysore Madras Kochi Pune Vizag Supply

60 70 10 30 90 90
Warehouse A 1900
0 0 1900 0 0 0
70 25 40 55 80 100
Warehouse B 1800
0 750 0 500 550 0
50 80 45 75 85 30
Warehouse C 3300
1750 0 100 0 650 800
80 40 50 45 90 60
Warehouse D 1300
0 0 0 1300 0 0
Demand 1750 750 2000 1800 1200 800 8300

Cost of transportation (Rs.) 339,000.00

Data and solution area for solver

Transportation Cost Matrix

Hydera Myso Madr Koch Supp
Pune Vizag
bad re as i ly
Warehouse A 60 70 10 30 90 90 1900
Warehouse B 70 25 40 55 80 100 1800
Warehouse C 50 80 45 75 85 30 3300
Warehouse D 80 40 50 45 90 60 1300
Demand 1750 750 2000 1800 1200 800 8300

Transportation Schedule
Hydera Myso Madr Koch Supp Availa
Pune Vizag
bad re as i ly ble
Warehouse A 0 0 1900 0 0 0 1900 1900
Warehouse B 0 750 0 500 550 0 1800 1800
Warehouse C 1750 0 100 0 650 800 3300 3300
Warehouse D 0 0 0 1300 0 0 1300 1300
Demand 1750 750 2000 1800 1200 800 8300 8300
Actual 1750 750 2000 1800 1200 800

The Min cost is Rs. 339,000.00 /-

We have used the Solver of Excel to

generate the optimal solution to this
problem. For
details click on H55 and select
Solver from Data menu.
s follows:
 PREVIOUS SOLUTION NEXT SOLUTION

Problem 5

New demand in Mysore 2550

Hyderabad Mysore Madras Pune Vizag Supply
60 70 10 90 90
Warehouse A 1900
70 25 40 80 100
Warehouse B 1800
50 80 45 85 30
Warehouse C 3300
80 40 50 90 60
Warehouse D 1300
Demand 1750 2550 2000 1200 800 8300

The Least cost schedule (obtained using solver, for details see below) is as follows:

Hyderabad Mysore Madras Pune Vizag Supply

60 70 10 90 90
Warehouse A 1900
0 0 1900 0 0
70 25 40 80 100
Warehouse B 1800
0 1800 0 0 0
50 80 45 85 30
Warehouse C 3300
1750 0 0 750 800
80 40 50 90 60
Warehouse D 1300
0 750 100 450 0
Demand 1750 2550 2000 1200 800 8300

The cost of transportation is (Rs.) 314,750.00 /-

The decision is better as there is a cost savings of Rs. 24,250.00

The removal of Kochi as one of the supply points has resulted in an
interesting reallocation of the despatches from the warehouses.

Data and solution area for solver

Transportation Cost Matrix

Hyde
Myso Madr Viza Supp
raba Pune
re as g ly
d
Warehouse A 60 70 10 90 90 1900
Warehouse B 70 25 40 80 100 1800
Warehouse C 50 80 45 85 30 3300
Warehouse D 80 40 50 90 60 1300
Demand 1750 2550 2000 1200 800 8300

Transportation Schedule
Hyde
Myso Madr Viza Supp Avail
raba Pune
re as g ly able
d
Warehouse A 0 0 1900 0 0 1900 1900
Warehouse B 0 1800 0 0 0 1800 1800
Warehouse C 1750 0 0 750 800 3300 3300
Warehouse D 0 750 100 450 0 1300 1300
Demand 1750 2550 2000 1200 800 8300 8300
Actual 1750 2550 2000 1200 800

The Min cost is Rs. 314,750.00 /-

We have used the Solver of Excel

to generate the optimal solution to
this problem. Foe details click on
H57 and select Solver from Tools
menu.
We have used the Solver of Excel
to generate the optimal solution to
this problem. Foe details click on
H57 and select Solver from Tools
menu.
 PREVIOUS SOLUTION

Problem 6

Hyderabad Mysore Madras Kochi Pune Vizag Supply

60 70 10 30 90 90
Warehouse A 1900
70 25 40 55 80 100
Warehouse B 1800
50 80 45 75 85 30
Warehouse C 3300
80 40 50 45 90 60
Warehouse D 1300
45 75 30 65 90 80
Warehouse E 900
Total Supply
Demand 1750 750 2000 1800 1200 800 9200

Unbalanc
Total
demand
8300 ed 900
demand

The Least cost schedule (obtained using solver, for details see below) is as follows:

Hyderabad Mysore Madras Kochi Pune Vizag Dummy source Supply

60 70 10 30 90 90 0
Warehouse A 1900
0 0 1400 500 0 0 0
70 25 40 55 80 100 0
Warehouse B 1800
0 750 0 0 1050 0 0
50 80 45 75 85 30 0
Warehouse C 3300
1450 0 0 0 150 800 900
80 40 50 45 90 60 0
Warehouse D 1300
0 0 0 1300 0 0 0
45 75 30 65 90 80 0
Warehouse E 900
 Warehouse E 900
300 0 600 0 0 0 0
Demand 1750 750 2000 1800 1200 800 900 9200

The cost of transportation is (Rs.) 331,000.00 /-

Warehouse C supplies 900 units to a dummy source, thereby implying that 900 units
are excess. The setting up of the new warehouse has resulted in a savings in
transportaion cost of Rs. 8000/- per unit time. Based on the trade off between
cost of setting the new warehouse and savings, the management can evaluate whether
the new proposal is worthwhile.

Data and solution area for solver

Transportation Cost Matrix

Hyde
Myso Madr Koch Viza Dum Supp
raba Pune
re as i g my ly
d
Warehouse A 60 70 10 30 90 90 0 1900
Warehouse B 70 25 40 55 80 100 0 1800
Warehouse C 50 80 45 75 85 30 0 3300
Warehouse D 80 40 50 45 90 60 0 1300
Warehouse E 45 75 30 65 90 80 0 900
Demand 1750 750 2000 1800 1200 800 900 9200

Transportation Schedule
Hyde
Myso Madr Koch Viza Dum Supp Avail
raba Pune
re as i g my ly able
d
Warehouse A 0 0 1400 500 0 0 0 1900 1900
Warehouse B 0 750 0 0 1050 0 0 1800 1800
Warehouse C 1450 0 0 0 150 800 900 3300 3300
Warehouse D 0 0 0 1300 0 0 0 1300 1300
Warehouse E 300 0 600 0 0 0 0 900 900
Demand 1750 750 2000 1800 1200 800 900 9200 9200
Actual 1750 750 2000 1800 1200 800 900

The Min cost is Rs. 331,000.00 /-

We have used the Solver of Excel to

generate the optimal solution to this
problem. For details click on H64 and
select Solver from Tools menu.