Operations Management - Location Analysis Projects

Location Problem George Heller was so successful in his previous assignment that he was promoted to the

Location Problem

George Heller was so successful in his previous assignment that he was promoted to the coveted position of Infrastructure Manager on the Mergers and Acquisitions Team.

Again Agame has recently acquired a competitive company with a plant and a warehouse in a nearby city. Management has decided to keep the additional warehouse. However, they are unsure if they need to keep the additional manufacturing plant. All products can be manufactured in either plant and shipped from either warehouse. Each plant and each warehouse has sufficient capacity to meet the total forecasted demand individually.

Prepare a report for management with your recommendation. Three possible choices exist. 1) Close the Competitor plant and satisfy all demand from the Again Agame plant; 2) Close the Again Agame plant and satisfy all demand from the Competitor plant; 3) Keep both plants open.

Your recommendation should include a solution for each of the five years in question. Include your calculations and spreadsheets in support of your recommendations.

Sales Forecast (cases)
	2011	2012	2013	2014	2015
Competitor Warehouse (WH1)	15,000,000	20,000,000	26,000,000	34,000,000	44,000,000
Again Agame Warehouse (WH2)	6,000,000	7,000,000	10,000,000	15,000,000	21,000,000

Fixed Costs
	2011	2012	2013	2014	2015
Competitor Plant (P1)	900,000	900,000	900,000	900,000	900,000
Again Agame Plant (P2)	800,000	800,000	800,000	800,000	800,000

Transportation Costs
$1.00 / 1,000 cases / mile