Question:

A retail chain has two distribution centres (DCs) that ship refrigerators to four retail outlets (ROs). Each RO produces a monthly demand forecast for refrigerators based on historical sales data which then needs to be fulfilled by shipments from the DCs. Shipments from the DCs to the ROs go out once a month in response to these demand forecasts. DC1 has a capacity to hold 800 refrigerators; DC2’s capacity is 400. The costs of shipping refrigerators from the DCs to the ROs, the DC capacities and the upcoming monthly RO forecasts are shown below.

[* The cost of shipping one refrigerator from DC 1 to RO1 is $150]

a. Formulate this as a linear programming problem to minimise shipping cost while meeting forecasted demand.

c. Use solver to produce a solution to this problem. Include your spreadsheet, answer report and sensitivity report.