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Dry Ice Factory Cost Analysis

This document presents a problem to determine the optimal locations for establishing dry ice factories to supply four markets (New York, Atlanta, Chicago, San Diego) at minimum total cost. There are four potential sites with fixed and variable costs. The objective is to minimize total costs by selecting sites and determining production levels. Constraints include factory capacity, meeting demand in each market, and binary and non-negativity requirements. The decision variables are the quantity produced and shipped to each market (xij) and whether each potential site is selected (yi).

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Hirak Jyoti Das
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15 views2 pages

Dry Ice Factory Cost Analysis

This document presents a problem to determine the optimal locations for establishing dry ice factories to supply four markets (New York, Atlanta, Chicago, San Diego) at minimum total cost. There are four potential sites with fixed and variable costs. The objective is to minimize total costs by selecting sites and determining production levels. Constraints include factory capacity, meeting demand in each market, and binary and non-negativity requirements. The decision variables are the quantity produced and shipped to each market (xij) and whether each potential site is selected (yi).

Uploaded by

Hirak Jyoti Das
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Dry Ice Factory Establishing Problem

East South Mid- West fixe fixe cost low high


west cost annual (4 capaci capaci
annua lakh plant) ty ty
l (2 plant plant
lakh (k) (k’)
plant)
New York 211 232 240 300 60000 10000000 20000 40000
00 0 0
Atlanta 232 212 230 280 55000 9200000 20000 40000
00 0 0
Chicago 238 230 215 270 56000 9300000 20000 40000
00 0 0
San Diego 299 280 270 225 61000 10200000 20000 40000
00 0 0
requirement 11000 180000 12000 10000
0 0 0

East South Mid- West 2 lakh 4 lakh plant (y=1,


west plant if open)
(y=1, if
open)
New York 0 0 0 0 0 0
Atlanta 0 0 0 0 0 0
Chicago 0 0 0 0 0 0
San Diego 0 0 0 0 0 0
Demand 0 0 0 0

In this problem:

Number of potential sites for building factory (n) = 4

Number of markets for supplying product/air-conditioner (m) = 4

Here, the decision variables would be

1) No. of units produced and transported to each region i.e. x ij


2) No of locations selected to establish factories i.e. y i

Hence, Objective function is

Z=total cost=¿ cost of establishing factories+ variable cost of producing∧transporting air conditioners
n n m
Z=∑ f i∗y i + ∑ ∑ x ij∗c ij
i=1 i=1 j=1

Expanding the objective function for i=1,2,3,4 & j=1,2,3,4

1
Z=f 1 y 1 +f 2 y 2 +f 3 y 3 +f 4 y 4 + x 11 c 11 + x 12 c 12+ x 13 c13 + x 14 c14 + x 21 c 21 + x 22 c 22+ x 23 c23 + x 24 c24 + x 31 c31 + x 32 c 32+ x 33 c

Constraints
Capacity Constraint
m

∑ x ij ≤ k i y i where i=1,2,3,4 & j = 1,2,3,4


j=1

Hence,

x 11 + x 12+ x 13+ x14 ≤ k 1 y1 + k '1 y '1

x 21+ x 22+ x23 + x 24 ≤ k 2 y 2 +k '2 y '2

x 31+ x 32 + x33 + x 34 ≤ k 3 y 3 +k '3 y '3

x 41+ x 42+ x 43 + x 44 ≤ k 4 y 4 +k '4 y '4


Demand Constraint
n

∑ x ij=D j where i=1,2,3,4 & j = 1,2,3,4


i=1

x 11 + x 21+ x 31+ x 41=D1

x 1 2+ x 2 2+ x3 2 + x 4 2=D 2

x 1 3+ x 2 3 + x 33 + x 4 3 =D3

x 1 4 + x 2 4 + x 3 4 + x 4 4 =D4

Binary Constraint

y i=[1,0 ] for all i

If location is chosen then y i would take the value 1 otherwise 0.

Non-Negativity Constraint
x ij ≥ 0 for all i & j.

After this, the inputs can be given in solver with numbers to minimize the total cost which
will provide the values of our considered decision variables.

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