Problem Statement

In the distribution problem there is a possibility of opening new depots at Bristol and Northampton as well as of enlarging the Birmingham depot.[21]

It is not considered desirable to have more than four depots and if necessary Newcastle or Exeter (or both) can be closed down.

The monthly costs (in interest charges) of the possible new depots and expansion at Birmingham are given in Table 21.1 together with the potential monthly throughputs.

The monthly savings of closing down the Newcastle and Exeter depots are given in Table 21.2.

Table 21.1:  

 

Cost (£1000)

Throughput (1000 tons)

Bristol

12

30

Northampton

4

25

Birmingham (expansion)

3

20


Table 21.2:  

 

Saving (£1000)

Newcastle

10

Exeter

5


Table 21.3:  

 

Supplier

 

Liverpool

Brighton

Bristol

Northampton

Supplied to

factory

factory

depot

depot

New depots

Bristol

0.6

0.4

Northampton

0.4

0.3

Customers

C1

   

1.2

C2

   

0.6

0.4

C3

As given for

0.5

C4

distribution problem

0.5

C5

   

0.3

0.6

C6

   

0.8

0.9


The distribution costs involving the new depots are given in Table 21.3 (in £ per ton delivered).

Which new depots should be built? Should Birmingham be expanded? Should Exeter or Newcastle be closed down? What would be the best resultant distribution pattern to minimize overall costs?



[21] Reproduced with permission of John Wiley & Sons Ltd. (Williams 1999, pp. 251–252).