Question

Question 2: A manufacturer is considering alternatives for building new plants to be located closer to three of its primary customers with whom it intends to develop long-term relationships. The net cost of manufacturing and transporting each unit of the product to customers will vary depending on where the plant is built and the production capacity of the plant. These costs are summarized in the following table: Cost per Units to Supply Customer Plant Customer X Customer Y Customer Z 35 45 70 20 65 30 40 65 45 45 45 50 50 25 45 The annual demand for products from customers X, Y, and Z, is expected to be 40 35,000 units; respectively. The annual production capacity and construction costs for each potential plant are given in the following table: ,000; 25,000; and Plant Production Capacity Construction Cost (in $1,000s) . 40,000 30,000 50,000 20,000 40,000 $1,325 $1,100 $1,500 $1,200 $1,400 The company wants to determine which plants to build and which plants should serve which cus- tomers to satisfy customer demand at a minimum total cost. Develop and solve an optimization model using Solver to determine the optimal network design. [50 points)