Due to Increased Sales, a Company Is Considering Building Three

question 65

Essay

Due to increased sales, a company is considering building three new distribution centers (DCs) to serve four regional sales areas. The annual cost to operate DC 1 is $500 (in thousands of dollars). The cost to operate DC 2 is $600 (in thousands of dollars.). The cost to operate DC 3 is $525 (in thousands of dollars). Assume that the variable cost of operating at each location is the same, and therefore not a consideration in making the location decision.

The table below shows the cost ($ per item) for shipping from each DC to each region.
Region
$$\begin{array} { | c | c | c | c | c | } \hline \mathrm { DC } & \mathrm { A } & \mathrm { B } & \mathrm { C } & \mathrm { D } \\\hline 1 & 1 & 3 & 3 & 2 \\\hline 2 & 2 & 4 & 1 & 3 \\\hline 3 & 3 & 2 & 2 & 3 \\\hline\end{array}$$ The demand for region A is 70,000 units; for region B, 100,000 units; for region C, 50,000 units; and for region D, 80,000 units. Assume that the minimum capacity for the distribution center will be 500,000 units.
-Write the constraints for the three distribution centers.

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Definitions:

Pollution Rights

Permits or allowances that authorize the holder to emit a certain amount of pollution, often tradeable in a market to encourage reduction of pollution in cost-effective ways.

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Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Subsidies

Financial assistance provided by governments to individuals, businesses, or other entities, aimed at promoting economic activities that are deemed beneficial for the public interest.

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A situation where one party engages in risky behavior knowing that it is protected against the consequences, typically because another party bears the cost of those actions.