A large retailer is planning to open a new store. Three locations in California
ID: 339559 • Letter: A
Question
A large retailer is planning to open a new store. Three locations in California are currently under consideration: South Coast Plaza (SCP), Fashion Island (FI), and Laguna Hills (LH). Transportation costs for the locations and costs, demands, and supplies for existing locations and warehouses (origins), are shown below. Each of the locations has a demand potential of 300 units per week. Which location would yield the lowest transportation costs for the system? Use the Minimum Cell Cost Heuristic. (Omit the "$" sign in your response.)
A large retailer is planning to open a new store. Three locations in California are currently under consideration: South Coast Plaza (SCP), Fashion Island (FI), and Laguna Hills (LH). Transportation costs for the locations and costs, demands, and supplies for existing locations and warehouses (origins), are shown below. Each of the locations has a demand potential of 300 units per week. Which location would yield the lowest transportation costs for the system? Use the Minimum Cell Cost Heuristic. (Omit the "$" sign in your response.)
Supply B (Units/week) 660 10 2 340 14 18 3 200 Demand (Units/week) 4500 Transportation cost Location SCP FI LH Thus, location (South coast plaza yields the lowest transportation costsExplanation / Answer
Q:
From the question, pl note the following details-
a) Option 1 - South Coast Plaza (SCP)
Cells under consideration (A1 + B1).
A1 Transportation cost = $15
B1 Transportation cost = $9
Using minimum cost heuristic, supply will be made to B1 first of 500 units and remaining 160 units will be sent to A1
Total cost = 15x160 + 9x500 = 6,900
Thus, cost per unit supplied = $ 6,900/660 = $10.45
b) Option 2 - Fashion Island (FI)
Cells under consideration (A2 + B2).
A2 Transportation cost = $10
B2 Transportation cost = $7
Using minimum cost heuristic, supply will be made to B2 of 340 units and no supply will be sent to A2 as supply limit is 340 in this case
Total cost = 7X340 = 2,380
Thus, cost per unit supplied = $ 2,380/340 = $7
c) Option 3 - Laguna Hills (LH)
Cells under consideration (A3 + B3).
A3 Transportation cost = $14
B3 Transportation cost = $18
Using minimum cost heuristic, supply will be made to A3 of 200 units and no supply will be sent to B3 as supply limit is 200 in this case
Total cost = 14X200 = 2,800
Thus, cost per unit supplied = $ 2,800/200 = $14
Cost is minimum in Option 2 (Fashion Island)
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