Problem
UBike is a bicycle manufacturer based in Japan. Haruki, the supply chain manager at UBike is designing the manufacturing network and has selected four potential sites-Tokyo, Sapporo, Fukuoka, and Sendai. The below table shows the annual fixed costs at the four locations as well as the cost of producing and shipping a bicycle to each of the four markets. Note that plants could have a capacity of either 250,000 or 500,000 units and that each open plant should have at least 60% capacity utilization.
1. Formulate an integerlinear programming (ILP) model for this problem.
2. Develop a spreadsheet model and solve the problem of finding the optimal location and sizing for UBike factories. Comment on your results.
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Production and Transportation Costs($/unit)
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Annual
Demand
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Tokyo
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Sapporo
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Fukuoka
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Sendai
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Southwest
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50
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80
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35
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52
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210,000
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Northeast
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65
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35
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70
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40
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150,000
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Central
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30
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80
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55
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53
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160,000
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East
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48
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30
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42
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35
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170,000
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Annual fixed cost of 250,000
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$8 million
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$6 million
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$7 million
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$7.4 million
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Annual fixed cost of 500,000
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$12 million
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$10 million
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$11 million
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$11.4 million
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