Plant Locating

Problem: Demonstrating how to locate plants or warehouse facilities to minimise shipping expenses while meeting demand.

This problem is related to the class of "network" or "routing" problems. In such problems, the variables usually include multiple choices of transportation routes to and from a number of points of origin and destination, with differing shipping and operating costs associated with each possible route.

The Plant Location problem is similar to the SHIPPING sample model, but allows greater latitude of decision-making in that the points of origin (plant locations) are variable. Manufacturers and wholesale businesses are likely to encounter problems of this sort in matching existing customer demand to product availability and minimal transportation costs.

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Your firm has a choice of five locations in which to operate a manufacturing facility. Six markets exist with a demand for your product. Each potential plant has an associated monthly operating cost, and shipping routes to the demand cities have varying costs. In addition, each potential plant will have a production capacity which must not be exceeded.

The objective is to locate plants in such a way that demand is satisfied in each target city, potential plant capacity is not exceeded, and overall operating costs are minimised.

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