An Automobile Manufacturer Has Five Outdated Plants Case Study

An automobile manufacturer has five outdated plants: one each in Michigan, Ohio, and California and two in New York. Management is considering modernizing these plants to manufacture engine blocks and transmissions for a new model car. The cost to modernize each plant and the manufacturing capacity after modernization is as follows:

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The projected needs are for total capacities of 900,000 engine blocks and 900,000 transmissions. Management wants to determine which plants to modernize to meet projected manufacturing needs and, at the same time, minimize the total cost of modernization.

a. Develop a table that lists every possible option available to management. As part of your table, indicate the total engine block capacity and transmission capacity for each possible option, whether the option is feasible based on the projected needs, and the total modernization cost for each option.

b. Based on your analysis in part (a), what recommendation would you provide management?

c. Formulate a 0-1 integer programming model that could be used to determine the optimal solution to the modernization question facing management.

d. Solve the model formulated in part (c) to provide a recommendation for management.

SOLUTION:

a. Let 1 denote the Michigan plant

2 denote the first New York plant

3 denote the second New York plant

4 denote the Ohio plant

5 denote the California plant

It is not possible to meet needs by modernizing only one plant.

The following table shows the options which involve modernizing two plants.

| | |Plant | | |Transmission |Engine Block | | |

|1 |2 |3 |4 |5 |Capacity |Capacity |Feasible? |Cost |

| | | | | | | | | |

|( |( | |...