Distribution Design Assignment | Distribution |

You have been asked to assist in the distribution design for Santa Insulators – the Brazilian’s premiere source for porcelain insulators used in electrical lines. Santa Insulators operates two plants (Plant 1 in Lorena, SP and Plant 2 in Sorocaba, SP). The plants produce a range of insulator types and sizes, but you have determined that the most relevant flow unit is simply each insulator.

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Because the insulators are quite fragile, they are transported directly from the plants to the three DCs located in Sao Paulo, SP; Campinas, SP and Rio de Janeiro, RJ. Each DC has a different demand for insulators: Sao Paulo, SP:  6,000 insulators per week, Campinas, SP:  550 insulators per week, Rio de Janeiro, RJ:  3,160 insulators per week. The cost of transporting an insulator from each plant to each DC ($/insulator) is shown below: $/insulator Sao Paulo, SPCampinas, SP Rio de Janeiro, RJPlant 1 (Lorena, SP)1.902.492.50Plant 2 (Sorocaba, SP)1.010.865.27.

The plants have their differences, but they have the same capacity of 5,000 insulators/week. The Chief Financial Officer for Santa Insulators, Paulo Silva, believes that the models are not including the cost of running a production line at a plant. He tells you that to manage a production line of one product type costs $5,000 per week. So, if a plant is producing both Type A and Type B insulators, they incur a $10,000 fixed cost. How should we adjust the variables and constraints in the model to implement the changes requested by the CFO?

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