General Appliance Corporation (GAC) produces refrigerators at three plants: Akron, Evansville, and Chicago. They ship them to distribution centers in Cincinnati, Indianapolis, and Pittsburgh. The accounting, production, and marketing departments have provided the information in the table given below, which shows the unit cost of shipping between any plant and distribution center, plant capacities over the next planning period, and distribution center demands. GAC’s supply chain manager faces the problem of determining how much to ship between each plant and distribution center to minimize the total transportation cost, not exceed available capacity, and meet customer demand. Cincinnati Indianapolis Pittsburgh Capacity Ackron $2.30 $2.50 $2.15 1200 Evansville $2.35 $1.65 $2.95 800 Chicago $1.70 $1.95 $2.99 500 Demand 500 1000 1000

General Appliance Corporation (GAC) produces refrigerators at three plants: Akron, Evansville, and Chicago. They ship them to distribution centers in Cincinnati, Indianapolis, and Pittsburgh. The accounting, production, and marketing departments have provided the information in the table given below, which shows the unit cost of shipping between any plant and distribution center, plant capacities over the next planning period, and distribution center demands. GAC’s supply chain manager faces the problem of determining how much to ship between each plant and distribution center to minimize the total transportation cost, not exceed available capacity, and meet customer demand. Cincinnati Indianapolis Pittsburgh Capacity Ackron $2.30 $2.50 $2.15 1200 Evansville $2.35 $1.65 $2.95 800 Chicago $1.70 $1.95 $2.99 500 Demand 500 1000 1000

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section11.4: Marketing Models

Problem 30P: Seas Beginning sells clothing by mail order. An important question is when to strike a customer from...

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Seas Beginning sells clothing by mail order. An important question is when to strike a customer from the companys mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next catalog she receives. If a customer last placed an order four catalogs ago, there is a 4% chance she will order from the next catalog she receives. If a customer last placed an order five catalogs ago, there is a 2% chance she will order from the next catalog she receives. It costs 2 to send a catalog, and the average profit per order is 30. Assume a customer has just placed an order. To maximize expected profit per customer, would Seas Beginning make more money canceling such a customer after six nonorders or four nonorders?
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