The owner of a big milk tea shop is considering several potential sites forementsexpansion and would like to minimize the initial investment involved withpurchasing locations. However, the owner is concerned about delivery time andwants to make sure that every neighborhood in the city can have an orderdelivered in 15 minutes or less. The owner has divided the city into 10neighborhoods (A-J) and is currently considering a total of 8 different locations(L1-L8). The table shows the delivery time (in minutes) from a specific location to aHillspecific neighborhood, along with location cost (in millions).Formulate a spreadsheet model and solve using Solver.L1L2L3L4L5L6L7L8A1013209.16211218В15171715191730253029151812311313271122162228142810121719351025202213102217276.G1811212015221223H.101719142482220153223183114241314201032123333Locationcost100120901357585110135($millions)23E cements*Type variables L1 - L8 if the location name is required. For example, if youranswers are Locations 4, 5 and 7, type L4, L5, L7 in the box.a. In the optimal solution, which of the 8 locations should be selected?v-Hilltb. Which of the selected locations can deliver to Neighborhood C within 15minutes?Appc. Which of the selected locations can deliver to Neighborhood G within 15minutes?d. Which of the selected locations can deliver to Neighborhood H within 15minutes?e. What is the optimal amount needed to buy the selected locations?millions%24

Decision variables: Suppose-L1 is Location 1 where a firm can deliver the order in or within 15…

Answered: The owner of a big milk tea shop is…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Consider above problem. Suppose that the weight of facility 2 is 20. Applying the median method, it can be verified that the optimal location is (10, 10) - the centroid of department 2, where immovable structures exist. It is now desired to find a feasible and “near-optimal” location using the contour line method.
Here is a problem to challenge your intuition. In theoriginal Grand Prix example, reduce the capacity ofplant 2 to 300. Then the total capacity is equal to thetotal demand. Reoptimize the model. You should findthat the optimal solution uses all capacity and exactlymeets all demands with a total cost of $176,050. Nowincrease the capacity of plant 1 and the demand atregion 2 by 1 automobile each, and optimize again.What happens to the optimal total cost? How can youexplain this “more for less” paradox?
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