Capacitated plant location model

SunOil is considering two plant sizes in each location. Low-capacity plants can produce 10 million units a year, whereas high-capacity plants can produce 20 million units a year, as shown in cells H4 H8 and J4 J8, respectively. High-capacity plants exhibit some economies of scale and have fixed costs that are less than twice the fixed costs of a low-capacity plant, as shown in cells 14 18. All fixed costs are annualized. The vice president wants to know what the lowest-cost network should look like. To answer this question, we next discuss the capacitated plant location model, which can be used in this setting. 

THE CAPACITATED PLANT LOCATION MODEL The capacitated plant location network optimization model requires the following inputs ... 

The problem of selecting the optimal location and capacity allocation is very similar to the regional configuration problem we have already studied in Phase II. The only difference is that instead of using costs and duties that apply over a region, we now use location-specific costs and duties. The supply chain team thus decides to use the capacitated plant location model discussed earher to solve the problem in Phase IV. 

LOCATING PLANTS THE CAPACITATED PLANT LOCATION MODEL WITH SINGLE SOURCING... 

Network design models should be structured such that the resulting supply chain netwoik maximizes profits after tariffs and taxes while meeting customer service requirements. The models discussed earlier can be modified to maximize profits accounting for taxes, even when revenues are in different currencies. If is the revenue from seUing one unit in market j, the objective function of the capacitated plant location model can be modified to be... 

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