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Cherie’ R. James

Western Governors University Texas

To: Cynthia Crowninshield
From: Cherie’ R. James
Date: March 28th, 2016
Re: Decisional Analysis (JGT2) Task 2
A. Distribution Pattern
By using the stepping stone method, distribution patterns were obtained. In our situation the Vogel Approximation Method (VAM) was used versus the North West Corner rule as it calculates an optimal or very close to optimal solution. The North West Corner rule is often not optimal (www.universalteacherpublications.com). In using this tool the factory was able to ascertain that the best distribution pattern has an optimal cost equal to \$13,600.00 with the information used in the table below.
Factory
Capacity
Warehouse
Requirements
Shanghai
1300
1
2500
Shuzworld H
2300
2
1500
Shuzworld F
2200
3
1800
Totals
5800

5800

The optimal cost with the above provided information equals \$13,600.00. The optimal cost decreases to \$13, 400.00 when the production at the Shanghai factory is increased from 1300 units to 2800. The increase was made in order to meet the future projected demand. This means that the supply has surpassed the demand. Due to this situation a dummy warehouse was created to balance the system but is not a real warehouse. Once demand reaches supply the dummy warehouse will be taken out of the formula.
After inputting the figures into the transportation tool in POM the following information was created:
Proposed shipments from Shanghai include
No units shipped to warehouse 1
1,500 units shipped to warehouse 2 (@ \$3 cost per unit)
No units shipped to warehouse 3
1,300 units shipped to dummy warehouse
Proposed shipments from Shuzworld H
300 units shipped to warehouse 1 (@ \$2 cost per unit)
No units shipped to warehouse 2
1,800 units shipped to warehouse 3 (@ \$2 cost per unit)
200 units shipped to dummy warehouse
Proposed shipments from Shuzworld F
2,200 units...