India's Refrigerator market estimated at Rs. 2750 Cr. is catered mainly by 10 brands. The annual capacity is estimated at around 4.15 million units is running head of demand of 1.5 million. As there is a demand and a surplus supply, all the manufacturers are trying out for new strategies in the market. Times have changed and also the buying behavior of the customer. Earlier it was cash and carry system. Now dealers play an important role in selling; now the systems are exchange for old “bring your old refrigerator and take a new one with many gifts”. A new company by name Electrolux has entered the market which has acquired Allwyn, Kelvinator and Voltas brand. These three brands are located, as supply markets, in Lucknow (location 26, 80) with total capacity 25000 units and distribution costs per unit 8$, Mumbai (location 19, 72) with total capacity 21000 units and distribution costs per unit 5$, and Sagar (location 14, 75) with total capacity 37000 units and distribution costs per unit 6$. Researchers have revealed that urban and city sales are declining and hence all manufacturers are trying to concentrate on rural markets. Electrolux strategy is customization of market, with special attention to the Northern and Southern India markets, while Godrej the main player thinks that dealer network in rural market for sales and service will be beneficial and is trying to give more emphasis on dealer network, whereas Whirlpool has adopted the strategy of increasing the dealer network by 30%. There are three potential markets in India as follows: Gokak (location 16, 74) with total demand 19000 units and distribution costs per unit 5$, Delhi (location 28, 77) with total demand 22000 units and distribution costs per unit 9$, and Pakur (location 24, 87) with total demand 30000 units and distribution costs per unit 4$. Questions
1. Design a distribution network and generate an answer report to determine the flow of goods between suppliers and markets.
2. In order to minimize total distribution costs, design a facility location model to determine the right location of establishing a distribution center.
3. Is it feasible to shut down one supply markets to minimize total costs if you know that the fixed costs are as follows: Lucknow (17000 $), Mumbai (19000 $), and Sagar (15000$)? Generate an answer report to shows your results