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Question 4. [20 points]  Gator Motors, a manufacturer of aut…

Question 4. [20 points]  Gator Motors, a manufacturer of automobile, needs to decide one of two MRO suppliers. Both suppliers offer a full line of supplies at very similar prices for products and shipping. Both provide similar service levels and lead times. However, their fee structures are quite different. The first supplier, MRO1981.com, sells all of its products with a 5 percent commission tacked on top of the price of the product (not including shipping). Gen-MRO.com’s pricing is based on a subscription fee of $10 million that must be paid upfront for a two-year period and a commission of 1 percent on each transaction’s product price. Gator Motors spends about $150 million on raw materials each year, although this varies with their utilization. Next year will likely be a strong year, in which high utilization will keep MRO spending at $150 million. However, there is a 25 percent chance that spending will drop by 10 percent. The second year, there is a 50 percent chance that the spending level will stay where it was in the first year and a 50 percent chance that it will drop by another 10 percent. Gator Motors uses a discount rate of 20 percent. Assume all costs are incurred at the beginning of each year (so Year 1 costs are incurred now, and Year 2 costs are incurred in a year). From which supplier should Gator Motors purchase MRO supplies?

Question 2. [35 points] Lifeline’s current nationwide demand…

Question 2. [35 points] Lifeline’s current nationwide demands are shown in Table1. Managers at Lifeline are designing the manufacturing network and have selected five potential sites- Philadelphia, Atlanta, Minneapolis, Portland, and Nashville. Plants could have a capacity of 200,000, 300,000, or 400,000 units. The annual fixed costs at the five locations and the transport costs are shown in Table 2. Lifeline has a single sourcing strategy such that facilities at a single location supply to a demand location. Where should Lifeline build its factories and how large should they be? Note that Lifeline can build multiple facilities in a location.  [10 points] Define all the decision variables and cost parameters that you need to construct the model. [10 points] Set up the optimization model and write down the mathematical formulation, including the objective function and all constraints. [15 points] Solve the model in Excel and briefly describe the optimal solution you found. Table 1 Nationwide demands Demand Locations demands New York City 310,000 Raleigh 160,000 Chicago 280,000 Dallas 240,000 Seattle 290,000 Table 2 Production and Transport Costs for Lifeline Supply Locations Philadelphia Atlanta Minneapolis Portland Nashville Annual Fixed Costs ($) Capacity of 200k 6,000,000 5,500,000 5,600,000 6,100,000 6,800,000 Capacity of 300k 8,000,000 7,800,000 7,900,000 8,200,000 8,800,000 Capacity of 400k 10,000,000 9,200,000 9,300,000 10,200,000 10,800,000 Transport Costs ($/unit) New York City 211 232 238 299 226 Raleigh 226 212 230 280 198 Chicago 240 251 204 257 210 Dallas 281 220 270 288 212 Seattle 300 327 279 193 286