Company ABC is considering opening warehouses in four cities inCanada: Ottawa, Toronto, Calgary and Winnipeg. Each warehouse canship 100 units per day. The daily fixed cost of keeping eachwarehouse open is $400 for Ottawa, $500 for Toronto, $300 forCalgary and $350 for Winnipeg. Region 1 of the country requires 80units per day, region 2 requires 70 units per day and region 3requires 40 per day. The costs (including production and shippingcosts) of sending one unit from plant to a region are shown belowin the table. The company wants to meet daily demands at a minimumcost subject to the preceding information and followingrestrictions:
To ($): From Region 1 Region 2 Region 3
Ottawa 20 40 50
Toronto 48 15 26
Calgary 26 35 18
Winnipeg 24 50 35
a) If Ottawa warehouse is opened, then Calgary warehouse must beopened.
b) At most two warehouses can be opened
c) Either Winnipeg or Calgary warehouse must be opened.
The company wants to minimize the daily cost of meetingdemand.
1. Formulate algebraically a Binary/Integer Programming (BIP)model for this problem.
2. Use Excel Solver to solve the resulting BIP. (Include bothformulation and answer report)
3. Describe clearly the optimal solution to this problem using amanagerial statement to make a recommendation to the leadership ofcompany ABC.
