Peculiar Outsourcing   Company Ltd. Has production centers at Mumbai, Chennai, and Kolkata.  The company has its distribution centers at Ahmedabad, Bhopal, Bangalore and Goa.  Production costs are equal and fixed at all three production centers, however the variable cost are only the transportation costs.  The monthly productions at Mumbai, Chennai and Kolkata are 10,000 units, 12,000 units and 5,000 units respectively.  The monthly demand at company’s four distribution centers viz. Ahmedabad, Bhopal, Bangalore and Goa are 12000 units, 8000 units, 4000 units and 30000 units respectively.  The transportation cost per unit from different production centers to different distribution centers are given in the following table:                                      (Apr 2004)

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Production centre

Distribution centers

Mumbai

6

4

14

12

Chennai

14

10

4

6

Kolkata

4

10

8

10

 

(a)    Obtain an optimum transportation schedule so as to minimize the transportation cost.

(b)   If the transportation cost from production centre Kolkata to distribution centre Bangalore is changed from Rs.8 per unit to Rs.12 per unit, what will be the effect on the transportation schedule? Will it change? If yes, state the reason.

(c)    If the company wants to meet the requirement of the least 2000 units at its Goa distribution centre only from Mumbai, will the optimum solution obtained in a change? If so, find the new optimum transportation schedule and its effect on total cost?

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