Suppose a company must service customers lying inan area of A sq mi with n warehouses. Kolesar and Blumhave shown that the average distance between a warehouseand a customer is An Assume that it costs the company $60,000 per year tomaintain a warehouse and $400,000 to build a warehouse.(Assume that a $400,000 cost is equivalent to foreverincurring a cost of $40,000 per year.) The company fills160,000 orders per year, and the shipping cost per order is$1 per mile. If the company serves an area of 100 sq mi,then how many warehouses should it have?
Suppose a company must service customers lying inan area of A sq mi with n warehouses. Kolesar and Blumhave shown that the average distance between a warehouseand a customer is An Assume that it costs the company $60,000 per year tomaintain a warehouse and $400,000 to build a warehouse.(Assume that a $400,000 cost is equivalent to foreverincurring a cost of $40,000 per year.) The company fills160,000 orders per year, and the shipping cost per order is$1 per mile. If the company serves an area of 100 sq mi,then how many warehouses should it have?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter5: Network Models
Section5.5: Shortest Path Models
Problem 31P
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Question
Suppose a company must service customers lying in
an area of A sq mi with n warehouses. Kolesar and Blum
have shown that the average distance between a warehouse
and a customer is
an area of A sq mi with n warehouses. Kolesar and Blum
have shown that the average distance between a warehouse
and a customer is
A
n
n
Assume that it costs the company $60,000 per year to
maintain a warehouse and $400,000 to build a warehouse.
(Assume that a $400,000 cost is equivalent to forever
incurring a cost of $40,000 per year.) The company fills
160,000 orders per year, and the shipping cost per order is
$1 per mile. If the company serves an area of 100 sq mi,
then how many warehouses should it have?
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