Case Problem


[Page 218 ( continued )]

N EW O FFICES AT A TLANTIC M ANAGEMENT S YSTEMS

Atlantic Management Systems is a consulting firm that specializes in developing computerized decision support systems for computer manufacturing companies. The firm currently has offices in Chicago, Charlotte, Pittsburgh, and Houston. It is considering opening new offices in one or more citiesincluding Atlanta, Boston, Washington, DC, St. Louis, Miami, Denver, and Detroitand it has $14 million available for this purpose. Because of the highly specialized nature of its high-tech consulting work, the firm must necessarily staff any new offices with a minimum number of its employees from its existing offices. However, it has a limited number of employees available to transfer to any new offices. In addition, the cost of transferring employees depends on the city they are leaving and the city to which they might move.

Following are the costs for opening a new office in each of the prospective cities and the start-up staffing needs at each office:

Prospective Office

Setup Cost ($1,000,000s)

Staffing Needs (employees)

1. Atlanta

$1.7

9

2. Boston

3.6

14

3. Denver

2.1

8

4. Detroit

2.5

12

5. Miami

3.1

11

6. St. Louis

2.7

7

7. Washington, DC

4.1

18


The numbers of employees available for transfer from each of the current offices are as follows :

Existing Office

Available Employees

Chicago

24

Charlotte

19

Pittsburgh

16

Houston

21


The costs (in thousands of dollars) of transferring an employee from an existing office to a new office differ according to housing costs and moving expenses plus cost of living adjustments. They are as follows:

 

Prospective New Offices (costs, $1,000s)

Current Office

1. Atlanta

2. Boston

3. Denver

4. Detroit

5. Miami

6. St. Louis

7.Washington, DC

1. Chicago

$19

$32

$27

$14

$23

$14

$41

2. Charlotte

14

47

31

28

35

18

53

3. Pittsburgh

16

39

26

23

31

19

48

4. Houston

22

26

21

18

28

24

43



[Page 219]

The firm has ranked the possible new offices according to their profit potential, with Washington, DC, being the best (i.e., greatest potential), as follows:

New Office

Rank

Washington, DC

1

Miami

2

Atlanta

3

Boston

4

Denver

5

St. Louis

6

Detroit

7


In addition, the firm wants at least one new office in the Midwest (i.e., Detroit and/or St. Louis) and one new office in the Southeast (i.e., Atlanta or Miami).

Formulate and solve an integer programming model to help Atlantic Systems determine how many new offices it should open , where they should be located, and how to transfer employees.




Introduction to Management Science
Introduction to Management Science (10th Edition)
ISBN: 0136064361
EAN: 2147483647
Year: 2006
Pages: 358

Similar book on Amazon

flylib.com © 2008-2017.
If you may any questions please contact us: flylib@qtcs.net