Silver Shoe Warehouse Case Study

REPORT:

Provide a report about the best solution, the model used to get there and what would be the result if you have costs associated to the new warehouses in Cordoba, Lerida or Leon.

Restrictions used to solve the model:

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Once we run the solver tool, considering that there are no costs associated to the warehouses, the optimal solution will be to have a warehouse at Lleida, due to the fact that it has a minimal cost of 162.390€.

However, if we introduce costs of building to the warehouses, the results will change depending on the different costs associated to each of them.

First of all, we are going to obtain the minimum cost when respectively each warehouse is selected:

Here, we can observe that Lleida is the one that has the lowest cost. Furthermore, we can analyze that there is a difference between the optimal minimum cost of each warehouse:

This means that in order to select the Córdoba warehouse, the cost of building of the Lleida warehouse has to be, at least, 2.751€ higher than the cost of building of the Córdoba warehouse.

Using the same logic, we can say that in order to select the León warehouse, two requirements have to be met:

1. The cost of building the Lleida warehouse has to be, at least, 12.561€ higher than the cost of building León’s warehouse.
2. The cost of building the Córdoba warehouse has to be, at least, 9.811€ higher than the cost of building León’s warehouse.

Below, some scenarios to clarify this explanation.

• Scenario number 1:

If every warehouse has the same building cost (for example, 1000€ or any other amount), the optimal solution, the one that minimize the cost, will still be Lleida. This is due to the fact that the cost of warehouses is added to the minimize cost, so the optimal solution will have a higher value (the costs will increase of the same amount that has been chosen before).

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