Question

New Offices at Atlantic Management Systems

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 cities – including Atlanta, Boston, Washington, DC, St. Louis, Miami, Denver, and Detroit – and 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 e

ach of the current offices are as follows:

Existing Office	Available Employees
Chicago	24
Charlotte	19
Pittsburgh	16
Houston	21

Existing Office (below)	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

The above table contains costs (in thousands of dollars) of transferring an employee from an existing office to a new office. The costs differ according to housing costs and moving expenses plus cost of living adjustments.

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). Atlantic’s top management is wondering which NEW offices to open, and where from/to and how many employees should be transferred, based on the above information.

Now, please prepare a managerial report with the following General Format:

A managerial report should be prepared and should be easily understood by the general recipients of the report (supervisors, COO, CEO, clients, etc.)

The report should include:

An executive summary (a short description of the case, alternatives considered, recommendations based on different objectives and a final recommendation)

A network diagram showing the connections and respective costs between the origins and destinations.

A short description of key assumptions used in the model / analysis

Integer Linear Programming (ILP) model formulation including defining all decision variables. You would need to formulate an Integer Linear Programming model to solve this office opening and employee transferring problem.

Narrative discussion explaining the ILP model, alternatives considered, brief analysis and discussions on what if questions Q1 – Q6 below:

A schedule showing how many new offices it should open, where they should be located, and how to transfer employees.

How would the result change if an additional $2 million were added to the budget?

Independent of Q2, suppose that due to NBA Championship this year, the setup cost in Miami has increased by 10%. What would be the result then?

In addition to Q3, suppose that the ranks of profit potential of Miami and Atlanta are exchanged (Potential customers in Miami are moving from computer manufacturing consulting to professional basketball consulting…). What would be the result then?

Independent of Q2 – Q4, discuss how would the result change if both employees available and staffing needs are doubled simultaneously?

Independent of Q2 – Q5, how would the result change if the objective of the firm was to minimize the cost?

Printouts of the optimal solution obtained by using Excel. Include printouts from various alternatives/objectives considered

Answer 1