Part A.
The above output from POM for Windows shows how the demand by each of the outlets is distributed. The East Side Mall includes a dummy indicating a short of supply to the store by 15 units. The demand in the outlet is 50 units, but only 35 units can be supplied from the available supply from the three bakeries at an optimally minimum cost of transportation. The shortage in supply in the East Side Mall must be addressed to ensure that all outlets can fully satisfy the needs of their customers. The first action that should be undertaken is to find out the causes for demand at various outlets. Some outlets may demand more supply than usual due to a certain function that is around the outlet and once the functions or events are demand can reduce to the normal average. Esebo Bakeries can have a plan that will enable it preempt periodic increase in demand and have plans to increase their supplies during such periods. The increased supplies can always be baked at the bakery where the cost of transporting them to the outlet needing extra supply is the least. For instance, if demand will be higher in the East Side Mall supply can be increased from Bakery C. it will ensure that the objective of keeping the costs at minimum.
Part B.
Most transportation models aim at minimizing costs. Esebo Bakeries tries to ensure that it finds an optimal solution that will enable it to transport its supplies from the three bakeries to the four outlet locations at minimum cost. The company, therefore, puts more emphasis on ensuring that the three bakeries supply their products to the outlets in a combination that will ensure that minimum cost is incurred in the daily transportation of the supplies. The main of business entities is usually to minimize cost so as to ensure that the costs do not reduce the profits. In other words, costs are minimized so that profits can be maximized. However, other than looking at costs, the company may do better by focusing on revenues and profits rather than costs. In this instance, Esebo Bakeries would be looking for a transportation model that maximizes revenues and hence profits rather than costs ("Transportation Problem", 2016).
Given that the bakeries are located at different locations, their production costs and cost of transportation to the various outlets vary. Eseba can, therefore, opt to transport their supplies in a manner that will maximize the profits that they earn from the various outlets in different malls. This option assumes that whatever quantity within the bakeries’ production capacity will be consumed in the outlets they are supplied. It also assumes that the company does not mind undersupplying other outlets as long as profits are maximized. This implies that the bakeries will ignore the demand requirements at various outlets. This approach is viable where the stores are located in highly populated areas, and the consumers will be able to buy any amount that is supplied. The market should also have substitute products that consumers will opt for when the supply at Eseba's outlets run out. In the long run, the company can learn about demand patterns in different markets and try to align the demands with supplies by adjusting the production capacity. It is important to note that it is not realistic to match demand and supply since demand can be influenced by factors outside the Bakeries’ influence.
References
Transportation Problem. (2016). Orms.pef.czu.cz. Retrieved 29 April 2016, from http://orms.pef.czu.cz/text/transProblem.html
