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Global Network Optimization Models

The vice president is considering options to optimize SunOil's production network to meet demand. The model inputs include production and transportation costs from each supply region to each demand region, as well as plant capacities and costs. The decision variables are the allocation of production to each demand region from each supply plant and whether low or high capacity plants are open in each supply region. The objective is to minimize total cost. Based on the solver results, the optimal solution is to open low capacity plants in South America and Asia, meeting all demand at lowest cost.

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Farid Aprilido
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67 views5 pages

Global Network Optimization Models

The vice president is considering options to optimize SunOil's production network to meet demand. The model inputs include production and transportation costs from each supply region to each demand region, as well as plant capacities and costs. The decision variables are the allocation of production to each demand region from each supply plant and whether low or high capacity plants are open in each supply region. The objective is to minimize total cost. Based on the solver results, the optimal solution is to open low capacity plants in South America and Asia, meeting all demand at lowest cost.

Uploaded by

Farid Aprilido
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Network Optimization Models

The vice president of SC SunOil considering several options to meet demand (set up a facility in each region or consolidate plants in just few regions). SunOil is considering 2 plant sizes in each location.
Low capacity plants can produce 10 million units a year, whereas high-capacity plants can produce 20 million units a year. VP want to know what the lowest cost network should look like

Inputs - Costs, Capacities, Demands


Demand Region
Fixed Cost Low Fixed Cost High
Supply Region Production and Transportation Cost per 1,000,000 Units ($) Capacity ($) Capacity
N. America S. America Europe Asia Africa
N. America 81 92 101 130 115 6,000 10 9,000 20
S. America 117 77 108 98 100 4,500 10 6,750 20
Europe 102 105 95 119 111 6,500 10 9,750 20
Asia 115 125 90 59 74 4,100 10 6,150 20
Africa 142 100 103 105 71 4,000 10 6,000 20
Demand 12 8 14 16 7

Decision Variables
Demand Region - Production Allocation (Million Units) Plants L Plants H
Supply Region N. America S. America Europe Asia Africa (1=open) (1=open)
N. America 1.3322676E-15 0 0 0 0 0 0 = There's a formula
S. America 12 8 0 0 0 0 1 = Known/given
Europe 0 0 0 0 0 0 0 = Solver
Asia 0 0 4 16 0 0 1 = Formula & Solver
Africa 0 0 10 0 7 0 1

Constraints
Supply Region Excess capacity
N. America -1.332268E-15
S. America 0
Europe 0
Asia 0
Africa 3
N. America S. America Europe Asia Africa
Unmeet Demand 0 0 0 0 0

Objective Functions
Cost= $ 23,751.00
The Capacitated Plant Location Model

Management executives at both TelecomOne and HighOptic have decided to merge the two companies into a sing
assigned SC team to study the network for the combined company and identify the plants that could be shut down

Inputs - Costs, Capcities, Demands (for TelecomOptic)


Demand City
Fixed Cost
Supply City Production and Transportation Cost per 1000 Units ($)
Atlanta Boston Chicago Denver Omaha Portland
Baltimore 1,675 400 685 1,630 1,160 2,800 7,650
Cheyenne 1,460 1,940 970 100 495 1,200 3,500
Salt Lake 1,925 2,400 1,425 500 950 800 5,000
Memphis 380 1,355 543 1,045 665 2,321 4,100
Wichita 922 1,646 700 508 311 1,797 2,200
Demand 10 8 14 6 7 11

Decision Variables
Demand City - Production Allocation (1000 Units) Plants
Supply City
Atlanta Boston Chicago Denver Omaha Portland (1=open)
Baltimore 0 8 2 0 0 0 1
Cheyenne 0 0 0 6 7 11 1
Salt Lake 0 0 0 0 0 1.776E-15 0
Memphis 10 0 12 0 0 0 1
Wichita 0 0 0 0 8.882E-16 0 0

Constrraints
Supply City Excess Capcity
Baltimore 8
Cheyenne 0
Salt Lake -1.776357E-15
Memphis 0
Wichita -8.881784E-16
Atlanta Boston Chicago Denver Omaha Portland
Unmeet Demand 0 0 0 0 0 0

Objective Function
Cost = $ 47,401.00

Based on Solver, it's optimal for TelecomOptic to close the plants in Salt Lake & Wichita, while keeping Baltimore, C
The total monthly cost of this network and operation is $47,401,000
o companies into a single entity called TelecomOptic. Management is debating whether all five factories are needed. It has
that could be shut down.

Capacity

18
24
27
22
31

= There's a formula
= Known/given
= Solver
= Formula & Solver

hile keeping Baltimore, Cheyenne, and Memphis open


needed. It has

1 4
2 5
3 6

21 sum
32 sumproduct

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