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    Iscl w3 Aplicatii Factories

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    Cristian Dumitrache
    This document summarizes a case study on optimizing a supply chain network model. The objective is to decide which production facilities to use and how to allocate production quantities to different markets to minimize total costs while meeting demand. The model considers factors like production and transportation costs, facility capacities and fixed costs, and demand for different markets. The problem will be solved using Excel Solver to determine the optimal network design based on the given inputs and constraints.

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    Iscl w3 Aplicatii Factories

    Uploaded by

    Cristian Dumitrache
    97 views5 pages
    This document summarizes a case study on optimizing a supply chain network model. The objective is to decide which production facilities to use and how to allocate production quantities to different markets to minimize total costs while meeting demand. The model considers factors like production and transportation costs, facility capacities and fixed costs, and demand for different markets. The problem will be solved using Excel Solver to determine the optimal network design based on the given inputs and constraints.

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    This document summarizes a case study on optimizing a supply chain network model. The objective is to decide which production facilities to use and how to allocate production quantities to different markets to minimize total costs while meeting demand. The model considers factors like production and transportation costs, facility capacities and fixed costs, and demand for different markets. The problem will be solved using Excel Solver to determine the optimal network design based on the given inputs and constraints.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    97 views5 pages

    Iscl w3 Aplicatii Factories

    Uploaded by

    Cristian Dumitrache
    This document summarizes a case study on optimizing a supply chain network model. The objective is to decide which production facilities to use and how to allocate production quantities to different markets to minimize total costs while meeting demand. The model considers factors like production and transportation costs, facility capacities and fixed costs, and demand for different markets. The problem will be solved using Excel Solver to determine the optimal network design based on the given inputs and constraints.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Laboratory no.

    3
    Network design in supply chain.
    Optimizing network model

    1. Subject: Supply chain management and logistics

    2. Master program: Service Engineering and Management

    3. Lecturer: Silviu RAILEANU

    4. Objectives

    Decide which facilities to use based on regional demand. The application consists
    of a case study presented in (Sunil, Mendil, 2010).

    5. Theoretical Summary

    The capacitated plant location network optimization model requires the following
    inputs:

    n = number of potential plan locations/capacity (each level of capacity will count as


    a separate location)

    m = number of markets or demand points

    Dj = annual demand from market j

    Ki = potential capacity of plant i

    fi = annualized fixed cost of keeping factory i open

    cij = cost of producing and shipping one unit from factory I to market j (cost includes
    production, inventory, transportation and tariffs).

    The supply chain team’s goal is to decide on a network design that maximizes
    profits after taxes. The model focuses on minimizing the cost of meeting global demand
    and can also be modified to include profits and taxes.
    Integrated supply chains and logistics

    In order to establish a network layout the following decisions, associated to network


    variables, must be taken:

    yi = 1 if plant i is open, 0 otherwise

    xij = quantity shipped from plant I to market j

    In these conditions the problem is formulated as the following integer program (the
    minimization of the total cost of operation (factory operation and production and shipment
    of goods) subject to common sense restrictions):

    Subject to:

    Demand is equal to the produced quantity.

    No plant can supply more than its capacity.

    A factory can be opened or closed.

    6. Application Description

    The input data (Costs, Capacities, Demands) is given as a table with locations on
    both columns (supply region) and rows (supplied region). At the intersection of a column
    with a row there is the price of a product produced in X (column) and shipped in Y (row).

    The problem will be solved using the Solver tool found in Excel. The solution
    consists of 5 steps:

     Reading the inputs


     Establishing the decision variables
     Modelling the constraints

    2
     Writing the objective function
     Running the solver

    Before running the solver the decision variables must be chosen (By Changing
    Variable Cells) and also the constraints as specified before.

    The result will be observable in the same page: chosen values for the decision
    variables, how the constraints are exceeded and also the computed objective function
    (minimization of the total cost).

    7. Support Information

    Chapter 5, Sunil Chopra, Peter Mendil, Supply Chain Management. Strategy,


    Planning and Operation, 2010, Fourth Edition

    http://www.wikihow.com/Use-Solver-in-Microsoft-Excel

    References

    Sunil Chopra, Peter Mendil, Supply Chain Management. Strategy, Planning and
    Operation, 2010, Fourth Edition

    3
    Inputs - Costs, Capacities, Demands
    Demand region Fixed Low Fixed High
      Production and transportation cost per 1 mil units cost ($) capacity cost ($) capacity
    S.
    Supply region N. America America Europe Asia Africa        
    N. America 81 92 101 130 113 6000 10 9000 20
    S. America 117 77 108 98 100 4500 10 6750 20
    Europe 102 105 95 119 111 6500 10 9750 20
    Asia 115 125 90 59 74 4100 10 6150 20
    Africa 142 100 103 105 71 4000 10 6000 20
    Demand 12 8 14 16 7        

    Decision variables
    Demand region Plants Plants
      Production allocation (1000 units) (1=open) (1=open)
    S.
    Supply region N. America America Europe Asia Africa    
    N. America 0 0 0 0 0 0 0
    S. America 0 0 0 0 0 0 0
    Europe 0 0 0 0 0 0 0
    Asia 0 0 0 0 0 0 0
    Africa 0 0 0 0 0 0 0

    Constraints
    Excess
    Supply region capacity
    N. America 0
    S. America 0
    Europe 0
    Asia 0
    Africa 0
      N. America S. Europe Asia Africa
    America
    Unmet
    demand 12 8 14 16 7

    Objective function
    Cost= 0

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