9-34

Decision variables:

Xij = number of units manufactured and distributed from Plant i to Warehouse j

i = 1, 2, 3, 4, 5 (W, P, B, F, D)
j = 1, 2, 3, 4 (Canada, South America, Pacific, Europe)

B1, B2 Binary variables of opening a plant in Ireland and France respectively

Parameters:
P(i) : Capacity of units produced and distributed from Plant i

Warehouse W P B F D
Capacity 8000 2000 5000 9000 9000

W(j) : Demand from Market j

Market DEMAND
Canada 4000
South America 5000
Pacific 10000
Europe 5000

C(ij): Total cost of producing and distributing one unit from plant i to warehouse j

cost
Market W P B F D
Canada 60 55 60 75 70
South
America 70 55 50 80 75
Pacific 75 40 65 90 85
Europe 75 70 70 60 65

Objective function:
𝑗
O.F. Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖𝑗 for i=1,2,3,4,5 j=1,2,3,4
Constraints:
Binary variable:
Here, I define opening of Irish and French plants as binary {0,1}
B1 + B2 = 1
B1 = {0,1}
B2 = {0,1}
Demand:
∑3𝑖=1(𝑋𝑖𝑗 + 𝑋3𝑗 ∗ 𝐵1 + 𝑋4𝑗 ∗ 𝐵2)=Wj j=1,2,3,4
Supply:
∑4𝑗=1 𝑋𝑖𝑗≤Pi i=1,2,3,4,5

Non-negativity:
Xij≥0
Formulation:
𝑗
Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖𝑗 for i=1,2,3,4 j=1,2,3,4,5
s.to
∑3𝑖=1 𝑋𝑖𝑗 + 𝑋3𝑗 ∗ 𝐵1 + 𝑋4𝑗 ∗ 𝐵2=Wj j=1,2,3,4
∑4𝑗=1 𝑋𝑖𝑗≤Pi i=1,2,3,4,5

B1 + B2 = 1
Xij≥0

Solution:

The company should open a plant in France and by that minimize Total Cost of
Production and Distribution to $1,530,000.

The production & distribution schedule will be as follows:

Market W P B F
Canada 0 0 0 4000
South
America 0 0 5000 0
Pacific 8000 2000 0 0
Europe 0 0 0 5000
9-46
Part A

Decision variables:

Xij= number of units manufactured during production time i in month j

i = 1, 2, 3 (regular, overtime, subcontract)
j = 1, 2, 3, 4,5,6,7,8 (JANUARY, FEBRUARY, MARCH, APRIL, MAY, JUNE,
JULY, AUGUST)

Parameters:
C(i): cost of producing one unit during production time i

TIME COST
REGULAR 1000
OVERTIME 1300
SUBCONTRACT 1500

N=$100: carrying cost of inventory

Pij - Unit capacity of production time i in month j

TIME JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST

REG 235 255 290 300 300 290 300 290
OVER 20 24 26 24 30 28 30 30
SUB 12 15 15 17 17 19 19 20

Wj – Unit demand of month j

JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST

DEMAND 255 294 321 301 330 320 345 340

Constraints:
Demand:
∑3𝑖=1 𝑋𝑖𝑗 + 𝐼(𝑖 − 1)≥Wj j= 1, 2, 3, 4,5,6,7,8
Where I(i-1) is inventory of units coming from the previous month
Supply:
Xij ≤ Pij i=1,2,3 j= 1, 2, 3, 4,5,6,7,8
Non-negativity:
Xij≥0

Objective Function:
Minimize total cost of production
𝑗
O.F. Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖 + ∑𝑖 𝑁 ∗ 𝐼𝑖 for i=1,2,3 j=1,2,3,4,5,6,7,8

The first part of the function is coming from monthly production while the second part
takes into account monthly inventory carrying costs

Formulation:
𝑗
O.F. Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖 + ∑𝑖 𝑁 ∗ 𝐼𝑖 for i=1,2,3 j=1,2,3,4,5,6,7,8
s.to
∑3𝑖=1 𝑋𝑖𝑗 + 𝐼(𝑖 − 1)≥Wj j= 1, 2, 3, 4,5,6,7,8
Xij ≤ Pij i=1,2,3 j= 1, 2, 3, 4,5,6,7,8
Xij≥0

Solution:
Total Cost= $2,591,200 with the following production schedule:

SOURCE JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST

REG 235 255 290 300 300 290 300 290
OVER 20 24 26 3 30 28 30 30
SUB 0 15 5 0 0 0 15 20

Part B

B- Minimum Total Cost= $2,640,500. Therefore, as a result, minimum achievable cost

increases while the production schedule changes to;

SOURCE JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST

REG 275 275 275 275 275 275 275 275
OVER 20 24 26 24 30 28 30 30
SUB 0 0 2 17 17 19 19 20
Increased total cost is due to higher demand in the later months where there was
higher regular production capacity before. Therefore, the later months become more
expensive now, inventory carrying costs rise as well.

Part C-

If overtime costs rise to $1,400

Total cost= $2,610,100, the production schedule is:

SOURCE JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST

REG 235 255 290 300 300 290 300 290
OVER 20 24 26 1 30 28 30 30
SUB 0 15 5 0 0 2 15 20

If overtime costs fall to $1,200

Total cost=$2,572,100, the production schedule is:

SOURCE JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST

REG 235 255 290 300 300 290 300 290
OVER 20 24 26 18 30 28 30 30
SUB 0 15 5 0 0 0 0 20

9-47
Part A

Decision variables:

Xij= binary variable for assigning astronaut i to mission j

{Xij=1 astronaut j will complete mission j; Xij=0 astronaut j will not complete
mission j}
i = 1, 2, 3,4,5,6,7,8,9,10
(VINEZE,VEIT,ANDERSON,HERBERT,SCHATS,PLLANE,CERTO,MOSES,BRAN
DON,DRTINA)
j = 1, 2, 3, 4,5,6,7,8,9,10 (JANUARY1,JANUARY2, FEBRUARY1, FEBRUARY2,
MARCH, APRIL, MAY, JUNE, AUGUST, SEPTEMBER)
Parameters:
C(ij): rating of an astronaut i on mission j

Constraints:
Each mission requires one astronaut only:
10

∑ 𝑋𝑖𝑗 = 1
𝑖=1

For j = 1, 2, 3, 4,5,6,7,8,9,10
Each astronaut can go to one mission only:
10

∑ 𝑋𝑖𝑗 = 1
𝑗=1

For i = 1, 2, 3, 4,5,6,7,8,9,10

Non-negativity:
Xij≥0

Objective Function:
As the problem is to select the best possible combination of astronauts for every
mission, it means we have to maximize the total sum of ratings of every astronaut
assigned to every mission;
 𝑗
O.F. Max. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖 𝑗
For i = 1, 2, 3, 4,5,6,7,8,9,10
For j = 1, 2, 3, 4,5,6,7,8,9,10

Formulation:
𝑗
Max. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖 𝑗
For i = 1, 2, 3, 4,5,6,7,8,9,10
For j = 1, 2, 3, 4,5,6,7,8,9,10
s.to
10

∑ 𝑋𝑖𝑗 = 1
𝑖=1

j = 1, 2, 3, 4,5,6,7,8,9,10

10

∑ 𝑋𝑖𝑗 = 1
𝑗=1

For i = 1, 2, 3, 4,5,6,7,8,9,10
Xij≥0

Solution:
Total Rating= 96 with the following mission schedule, where 1 indicates that an astronaut
goes to that mission:

Astronaut JAN JAN FEB FEB MAR APR MAY JUN AUG SEP
VINEZE 0 0 0 0 1 0 0 0 0 0
VEIT 0 0 0 0 0 1 0 0 0 0
ANDERSON 0 0 0 1 0 0 0 0 0 0
HERBERT 0 0 1 0 0 0 0 0 0 0
SCHATS 0 1 0 0 0 0 0 0 0 0
PLLANE 0 0 0 0 0 0 0 1 0 0
CERTO 0 0 0 0 0 0 0 0 0 1
MOSES 0 0 0 0 0 0 1 0 0 0
BRANDON 0 0 0 0 0 0 0 0 1 0
DRTINA 1 0 0 0 0 0 0 0 0 0
Part B
In this case there is an additional constraint to the objective function and we should
expect the total rating to either decline or remain the same, no improvements possible.
New Constraints:
Anderson (i=3) cannot go on missions in February (j=3, j=4), therefore he cannot be
assigned to those missions and binary variables should be equal to 0.
X33=0
X34=0

Therefore the final formulation of the problem changes to:

Formulation:
𝑗
Max. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖 𝑗
For i = 1, 2, 3, 4,5,6,7,8,9,10
For j = 1, 2, 3, 4,5,6,7,8,9,10
s.to
10

∑ 𝑋𝑖𝑗 = 1
𝑖=1

j = 1, 2, 3, 4,5,6,7,8,9,10

10

∑ 𝑋𝑖𝑗 = 1
𝑗=1

For i = 1, 2, 3, 4,5,6,7,8,9,10
X33=0
X34=0
Xij≥0
Result:
The total rating score of the mission schedule is maximized to 92 when the following
schedule is applied:
Astronaut JAN JAN FEB FEB MAR APR MAY JUN AUG SEP
VINEZE 0 0 0 0 1 0 0 0 0 0
VEIT 0 0 0 0 0 1 0 0 0 0
ANDERSON 0 0 0 0 0 0 1 0 0 0
HERBERT 0 0 1 0 0 0 0 0 0 0
SCHATS 0 0 0 1 0 0 0 0 0 0
PLLANE 0 0 0 0 0 0 0 1 0 0
CERTO 0 1 0 0 0 0 0 0 0 0
MOSES 0 0 0 0 0 0 0 0 0 1
BRANDON 0 0 0 0 0 0 0 0 1 0
DRTINA 1 0 0 0 0 0 0 0 0 0

Part C
There are no changes in the final schedule as Certo was already originally assigned to
fly in January even with a score of 9, therefore, we should expect that he remains in the
same position with a better score of 10. When we run the same maximization problem
in Excel solver with updated rating scales, the schedule does not change. This clarifies
the above-mentioned reasoning.
The only difference is that the overall score of the flight (sum of all the ratings)
increases from 92 in part B to 93 in part C.
Part D
There are number of advantages and disadvantages of the given method of scheduling.
The chief creates a scale that provides a basis for judgment of the overall quality and
strength of a mission based on a schedule. Also, there is a goal to maximize, in this case
the sum of all the ratings on every mission. Otherwise, it would depend much on
individual preferences of astronauts, and more subjective judgment. Nevertheless, this
method also runs into problems of subjective judgment and omits several other
constraints/controls for scheduling. For instance, as it’s the chief who assigns scores to
the personell, as in the case of Certo, there might be mismatches in his perceptions and
real abilities of astronauts, and he might assign a wrong score, and subjectivity is still
present.
Andrew-Carter case study

Q1:
Option 1 : Plant 1 and Plant 2 open, Plant 3 closed

PLANT W1 W2 W3 W4 W5 CAPACITY
P1 3.30 3.24 3.29 3.26 3.36 27,000
P11 4.02 3.96 4.01 3.98 4.08 7,000
P2 3.18 3.30 3.28 3.34 3.35 20,000
P22 3.88 4.00 3.98 4.04 4.05 5,000
Demand 9,000 13,000 11,000 15,000 8,000

In the graph we have given total cost of producing and distributing one unit from
each plant to each warehouse, that is production cost + distribution cost in each node.

Decision variables are:

Xij= Number of units produced and distributed from Plant i to Warehouse j, for
i = 1, 2, 3, 4 (P1, P11, P2, P22)
j = 1, 2, 3, 4, 5 (W1, W2, W3, W4, W5)
Also:
P(i) : Capacity of units produced and distributed from Plant i

PLANT SCHEDULE CAPACITY

P1 regular 27,000
P11 overtime 7,000
P2 regular 20,000
P22 overtime 5,000

W(j) : Demand from Warehouse j

Warehouse Demand
W1 9,000
W2 13,000
W3 11,000
W4 15,000
W5 8,000

C(ij): Total cost of producing and distributing one unit from plant i to warehouse j
Objective function:
𝑗
O.F. Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖𝑗 for i=1,2,3,4 j=1,2,3,4,5
Constraints:
Demand:
∑4𝑖=1 𝑋𝑖𝑗=Wj j=1,2,3,4,5
Supply:
∑5𝑗=1 𝑋𝑖𝑗≤Pi i=1,2,3,4

Non-negativity:
Xij≥0
Formulation:
𝑗
Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖𝑗 for i=1,2,3,4 j=1,2,3,4,5
s.to
∑4𝑖=1 𝑋𝑖𝑗 = Wj j=1,2,3,4,5
∑5𝑗=1 𝑋𝑖𝑗 ≤ Pi i=1,2,3,4

Xij≥0
Solution:

PLANT W1 W2 W3 W4 W5

P1 - 9,000 3,000 15,000 -

P11 - 4,000 - - -

P2 9,000 - 8,000 - 3,000

P22 - - - - 5,000

The plants 1 and 2 should operate with the production schedule above.
Production and Distribution costs will be minimized at $188,930
while operation costs of P1 and P2 are together $26,000, finally non-operation cost of
P3=$7,500.
Total Cost of Option1= $222,430
Option 2 P1 and P3 operating, P3 non-operating

PLANT W1 W2 W3 W4 W5 CAPACITY
regular P1 3.30 3.24 3.29 3.26 3.36 27,000
overtime P11 4.02 3.96 4.01 3.98 4.08 7,000
regular P3 3.28 3.25 3.23 3.26 3.07 25,000
overtime P33 3.98 3.95 3.93 3.96 3.77 6,000

In the graph we have given total cost of producing and distributing one unit from
each plant to each warehouse, that is production cost + distribution cost in each node.

Decision variables are:

Xij= Number of units produced and distributed from Plant i to Warehouse j, for
i = 1, 2, 3, 4 (P1, P11, P3, P33)
j = 1, 2, 3, 4, 5 ( W1, W2, W3, W4, W5)
Also:
P(i) : Capacity of units produced and distributed from Plant i

PLANT CAPACITY
regular P1 27,000
overtime P11 7,000
regular P3 25,000
overtime P33 6,000

W(j) : Demand from Warehouse j

Warehouse Demand
W1 9,000
W2 13,000
W3 11,000
W4 15,000
W5 8,000

C(ij): Total cost of producing and distributing one unit from plant i to warehouse j

Objective function:
𝑗
O.F. Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖𝑗 for i=1,2,3,4 j=1,2,3,4,5
Constraints:
Demand:
∑4𝑖=1 𝑋𝑖𝑗=Wj j=1,2,3,4,5
Supply:
∑5𝑗=1 𝑋𝑖𝑗≤Pi i=1,2,3,4

Non-negativity:
Xij≥0

Formulation:
𝑗
Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖𝑗 for i=1,2,3,4 j=1,2,3,4,5
s.to
∑4𝑖=1 𝑋𝑖𝑗 = Wj j=1,2,3,4,5
∑5𝑗=1 𝑋𝑖𝑗 ≤ Pi i=1,2,3,4

Xij≥0
Solution:

P W1 W2 W3 W4 W5

P1 - 13,000 - 14,000 -
P11 - - - - -

P3 9,000 - 8,000 - 8,000

P33 - - 3,000 1,000 -

The plants 1 and 3 should operate with the production schedule above.
Production and Distribution costs will be minimized at $183,430
while operation costs of P1 and P3 are together $29,000, finally non-operation cost of
P3=$5,000.
Total cost of Option2= $217,430
Option 3 P2 and P3 operating, P1 non-operating

PLANT W1 W2 W3 W4 W5 CAPACITY
regular P2 3.18 3.30 3.28 3.34 3.35 20,000
overtime P22 3.88 4.00 3.98 4.04 4.05 5,000
regular P3 3.28 3.25 3.23 3.26 3.07 25,000
overtime P33 3.98 3.95 3.93 3.96 3.77 6,000

In the graph we have given total cost of producing and distributing one unit from
each plant to each warehouse, that is production cost + distribution cost in each node.

Decision variables are:

Xij= Number of units produced and distributed from Plant i to Warehouse j, for
i = 1, 2, 3, 4 (P2, P22, P3, P33)
j = 1, 2, 3, 4, 5 ( W1, W2, W3, W4, W5)
Also:
P(i) : Capacity of units produced and distributed from Plant i

PLANT CAPACITY
P2 20,000
P22 5,000
P3 25,000
P33 6,000

W(j) : Demand of units from Warehouse j

Warehouse Demand
W1 9,000
W2 13,000
W3 11,000
W4 15,000
W5 8,000

C(ij): Total cost of producing and distributing one unit from plant i to warehouse j

Objective function:
𝑗
O.F. Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖𝑗 for i=1,2,3,4 j=1,2,3,4,5
Constraints:
Demand:
∑4𝑖=1 𝑋𝑖𝑗=Wj j=1,2,3,4,5
Supply:
∑5𝑗=1 𝑋𝑖𝑗≤Pi i=1,2,3,4

Non-negativity:
Xij≥0
Formulation:
𝑗
Min. Z = ∑𝑖 𝑋𝑖𝑗 ∗ 𝐶𝑖𝑗 for i=1,2,3,4 j=1,2,3,4,5
s.to
∑4𝑖=1 𝑋𝑖𝑗 = Wj j=1,2,3,4,5
∑5𝑗=1 𝑋𝑖𝑗 ≤ Pi i=1,2,3,4

Xij≥0

Solution:

P W1 W2 W3 W4 W5 CAPACITY

P2 4,000 5,000 11,000 - - 20,000

P22 5,000 - - - - 5,000

P3 - 8,000 - 9,000 8,000 25,000

P33 - - - 6,000 - 6,000

Demand 9,000 13,000 11,000 15,000 8,000

The plants 2 and 3 should operate with the production schedule above.
Production and Distribution costs will be minimized at $188,360
while operation costs of P2 and P3 are together $27,000, finally non-operation cost of
P3=$6,000.
Total cost of Option3= $221,360
Selected Option 2
Operating Plant 1 and Plant 3
Non-operating Plant 2

Total Cost= $217,430

Q2-
Closing a plant has labour related costs. If A-C close a plant they will have to fire the
employees in which significant investment of resources and time have gone in previous
operations years. Therefore, at first, it is a loss of skilled and experienced labour.
Moreover, if A-C decide to re-open a plant these workers are likely to be employed in
other companies and they will not be available anymore that implies future recruitment
and training costs on the company. Finally, although there is no indication of reopening
costs of a plant in the problem, there might be costs associated with re-opening a plant
such as required diagnostics of a plant before it is open, etc.
Mexicana wire works case study

Decision variables:
P1= units of W0075C product produced
P2= units of W0033C product produced
P3= units of W0005X product produced
P4= units of W0007X product produced

Parameters:

PRODUC MATERIA LABOU OVERHEA PRIC TOTAL PROFI

T L R D E COST T
W0075C 33 9.9 23.1 100 66 34
W0033C 25 7.5 17.5 80 50 30
W0005X 35 10.5 24.5 130 70 60
W0007X 75 11.25 63.75 175 150 25

Profit per unit is a selling price of a product less the total cost of production.

Objective function:
As the goal is to meet increase the bottom line of the company in April, production
should focus to maximize profit:

O.F. Max Z=34P1+30P2+60P3+25P4

Constraints:
Production facility has limitations of working hours in each section of production
1P1 + 2P2 + 1P4 ≤ 4000 Drawing
1P1 + 1P2 + 4P3 + 1P4 ≤ 4200 Extrusion
1P1 + 3P2 ≤ 2000 Winding
1P1 + 3P3 + 2P4 ≤ 2300 Packaging
The promise that was made to an important client requires products P1 and P4 to be
made in at least minimum amounts of 150 and 600 respectively:
P4≥600
P1≥150
Non-negativity:
P1, P2, P3, P4 ≥ 0

Formulation:
Max Z=34P1+30P2+60P3+25P4
s.to
1P1 + 2P2 + 1P4 ≤ 4000
1P1 + 1P2 + 4P3 + 1P4 ≤ 4200
1P1 + 3P2 ≤ 2000
1P1 + 3P3 + 2P4 ≤ 2300
P4≥600
P1≥150
P1, P2, P3, P4 ≥ 0
Solution:
Q1
Mexican wire company should produce the following number of units of each product:

PRODUCT UNITS PRODUCED

W0075C 1100
W0033C 300
W0005X 0
W0007X 600

The profit of this plan is $61,400

Q2
The given production plan does not require additional labour in the drawing department
as currently only 1*1100 + 2*300 + 1*600= 2,300 working hours of drawing is
required. This means that the company is not using the current maximum capacity, and
increasing it even more will not increase the profit.
Q3
The plant layout might be altered by putting the related department areas closer in a
production sequence. In this case the product will pass in one room/way only once and
the company could avoid moving it too much. It should save working hours required,
decrease costs and increase capacity.
In the given facility plan following changes can be made:
Drawing department should be followed by extrusion and winding departments. While
the packaging area will be moved before inspection. As for the finished product storage,
I think it can change places with rejected product storage area, as it is the finished
products from inspection could directly go to the closest area.