Case Study: Custom Vans, Inc.

Christopher A. Smiley

OMGT410 – Operations Management II

December 8, 2012

Instructor - Bruce Stephens

Southwestern College Professional Studies

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Abstract

Transportation issue could be a way finding ideal transportation courses at the most
reduced conceivable cost with other applications like apportioning assets, amplifying
benefit and apportioning office. The strategies utilized to get the ideal transportation
arrange are excel solver and Northwest corner. Custom Vans, Inc. is confronting a
issue of neglected showcase request due to inadequate supply, the objective is to look
for two best plant areas to meet showcase demand at a most reduced add up to
transportation fetched.

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Introduction

There are a few ways for tackling transportation issues, for the reason of this report
excel solver, Northwest corner run the show and Steppingstone strategy were utilized.
Excel solver could be a Microsoft add-in program, utilized as an advancement device
to discover arrangement for choice issues. Exceed expectations solver was utilized
for the purpose of the examination since it could be a quick way of doing transportation
issues compared to other manual calculations. The North West corner could be a
strategy utilized when creating an initial feasible arrangement of the transportation
issue. The title northwest corner is given to the strategy since the allotment begins
within the upper left-hand cell of the table. The steppingstone strategy may be a
method utilized to get an ideal arrangement from a beginning arrangement. The
strategy is utilized to check on the off chance that whether the current arrangement is
ideal or not, it is additionally utilized to move forward the current arrangement until the
ideal arrangement is come to.

The Situation

In this case study, we learn about Tony Rizzo, owner and founder of Custom Vans,

Inc. He started a customization shop for vans, where people spend thousands of

dollars to have their vans customized with unique features and devices. One of his

most popular features is the Shower-Rific, a fiberglass shower unit that attaches to a

van. Tony’s business has done so well in the mid-west, that he has expanded his

customization shops to four different U.S. cities, Chicago, Milwaukee, Minneapolis,

and Detroit. The shower units are in such demand that Tony has had to expand his

Shower-Rific production to two different factories, one in Gary, Indiana and the other

in Fort Wayne, Indiana. Unfortunately, the two factories together are no longer able

to meet the increasing demand of his four customization shops.

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Materials and Methods

The data collection was in the case study

Table 1

From\To Chicago Milwaukee Minneapolis Detroit Supply

Gary 10 20 40 25 300
Fort Wayne 20 30 50 15 150
Detroit 26 36 56 1 150
Madison 7 2 22 37 150
Rockford 5 10 30 35 150
Demand 300 100 150 200 750\900

Table2

From\To Chicago Milwaukee Detroit Supply

Minneapolis
Gary 200 10 20 100 40 25 300
Fort 20 50 30 50 100 15 150
Wayne
Demand 300 100 150 200 750\450

Total cost in the table 2 above is $9000

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Using Microsoft Excel solver

The to begin with step for the excel examination was to input the given information
into the excel spreadsheet. The information was setup in two tables per conceivable
combination. The primary table contained unit costs, request and supply gauges. The
moment table was to show the transportation arrange. An objective cell was chosen,
the cell was for showing the overall costs for the transportation issue, a cell was the
objective cell with a equation demonstrating the entirety of the transportation fetched
and the transportation arrange.

Northwest Corner Rule & Steppingstone Method.

The primary step was to draw a transportation table that contained fetched, request,
supply, manufacturing plants and workshops. The following step was to check whether
the request and supply are adjusted. The requests and supply for this issue were all
adjusted. The next step was to start introductory allotment utilizing the northwest
corner run the show. Assignment started on extraordinary up-left cell and distributed
as much as conceivable units within the to begin with cell, with supply and request
imperatives. This was rehashed until all requests were meet, by moving vertically
when supply is meet and moving on a level plane when request is meet. After all
assignments were done the primary run the show for applying the steppingstone
strategy was checked, by checking in the event that the number of apportioned cells
(n) is rise to to the number of columns (r) furthermore number of columns (c) short
one. On the off chance that n = r + c -1, at that point it was conceivable to proceed to
utilize the steppingstone strategy. In case n ≠ r + c -1 the starting arrangement was
respected as worsen and to resolve this a zero was apportioned in a cell that will permit
a step design to proceed.

Utilizing the steppingstone, an empty cell was chosen so that it can be assessed, a
closed way was assessed by starting with a + sign and a – sign until the entire closed
way was followed. Enhancement record was calculated by including and subtracting
the unit fetched in each cell of the closed way. The sign designated decided in the

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event that we include or subtracted. This was rehashed for all purge cells until all
enhancement lists are found. Since this issue was a minimisation issue in arrange to
be ideal all enhancement records are gathered to be zero or positive. In the event that
not, the transportation course was moved forward by selecting the way with the most
noteworthy negative and distribute the most elevated conceivable units within the
cells. This was done by including the most reduced units within the fetched from cells
that have a negative sign, to the cells that contains positive signs and subtracting
within the cells that contains negative signs. After this the steppingstone was utilized
once more until all enhancement files are zero and negative.

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Results

The optimal transportation arrange for selecting Madison & Rockford to be the modern
manufacturing plant areas is to dispatch 250 units from Gary to Chicago, 50 units from
Gary to Detroit, 150 units from Post Wayne to Detroit, 100 units from Madison to
Milwaukee, 50 units from Madison to Minneapolis, 50 units from Rockford to Chicago
and 150 units from Rockford to Minneapolis. The ideal transportation arrange result to
a least fetched of $10550

Gary, IN Fort Wayne, IN Detroit, MI Rockford, IL Madison, WI Discount

Chicago, IL 10/250 20 30 5/50 10 300 $2,750
Milwaukee, WI 20 30 40 10/100 5 100 $1,000
Minneapolis, MN 40 50 60 30 25/150 150 $3,750
Detroit, MI 25/50 15/150 5 35 40 200 $3,500 Madison = $750
300 150 150 150 150 11000 Total = $10250

Gary, IN Fort Wayne, IN Detroit, MI Rockford, IL Madison, WI Discount

Chicago, IL 10/300 20 30 5 10 300 $3,000
Milwaukee, WI 20 30/100 40 10 5 100 $3,000
Minneapolis, MN 40 50 60 30 25/150 150 $3,750 Madison = $750
Detroit, MI 25 15/50 5/150 35 40 200 $1,500 Detroit = $600
300 150 150 150 150 11250 Total = $9900

Gary, IN Fort Wayne, IN Detroit, MI Rockford, IL Madison, WI Discount

Chicago, IL 10/300 20 30 5 10 300 $3,000
Milwaukee, WI 20 30 40 10/100 5 100 $1,000
Minneapolis, MN 40 50/100 60 30/50 25 150 $6,500
Detroit, MI 25 15/50 5/150 35 40 200 $1,500 Detroit = $600
300 150 150 150 150 12000 Total = $11400

The ideal transportation arrange for selecting Detroit & Madison to be the modern
manufacturing plant areas is to transport 200 units from Gary to Chicago, 100 units
from Gary to Milwaukee, 100 units from Post Wayne to Chicago, 50 units from Post
Wayne to Detroit, 150 units from Detroit to Detroit and 150 units from Madison to
Minneapolis. The ideal transportation arrange result to a least taken a toll of $10200

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The action(s) required

Tony Rizzo should build his new factories in Detroit, Michigan and Madison,

Wisconsin. The key to making this alternative the most efficient is taking advantage

of the discounted fiberglass in Detroit and the cheaper labor in Madison. Without these

discounts, this alternative is $1000 more than the first alternative, Rockford and

Madison.

The transportation problem proved that it can be used to allocate facilities. Using
Microsoft Excel Solver was a quick method of obtaining the optimal solutions, but it
was not able to give other optimal solutions. The northwest corner rule and
steppingstone method were long methods of determining the optimal solutions, but
they proved to be much effective in determining other optimal solutions. And
investigation can be improved and developed further in order to factor in other
constraints or components that may affect the overall cost. This can be done by using
a different, more complex software, with an algorithm that can factor all of the
constraints or components in a shorter time.

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