Solve the lp model using pom-qm


Operations Research: Linear Optimization

Applichem wants to allocate the capacity of its worldwide manufacturing plants to fulfill its customer demand. Applichem makes a product, R, which is used by plastic molding companies around the world. R sells for $1/lb. Its plants are located in Gary, Indiana, Windsor, Ontario, Frankfurt, Germany, Mexico City, Caracus, Venezula, and Osaka, Japan. Its current strategy is to make and ship R as shown in the table below (x 100,000 lbs)

From/To       Mexico    Canada    Venezula    Europe    United States    Japan

Mexico City    3.0                          6.3           
Windsor                        2.6               
Caracus                                       4.1           
Frankfurt                                      5.6           20.0           12.4   
Gary                    14.0   
Japan                                                                                                4.0

Plant Production Costs and Capacity are shown in the table below:

Plant                Cost/1000lbs    Capacity (100,000 lbs)

Mexico City            95.01                   22.0
Windsor                 97.35                    3.7
Caracas                116.34                   4.5
Frankfurt                76.69                   47.0
Gary                     102.93                  18.5
Osaka                   153.80                   5.0

The current Transportation Cost ($/1000 lb), Import Duties, and current customer Demand are shown in the table below:

Plant/Country    Mexico    Canada    Venezuela    Europe    United States    Japan

Mexico City           0          11.40          7.00         11.00           11.00         14.00
Windsor             11.00          0             9.00         11.50            6.00          13.00
Caracas              7.00        10.00            0           13.00           10.40         14.30
Frankfurt            10.00       11.50         12.50           0               11.20        13.30
Gary                  10.00        6.00          11.00        10.00               0           12.50
Osaka                14.00        13.00         12.50        14.20           13.00           0
Demand
(100,000 lbs)        3.0            2.6            16.0         20.0             26.4          11.9
Import Duty                                           50%          9.5%           4.5%        6%

Your boss has asked you to look at this and suggest improvements to increase profit.

a. What is the current cost being incurred and profit earned?

b. Build a LP model to represent the situation. Hint you need a variable for product shipped from each plant to each destination, for the total produced at each plant and the total received in each country.

c. Solve the LP model using POM/QM and develop your recommendation.

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Operation Research: Solve the lp model using pom-qm
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