INDIAN INSTITUTE OF MANAGEMENT, UDAIPUR

GARTLAND STEEL
COMPANY
GROUP 7 ASSIGNMENT IN
OPERATIONS RESEARCH

ANUPAM BARA 111008

JASDEEP SINGH 111018
P SWETHA 111030
PRITESH 111037
VAIBHAV BAWEJA - 111056

EXECUTIVE SUMMARY
About Gartland Steel
Gartland Steel is an integrated steel plant which was founded in 1901. In a span
of 78 years, it had come up with 7 more units in US. Gartland Steel was the
countrys fourth largest steel maker and third largest in sales. Gartland Steel
emphasized more towards method and product innovations. Gartland Steel had
always been concerned and sensitive to the environmental pollution level due
the running of their plants. Gartland used to spend over $300 million on pollution
control, which placed them above all the other major steel firms.
Environmental Protection Agency (EPA) in response to the Clean Air Act of 1970,
set up National Ambient Air Quality Standards (NAAQS) for six airborne
pollutants. The pollution level has to be kept under the permissible limits by
every firm. Stack By stack method was used by most of the firms to comply
with the pollution standards. But the stack by stack method was resulting to be
very expensive for most of the firms to survive in the industry. This resulted in
the introduction of Offset policy. Offset policy allowed firms to trade pollution
rights within non-attainment regions.
Dan Crossan, director of Environmental Engineering at Gartlands Salem Ohio
steel mill keeping the rising cost in mind was planning to implement the
bubble method of determining air pollution emission compliance for industrial
plants. In Bubble method, a variation of Offset policy, allows the firms to vary the
pollution levels at various steps independently keeping the total pollution level
same or less than that in the previous case.
Problem Definition
To operate profitably within the pollution level standards set by Environmental
Policy Agency (EPA). The current level of pollution for the Salem Plant was 5525
thousand pounds per year. According to the standards, the plant had to bring
down the pollution level by 6.6% per year.
Solution approach
The objective is to maximize the profit keeping the pollution levels within the
standards specified by EPA, keeping the various constraints of input output
combination at every stage of the process in mind. The solution approach started
with formulating the initial process being used by Gartland and calculating the
profit. Then various methods that can be used to decrease the pollution levels
while maximizing the profit were considered and analysed to get the best
possible solution having maximum profit along with the pollution levels within
the specified limits.
Problem Cases
The problem can be analysed in about 15 cases, while taking into consideration
the cases of bubble method and stack by stack method of reducing pollution,
changes in the mix of the open hearth, and while considering or not considering
the pollution from coal and ore yards.

Also, a case is considered when 250,000 pounds of pollution are offset by buying
the rubber factory and the remaining pollution is reduced by reducing output.

Recommendations
Considering and analysing the various 15 options that are available for Gartland
Steel in order to maximize the profit along with minimizing the pollution levels
according to the standards set by EPA, following 4 the optimum solutions are
available:
1

Bubble method with pollution from coal yard and ore yard considered and
offset by buying and shutting the plant also taken into account.
This is the best solution but it depends upon the following assumptions:
a EPA approves for the Bubble policy.
b EPA approves to consider the coal yard and ore yard pollution levels
with the process.
c Offset policy can be used along with Bubble method.
Bubble method with pollution from coal yard and ore yard considered.
This is the second best solution and can be implemented if:
a EPA approves for the Bubble policy.
b EPA approves to consider the coal yard and ore yard pollution levels
with the process.
c Offset policy cannot be used along with Bubble method.
Bubble method without considering the pollution from coal yard and ore
yard.
This is the third best solution and can be implemented if:
a EPA approves the Bubble policy
b EPA refuses to consider the coal yard and ore yard pollution levels
with the process.
c Offset policy cannot be used along with Bubble method.
Stack by Stack method with offset from buying and shutting the plant,
without considering the pollution from coal yard and ore yard.
This is the fourth best solution but the safest solution as:
a It does not depend upon the approvals of EPA regarding the Bubble
method
b No approval is required from EPA regarding consideration of
pollution from coal yard and ore yard.
c It only involves the use of Offset policy along with Stack by Stack
policy which is currently according to the standards of EPA.

Problem Definition
Without pollution from coal and ore yard:
We first determine the output mix for maximum profit yield without
considering pollution from coal and ore yard. This is considered as the
initial case.
Bubble Method:
Using bubble method, determine new output for 6.6% reduction in the
pollution, which is 5163 pounds.
Using bubble method, determine the output for maximum profit for
changed mix in the open hearth.
Using bubble method, determine the output for obtaining the profit of
5163 pounds for changed mix with open hearth.
Using bubble method, determine the output for obtaining the profit in
case Gartland chooses to buy the rubber plant and sell it for getting
250,000 pounds offset, considering the original mix of hearth (as it is
later determined that the change in hearth is in fact reducing profit.
Stack by Stack Method
In this method, as different types of pollution cannot be interchanged,
it is understood that the reduction in pollution as required should be
done in every stage of the process. Therefore, we reduce the pollution
as a percentage, 6.6% through each of the processes.
This gives additional constraints of pollution limits.
The following cases thus arise
Using stack by stack method, determine new output for 6.6%
reduction in the pollution, which is 5163 pounds.
Using stack by stack method, determine the output for maximum
profit for changed mix in the open hearth.
Using stack by stack method, determine the output for obtaining
the profit of 5163 pounds for changed mix with open hearth.
Using stack by stack method, determine the output for obtaining
the profit in case Gartland chooses to buy the rubber plant and sell
it for getting 250,000 pounds offset, considering the original mix of
hearth (as it is later determined that the change in hearth is in fact
reducing profit.

Similarly, we Include pollution from coal and ore yard and repeat the above
cases, thus yielding a total of 15 cases.

Linear Program Formulation:

The linear program was formulated using the following rules obtained from the
case data.

The ratio of inputs to outputs at any processing unit (such as coking plant,
blast furnace etc..) shall be in the ratio as per the requirement and output
given in the table.
Ex: Consider the table given below

1 ton of outputs
Produces
scrap
(tons)
Produces
particulate
pollution
(pounds)
Requires (tons)

Sinter Plant

Blast Furnace

Sinter
--

Pig Iron
0.01

0.777

0.474

0.52
Ore

1.12
Ore
0.65
Coke

Operating Costs
$18.77
Coast of coal and $18.82
ore used
Energy Credits
$0.00

0.47
Sinter
$57.82
$40.54
$0.16

Under Sinter Plant, it shows that for producing 1 ton of Sinter, it takes 0.52 ton of
ore.
Representing the same in the form of an equation, we obtain the following
equation

xsinter=

xore
0.52

This equation can be further reduced to the following to make it easier to use
with excel solver.

0.52 xsinter xore=0

So the coefficients of the variables xsinter and xore will be 0.52 and -1
respectively and the constraint equation will be equated to 0.
A similar process is followed throughout

Coke
Ore2

Pig Iron

Blast
Furnace

Sinter

In the case of multiple inputs into a single process simultaneously, we consider

the minimum of the variables.
Ex:
For the Blast Furnace, 1.12 tons of Ore, 0.65 tons of coke and .47 tons of Sinter
will produce 1 ton of Pig Iron.
Xcoke>=0.65 XPigIron
Xore2>=1.12 XPigIron
XSinter >= 0.47 XPigIron
From the above, we will get the Minimum value of the Pig Iron.

Balancing at nodes is done so as to keep the sum total of the items going
into a node is equal to the items coming out of the node.

Input Variables:

Xcoal
xcoke

xscrappurc
hase
Xscrap

xore1
xsinte
r

xscrap1

xore2
xpigir
on

xsteel1

xpi1
xpi2
xpi3

xsteel3
xsteel4
xsteel5

xscrap2

xsteel2

xingot
s
xslabs
xingot
s1
xingot
s2
xslabs
1
xslabs
2
xslabs
3
xcoils

Constraints:
Xcoal--1.43 xcoke =0 ( Coking)
xore1- 0.52 xsinter=0 (Sinter)
Xcoke-0.65xpigIron >=0 (Blast Furnace)
Xore2- 1.12xpigiron>=0 (Blast Furnace)
Xsinter- .47 xpigiron>=0 (Blast Furnace)
Xpi1-0.14xsteel1 >=0 (Open Hearth furnace)
Xscrap1-1.08 xsteel1>=0 (Open hearth Furnace)
Xscrap2-0.32 xsteel2 >=0 (Basic oxygen Furnace)
Xpi2-0.8xsteel2>=o (Basic Oxygen Furnace)
Xsteel1+xsteel3-xsteel5=0 (Steel division)
Xsteel2 xsteel3-xsteel4=0 (Steel division)
Xsteel5-1.02xingots=0 (Ingots caster)
Xsteel4-1.06xslabs=0(Continuous caster)
Xingots1-1.2xslabs=0 (Pri-break Down Mill)
Xslabs3-1.04 xcoils=0 ( Hot Strip Mill)
Capacity Constraints:
Xpigiron<= 1404000 (Blast Furnace)
Xsteel1 <= 1740000 (Open Hearth)
Xscrap2<= 2700000 (basic Oxygen Furnace)
Xingots<= 3408000 (ingots casting)

Xslabs<=720000 (continuous casting)

Xcoils <= 3480000 (hot strip unit)
Other constraints:
0.01xpigiron xscrap+0.02xsteel1+0.02 xsteel2 +0.02xingots+0.04
xslabs+0.18 xslabs + 0.04xcoils=0 (scrap)
Xingots-xingots1-xingots2=0 (ingots)
Xpigiron xpi1-xpi2+xpi3=0 (scrap)
Xslabs-xslabs1+xslabs2-xslabs3=0 (slabs)

Pollution constraint is considered in some of the above cases. Otherwise, the

same is not considered.
Objective Function:
- 47.59xcoal - 34.35xcoke - 36.2 xore1 - 18.77 xsinter-36.2 xore2 57.66xpigiron
- 191.1xpi3 -98.48xscrappurchase - 52.82xsteel1-27.97xsteel2-4.22xingots31.86xslabs+200xingots2+250xslabs1 16.31xslabs2+ 296.69xcoils

Output Mix obtained from solver

Variable
Xcoal
Xcoke
xore1
Xsinter
xore2
Xpigiron
xpi1
xpi2
xpi3
xscrappurc
hase
Xscrap
xscrap1

Initial
Scenario
1,305
913
343
660
1,572
1,404
244
2,024
864
1,835
844
1,879

Without Pollution from Coal and Ore Yard

Stack
Bubble
by
- With
Stack
Stack Open
by
With
Bubble hearth
Stack open
With
mix and 6.6%
hearth
Open
5163
reducti
and
Bubble
hearth
pounds on in
pollutio
Reduced mix
pollutio each
n
by 6.6%
changed
n
stage
=5163
1,140
1,305
1,166
1,219
1,246
797
913
815
852
871
300
343
306
320
328
577
660
589
616
630
1,374
1,572
1,404
1,469
1,501
1,227
1,404
1,254
1,311
1,341
244
435
435
228
415
2,024
2,024
2,024
1,891
1,933
1,041
1,055
1,205
807
1,008
1,837
842
1,879

1,609
844
1,653

1,610
842
1,653

1,720
782
1,755

1,540
802
1,578

Stack
by
Stack with
250
from
rubber
and
rest
here
1,276
893
336
645
1,538
1,373
238
1,980
845
1,797
823
1,838

xscrap2
xsteel1
xsteel2
xsteel3
xsteel4
xsteel5
Xingots
Xslabs
xingots1
xingots2
xslabs1
xslabs2
xslabs3
Xcoils

800
1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

800
1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

800
1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

800
1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

747
1,625
2,334
1,571
763
3,196
3,134
720
3,134
0
0
2,611
3,331
3,203

764
1,661
2,386
1,623
763
3,285
3,220
720
3,220
0
0
2,684
3,404
3,273

782
1,702
2,444
1,681
763
3,383
3,317
720
3,317
0
0
2,764
3,484
3,350

Without Pollution from Coal and Ore Yard

Variable
Xcoal
Xcoke
xore1
Xsinter
xore2
Xpigiron
xpi1
xpi2
xpi3
xscrappurc
hase
Xscrap
xscrap1
xscrap2

Initial
Scenari
o
1,305
913
343
660
1,572
1,404
244
2,024
864

Bubble
- 6.6%
reducti
on in
pollutio
n
1,140
797
300
577
1,374
1,227
244
2,024
1,041

Bubble
- With
Open
hearth
mix
change
d
1,305
913
343
660
1,572
1,404
435
2,024
1,055

Bubble With
Open
hearth
mix and
pollutio
n at
6264
pounds
1,183
827
311
598
1,425
1,273
435
2,024
1,187

Stack
by
Stack 6.6%
reducti
on in
each
stage
1,219
852
320
616
1,469
1,311
228
1,891
807

Stack
by
Stack With
open
hearth
and
pollutio
n
=6264
pounds
1,241
868
326
627
1,495
1,335
414
1,925
1,004

1,835
844
1,879
800

1,837
842
1,879
800

1,609
844
1,653
800

1,610
843
1,653
800

1,720
782
1,755
747

1,534
798
1,572
760

Stack
by
Stack With
open
hearth
and
6.6%
reducti
on in
each
stage
1,219
852
320
616
1,469
1,311
406
1,891
986

Bubb
le
with
250
from
rubb
er
and
rest
from
here
1,169
818
307
591
1,409
1,258
244
2,024
1,010

1,509
782
1,544
747

1,837
842
1,879
800

xsteel1
xsteel2
xsteel3
xsteel4
xsteel5
Xingots
Xslabs
xingots1
xingots2
xslabs1
xslabs2
xslabs3
Xcoils

1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

1,625
2,334
1,571
763
3,196
3,134
720
3,134
0
0
2,611
3,331
3,203

1,654
2,376
1,613
763
3,268
3,204
720
3,204
0
0
2,670
3,390
3,259

1,625
2,334
1,571
763
3,196
3,134
720
3,134
0
0
2,611
3,331
3,203

Observations:

No Ingots or Slabs are sold in the case for obtaining maximum profit.

Assumptions:
The scrap produced in the process is re-utilised in the process itself and it
is not discarded or sold off.
We can use the rubber factory to offset pollution even when using bubble
policy.
Recommendations:
Considering and analysing the various 15 options that are available for Gartland
Steel in order to maximize the profit along with minimizing the pollution levels
according to the standards set by EPA, following 4 the optimum solutions are
available:
1. Bubble method with pollution from coal yard and ore yard considered and
6.6 % reduction in total pollution levels.
This is the best solution but it depends upon the following assumptions:
a. EPA approves for the Bubble policy.
b. EPA approves to consider the coal yard and ore yard pollution levels
with the process.
2. Bubble method without considering the pollution from coal yard and ore
yard, and 6.6 % reduction in total pollution levels.
This is the third best solution and can be implemented if:
a. EPA approves the Bubble policy
b. EPA refuses to consider the coal yard and ore yard pollution levels
with the process.
3. Bubble method with pollution from coal yard and ore yard considered with
offset from buying and shutting down plant.
This is the second best solution and can be implemented if:
a. EPA approves for the Bubble policy.

1,740
2,499
1,736
763
3,476
3,408
720
3,408
0
0
2,840
3,560
3,423

b. EPA approves to consider the coal yard and ore yard pollution levels
with the process.
c. Offset policy can be used along with Bubble method.
4. Stack by Stack method with offset from buying and shutting the plant,
without considering the pollution from coal yard and ore yard.
This is the fourth best solution and depends upon following:
a. It will be considered only if bubble method is not approved.
b. No approval is required from EPA regarding consideration of
pollution from coal yard and ore yard.
c. It only involves the use of Offset policy along with Stack by Stack
policy which is currently according to the standards of EPA.