You are on page 1of 3

File: 393925124.

xls As of: 08/06/2018 - 20:20:28

A firm has developed the following supply, demand , cost and inventory data. Allocate production capacity to meet demand at a minimum cost using
transportation method. What is the minimum cost? Assume that the initial inventory has no holding cost in the first period.

Input Data
100 cost_reg regular-time cost
150 cost_ot overtime cost
200 cost_sub subcontracting cost
4 cost_hold inventory holding cost Input the data,
Invoke the Solver using the
40 cost_back backorder cost
Tools-Solver menu,
Get the complete the aggregate plan at
a. Unit Transportation Cost - a i j the bottom of the worksheet.
Destinations Print the worksheet if needed.
j=1 2 3 Supply
Origins Period 1 Period 2 Period 3 Available - b i
i=1 Initial inv 0 4 8 20
2 Reg-time 1 100 104 108 30
3 Overtime 1 150 154 158 10
4 Subcon 1 200 204 208 5
5 Reg-time 2 140 100 104 35
6 Overtime 2 190 150 154 12
7 Subcon 2 240 200 204 5
8 Reg-time 3 180 140 100 30
9 Overtime 3 230 190 150 10
10 Subcon 3 280 240 200 5
Demand Desired - c j 40 50 40

b. Define decision variables


X i j = number of units transported from origin ( production method ) i to destination ( period) j

c. Define objective function


minimize transportation cost
min Z = ∑ a i j X i j
ij

d. Define constraints
Origin i ∑ Xi j ≤ bi Destination j ∑ Xi j = cj Xi j ≥ 0
j i

e. Implementation with Excel Solver


Decision Variables - X i j
To display Solver Window,
Destination use Tools-Solver menu.
j=1 2 3
Origin Period 1 Period 2 Period 3
i=1 Initial inv 20 0 0
2 Reg-time 1 20 10 0
3 Overtime 1 0 0 0
4 Subcon 1 0 0 0
5 Reg-time 2 0 35 0
6 Overtime 2 0 5 0
7 Subcon 2 0 0 0
8 Reg-time 3 0 0 30
9 Overtime 3 0 0 10
10 Subcon 3 0 0 0

Objective Fct
Destination
j=1 2 3
Origin Period 1 Period 2 Period 3 Sums
i=1 Initial inv 0 0 0 0
2 Reg-time 1 2,000 1,040 0 3,040
3 Overtime 1 0 0 0 0
4 Subcon 1 0 0 0 0
5 Reg-time 2 0 3,500 0 3,500
6 Overtime 2 0 750 0 750
7 Subcon 2 0 0 0 0
8 Reg-time 3 0 0 3,000 3,000
9 Overtime 3 0 0 1,500 1,500
10 Subcon 3 0 0 0 0
Sums 2,000 5,290 4,500 11,790

Constraints
Supply Used <= Supply Available
Supply Supply
Origin Used Available
i=1 Initial inv 20 20
2 Reg-time 1 30 30
3 Overtime 1 0 10
4 Subcon 1 0 5
5 Reg-time 2 35 35
6 Overtime 2 5 12
7 Subcon 2 0 5
8 Reg-time 3 30 30
9 Overtime 3 10 10
10 Subcon 3 0 5
Sums 130 162

Demand Used = Demand Desired


Demand Demand
Destination Used Desired
j=1 Period 1 40 40
2 Period 2 50 50
3 Period 3 40 40
Sums 130 130

f. Aggregate Plan
Destination
j=1 2 3
Origin Period 1 Period 2 Period 3
Reg-time 30 35 30
Overtime 0 5 10
Subcon 0 0 0
Solution to Solver

0 600

800 100

0 500

Page 2
Starting values

0 0

0 0

0 0

Page 3