File: 301910384.

xls

As of: 01/26/2016 - 11:01:00

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
150
200
4
40

cost_reg
cost_ot
cost_sub
cost_hold
cost_back

regular-time cost
overtime cost
subcontracting cost
inventory holding cost
backorder cost

a. Unit Transportation Cost - a i j

Destinations
3

j=1

Origins
i=1 Initial inv
2 Reg-time 1
3 Overtime 1
4 Subcon 1
5 Reg-time 2
6 Overtime 2
7 Subcon 2
8 Reg-time 3
9 Overtime 3
10 Subcon 3

Period 1
0
100
150
200
140
190
240
180
230
280

Period 2
4
104
154
204
100
150
200
140
190
240

Period 3
8
108
158
208
104
154
204
100
150
200

Demand Desired - c j

40

50

40

Input the data,

Invoke the Solver using the
Tools-Solver menu,
Get the complete the aggregate plan at
the bottom of the worksheet.
Print the worksheet if needed.

Supply
Available - b i
20
30
10
5
35
12
5
30
10
5

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 Xi j
ij

d. Define constraints

Origin i

Xi j
j

bi

Destination j

Xi j
i

e. Implementation with Excel Solver

Decision Variables - X i j
Origin
i=1 Initial inv
2 Reg-time 1
3 Overtime 1
4 Subcon 1
5 Reg-time 2
6 Overtime 2
7 Subcon 2
8 Reg-time 3
9 Overtime 3
10 Subcon 3

j=1
Period 1
20
20
0
0
0
0
0
0
0
0

Origin
i=1 Initial inv
2 Reg-time 1
3 Overtime 1
4 Subcon 1
5 Reg-time 2
6 Overtime 2
7 Subcon 2
8 Reg-time 3
9 Overtime 3
10 Subcon 3
Sums

j=1
Period 1
0
2,000
0
0
0
0
0
0
0
0
2,000

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
Used
Desired
40
40
50
50
40
40
130
130

Destination
j=1 Period 1
2 Period 2
3 Period 3
Sums

f. Aggregate Plan
Origin
Reg-time
Overtime
Subcon

j=1
Period 1
30
0
0

Destination
2
3
Period 2
Period 3
35
30
5
10
0
0

Xi j 0

To display Solver Window,

use Tools-Solver menu.

Destination
2
3
Period 2
Period 3
0
0
10
0
0
0
0
0
35
0
5
0
0
0
0
30
0
10
0
0

Objective Fct
Destination
2
3
Period 2
Period 3
0
0
1,040
0
0
0
0
0
3,500
0
750
0
0
0
0
3,000
0
1,500
0
0
5,290
4,500

= cj

Sums
0
3,040
0
0
3,500
750
0
3,000
1,500
0
11,790

Solution to Solver

Page 2

Solution to Solver
0

600

800

100

500

Page 3

Starting values

Page 4

Starting values
0

Page 5