1Business IT and Logistics—OMGT2287 Supply Chain Modelling and DesignAssessment 1: Case StudyDetailsThe company produces kiwifruit at three plants, which can be delivered directly to the two customersor it can first be shipped to the two warehouses and then to the customers. Shipments betweenplants are allowed. This also applies to between warehouses and between customers.The cost of producing the kiwifruit is the same at each plant; as a result, the company is onlyconcerned with minimising the total shipping cost incurred in meeting customer demands. Theproduction capacity of each plant (in tonnes per year) and the customer demand are summarised inthe table below: PlantCapacityCustomerDemandPlant 1300Customer 1300Plant 2325Customer 2500Plant 3350 The cost (in thousands of dollars) of shipping a tonne of the product between each pair of locations islisted in the table below where a blank indicates that the company cannot ship on that route: From nodeTo nodePlant 1Plant 2Plant 3Warehouse 1Warehouse 2Customer 1Customer 2Plant 111771414Plant 211561515Plant 311761314Warehouse 1257Warehouse 2264Customer 12Customer 22 The management has set the maximum flow between nodes (in tonnes) as shown in the table below: From nodeTo nodePlant 1Plant 2Plant 3Warehouse 1Warehouse 2Customer 1Customer 2Plant 1200200300300200200Plant 2200200300300200200Plant 3200200300300200200Warehouse 1300300300Warehouse 2300300300Customer 1200Customer 2200 Since sometimes the demands are fluctuated, the company plans to have safety stock of 50 tonnes ateach warehouse. Based on the information above:a. Determine a minimum-cost shipping strategyb. Based on the results that you have, what else could be done to furtherreduce the shipping cost?2Guidelines: Report Structure1. Cover pagea) Report’s titleb) Names and student IDs2. Problem formulation (please ensure that all mathematical symbols are correct and consistent)a) Define decision variables with a measurement unit (e.g. pallets, kg, or km)b) Provide an objective function and constraints and clearly show how you formulate themwith an explanation what each equation meansc) Ensure that decision variables and each equation are linked back to the data3. Problem solving (i.e. process of how you find the solution step-by-step)a) Explain how you implement the model in the Excel spreadsheet i. Explain how youimplement each equation in the model using what functions in Excel (e.g. SUMPRODUCT)and where you place it on the spreadsheet (e.g. at Cell B2). If constraints are of the samekind and implemented in the same way, you just need to explain the first one and summarisethe rest.b) Explain how you set up Solver in Excelc) Do not forget to submit the Excel spreadsheet together with the Word report4. Discussiona) Discuss the optimal solution based on the results that you findb) If you conduct sensitivity analysis, the results should be presented here.1 of 335. Recommendationsa) List and discuss what action should be taken based on the discussion.• For example, the results may suggest that the optimal solution for the production problemis to make 3 units of X and 4 units of Y. In addition, sensitivity analysis indicates that anincrease of each Resource A can increase the profit by $5, up to the maximum of 100 unitsof Resource A. Your first recommendation can be to produce 3 units of X and 4 units of Y,and the second recommendation is to procure additional 100 units of Resource A.6. Presentationa) Discussion and explanation are succinctb) There is a link between each section. And when the report is read, the reader should notfeel jumpy (i.e. some important information is omitted).c) Cross-referencing and citations are correct, if anyd) All headings and sections are in placee) Images or figures are clearf) The writing is readable. You may use Flesch–Kincaid readability tests to evaluate your report.
