Case Study on Operation

Research
Background
 Aluminum Company of Canada Limited (Alcan)
was an integrated producer of aluminum
products.
 The Foil Mill produced aluminum foil of
different widths for a variety of different end
uses.
 Space limitations required that a limited number
of standard widths of aluminum foil be carried in
stock from which customers’ orders were slit.
 Low turnover on some standard widths and large
scrap losses occurred when filling customers’
Case Statement

Re-assessment of the current inventory

policy in the Foil Mill of Aluminum
Company of Canada Limited (Alcan)
 Process
Separator

Select coil from Roll coil to desired

stock in Foil Mill thickness & finish
Customer Order
specifying Slitter
width, gauge & surface

 Slitter was used to slit the coil to desired width

 Separator was used to slit and then separate
coils which had been pack rolled in two layers.
 Rolling in two layers was done for thinner gauge
orders to give sufficient strength to the foil for slitting.
Difficulties in Slitting Operation
 A minimum of 5 mm must be trimmed from each edge of
the standard widths in order to guarantee clean edges.
 Two adjacent widths have tendency to interlock as they
were being coiled. To break them apart required the use
of a special tool & a sledge hammer which damages the
outer edges of the foil.
 To overcome this, the core on which the foil was wound
extended 2.5 mm on either side of the coil.
Selection of Standard Widths
 The customers could order any width, but some
of possible widths had never been ordered.
 The number of different standard widths that
could be held as inventory was constrained by
space limitations.
 The Sheet Mill wanted the number of widths it
produced kept to a minimum.
Scrap Loss
 Slitting multiple widths from wider
standard widths resulted in less scrap than
cutting a single width from a narrower
standard width.

Scrap = (Standard Width – Customer Width) x Weight of Std. Width

Roll
Standard Width
Calculation of Scrap Loss
Standard Width A B C D F G
 
Customer Width 210 420 620 820 1100 1300
I 200 10 20 20 M 100 100
II 300 M 120210 – 200
20 M M 100
III 400 M 20 M 20 M 100
IV 500 M M 120 M 100 M
V 600 M M 20 M M 100

Standard Width A B 10/210 C D E F

 
Customer Width 210 420 620 820 1100 1300
I 200 0.047619 0.047619 0.032258 M 0.090909 0.076923
II 300 M 0.285714 0.032258 M M 0.076923
III 400 M 0.047619 M 0.02439 M 0.076923
IV 500 M M 0.193548 M 0.090909 M
V 600 M M 0.032258 M M 0.076923
Calculation of Scrap Loss

Standard Width A B C D E F
 
Customer Width 210 420 620 820 1100 1300
0.047619 x Cij
I 200 95 190 194 M 1000 1000
II 300 M 1143 194 M M 1000
III 400 M 190 M 195 M 1000
IV 500 M M 1161 M 1000 M
V 600 M M 194 M M 1000

Cij 2000 4000 6000 8000 11000 13000

 Assignment Problem
 Xij is defined as difference of ith standard width with
jth customer width
 Cij is defined as the weight of width 210mm to the
actual ith standard width being used for jth customer
width
 Objective function is to minimize

Z= Cij Xij
subject to certain restrictions
Assignment Problem

Problem :
Standard Width Customer Width
A = 210 I = 200
B = 420 II = 300
C = 620 III = 400
D = 820 IV = 500
E = 1100 V = 600
F = 1300 VI = 0
Assignment Problem
Scrap loss Matrix
Standard
Width
A B C D E F
Customer
Width

I 95 190 194 M 1000 1000

II M 1143 194 M M 1000
III M 190 M 195 M 1000
IV M M 1161 M 1000 M
V M M 194 M M 1000
VI 0 0 0 0 0 0
Assignment Problem
Row Reduction
Standard
Width
A B C D E F
Customer
Width

I 0 95 99 M 905 905
II M 949 0 M M 806
III M 0 M 5 M 810
IV M M 161 M 0 M
V M M 0 M M 806
VI 0 0 0 0 0 0
Assignment Problem
Row Reduction
Standard
Width
A B C D E F
Customer
Width

I 0 95 99 M 905 905
II M 949 0 M M 806
III M 0 M 5 M 810
IV M M 161 M 0 M
V M M 0 M M 806
VI 0 0 0 0 0 0
Assignment Problem
Row Reduction
Standard
Width
A B C D E F
Customer
Width

I 0 95 99 M 905 905
II M 949 0 M M 806
III M 0 M 5 M 810
IV M M 161 M 0 M
V M M 0 M M 806
VI 0 0 0 0 0 0
Assignment Problem
Row Reduction
Standard
Width
A B C D E F
Customer
Width

I 0 95 99 M 905 905
II M 949 0 M M 806
III M 0 M 5 M 810
IV M M 161 M 0 M
V M M 0 M M 806
VI 0 0 0 0 0 0
Assignment Problem
Second Iteration
Standard
Width
A B C D E F
Customer
Width

I 0 95 905 M 905 905

II M 143 0 M M 0
III M 0 M 5 M 810
IV M M 967 M 0 M
V M M 0 M M 806
VI 0 0 806 0 0 0
Assignment Problem
Standard
Width
A B C D E F
Customer
Width

I 0 95 905 M 905 905

II M 143 0 M M 0
III M 0 M 5 M 810
IV M M 967 M 0 M
V M M 0 M M 0
VI 0 0 806 0 0 0
Assignment Problem
Final Assignment:
Standard
Width
A B C D E F
Customer
Width

I 0 95 905 M 905 905

II M 143 0 M M 0
III M 0 M 5 M 810
IV M M 967 M 0 M
V M M 0 M M 0
VI 0 0 806 0 0 0
 Assignment Problem
The assignments are:
Customer Width Standard Width Scrap (in Kg)
I A 95
II C 194
III B 190
IV E 1000
V F 1000
VI D 0
Total Scrap 2479
Verification using Tora Software
Input Data:
Output pdf
Conclusion
 Lowest scrap value is achieved using
Assignment Method
 Manual calculations are verified using Tora
software
 Scrap Loss matrix can be modified based on
forecast
 The above procedure sets a base for
determining an appropriate inventory policy
 Further Tora or other OR software can be used
to handle large amount of data
Reference

Book: Cases in Operation Research

by Cristoph Haehling von Lanzenauer

Case : ALCAN
by Cristoph Haehling von Lanzenauer
D D Wright