Presented to the Department of Sciences and Innovation

De La Salle University – Manila

Term 2, A.Y. 2021 – 2022

In Partial Fulfillment of the

Course Requirements for
Prescriptive Analytics (Optimization) – DSIMGTS (K41)

Final Paper: Analysis of Select Water Refilling Station

Submitted By:
Ching, Bea Zharina L.
De Los Reyes, Jaime Luis D.
Diño, Lance Gabriel A.
Lirio, Roi Neil D.
Rodis, Patricia Anne C.

Submitted to:
Mr. Roderick Pangindian

Submitted on:
June 6, 2022
 Table of Contents

Contents Page
1. Company Profile and Background …………………………………………………... 3
a. Company Name ………………………………………………………………… 3
b. Company Logo …………………………………………………………………. 3
c. Company Background ………………………………………………………….. 3
d. Products and Services …………………………………………………………... 4
2. Statement of The Problem …………………………………………………………….. 5
a. Problem Description……………………………………………………………... 5
b. Acquired Data and Explanation……………………………………….…………. 5
3. Alternative Courses of Action ………………………………………………………... 10
a. Development of Models ………………………………………………………... 10
i. Network Optimization Model ………………………………………….. 10
ii. Assignment Model …………………………………………………..…. 13
b. Results Analysis ………………………………………………………………... 17
c. Implications of Models Used …………………………………………………... 18
4. Optimal Solution ……………………………………………………………………… 19
5. Conclusion and Recommendations ………………………………………………….. 21
a. Conclusion ……………………………………………………………………... 21
b. Recommendations …………………………………………………….……….. 22

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 List of Figures

Figure Page
1. Logo of Select Water Refilling Station ………………………………………………….. 3
2. Illustration of Repair and Maintenance ………………………………………………….. 7
3. Research Locale …………………………………………………………………………. 9
4. Results of The Network Optimization Spreadsheet Model ……………………………. 11
5. Solver Parameters of Network Optimization Spreadsheet Model …………...………… 12
6. Results of The Assignment Spreadsheet Model for Monday and Thursday Shipment
Quantity ………………………………………………………………………………… 13
7. Results of The Assignment Spreadsheet Model for Tuesday and Friday Shipment
Quantity ………………………………………………………………………………… 14
8. Results of The Assignment Spreadsheet Model for Wednesday and Saturday Shipment
Quantity ………………………………………………………………………………… 15
9. Solver Parameters of Assignment Model Spreadsheet Model…………………………...16

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1. Company Profile and Background

a. Company Name – Select Water Refilling Station

b. Company Logo

Figure 1. Logo of Select Water Refilling Station

c. Company Background

Select Water Refilling Station is located in Navotas City. A business

which renders distilled water for households. It all started as two sole proprietor
businesses in Navotas City which were started by two individuals. These
businesses eventually closed down and started a conjugal partnership in the same
barangay. Both of them have a respective role in the enterprise that made the
business really successful in the said place. Around 2005, they thought of
engaging in a new business, particularly a water station to diversify their business
risks.

Furthermore, delivery services are free of charge since the vehicles that
are being used by the entity are modified bicycles that would be suitable for the
environment of the community, since the streets are narrow and more feasible
compared to motor-powered vehicles because of their maintenance cost and return

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 of investment. However, the downside is it requires more manpower as delivery
personnel do easily get tired by driving and at the same time carry the water
container into the homes of customers. Nevertheless, this is still an opportunity
for some to create a profitable business by engaging in necessities of the
community.

To reiterate, Select Water Refilling Station is a small business which

almost went into bankruptcy a few times because of the competition in the market
and other factors such as environment and legal requirements. Regardless, the
business continued its operation until they got known by the community which
made them to be one of the pioneers in providing distilled water. Additionally, the
store is not just limited to providing distilled water, but they also sell different
types of containers of distilled water. This type of business went really well in
nearby places where they had to hire employees to keep up with the demand.
These employees were tasked to clean and fill up the water container, and some
are allocated in delivering the water.

In addition to that, despite how successful the business is, the business is
still struggling in allocating the people because of the different strengths and
weaknesses of each employee which affect the quality of the service which may
lead to some negative feedback from customers. This kind of issue may also
affect the productivity of each worker since some of them might be ineffective in
certain areas. To also consider the situation of Navotas City, customers do not
usually come from the same streets, and each place differs from the other like
large vehicles may not be used for certain streets, and/or smaller vehicles are the
best choice for streets with very narrow roads and to populated streets.

d. Products and Services

The business provides products and services that are related in their
primary activity which is about refilling water containers and delivering it. The

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 enterprise also sells different types of water containers in which the customer may
opt to have it delivered or purchased over the counter. Customers may have their
empty water containers to be picked up from their respective homes as long as the
enterprise would find it convenient or feasible.

2. Statement of the Problem

a. Problem Description

The enterprise is incurring around 2,500 to 3,000 PHP each month for the
cost and maintenance of their vehicles, and the owner believes that their monthly
expenses could still be minimized if the vehicles would be used in certain
conditions for optimum solutions. They also take into account that the expense is
proportional to the number of water containers to be delivered to customers, and
also the distance of their operation to barangays. They average the expenses for
barangays which differ from one to another. Additionally, regardless if the cost of
repair and maintenance for each month is spent or not, the entity still records it
and accumulates the cash in repair and maintenance fund for future operational
expenses related to their vehicles, since the business has an old vehicle wherein
the company has the option to have it repaired or purchase a new one for its
replacement.

b. Acquired Data (Explanation)

Moreover, because of the multiple opportunities and vast information

available in the enterprise, the researchers decided to limit the scope of their study
in rendering water services and consider each employee to have the same
strengths with other employees. All other aspects are equal such as in
compensation and benefits. Nevertheless, these are the constraints which are
disclosed by the enterprise:

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 i. Brand new vehicle that is ideal for ordinary to large roads which is capable
of 60 containers maximum every day. Its repair and maintenance cost
cheapest;
ii. The existing decent-size vehicle is capable of bringing 40 containers a day
which can be used in roads such as narrow streets, ordinary and large
roads. Its repair and maintenance costs are moderate of a brand new and
old vehicle;
iii. A small and old vehicle which could bring a maximum of 30 containers
for the whole day that are ideal in narrow streets. Its repair and
maintenance is the most costly among the three.
iv. Water deliveries have a fixed demand for Monday and Thursday, Tuesday
and Friday, and Wednesday and Saturday because of contracts of the
enterprise with their customers. Therefore, 3 identical demands every
week.
v. The owner of the enterprise requires certain vehicles to not be used in
certain barangays because part of the reasons is the above-mentioned
constraints. The enterprise’s old vehicle is not allowed to be used in
Daanghari and San Jose. New vehicle is not used in Sipac - Almacen and
Tangos South. For the decent vehicle which cannot be in Tangos South.
vi. Minimize the cost as much as possible via assigning the transportation
problem.
vii. The owner would like to see the weekly expenses of operation.
viii. The entity has an option to use a motor-powered vehicle which may cost
them more compared to the other 3, but it can be used everywhere.
Moreover, because of the insignificant distance of destinations, the cost
per unit remains constant to 2 PHP.

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 Figure 2. Illustration of Repair and Maintenance

With regard to the constraints or the acquired data, Figure 2 illustrates how
much it will cost for the business to ship a single water container to the
destination. The “S” represents the source and the “D” signifies the destination.
The numbers written beside or above the arrows are the cost per unit if ever a
water container gets shipped. Aside from that, not all sources can ship to any
destinations and can only ship to particular places.

And with the above mentioned constraints, these are the issues that are
always present in operations which can be minimized. Also, the entity wishes to
maximize its net income through cost-effective strategy using Excel
Programming. Therefore, the company desires to reach the best way to minimize
their costs, and at the same time, they wish to provide the services equal to the
demand of their customers everyday.

The entity also delivers an average of 116 water containers each day to
contracted establishments, except Sunday because it is a rest day. Although they
manage to deliver 116 water containers each day, the cost of repair and

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maintenance differs depending on where they deliver these water containers.
Nevertheless, estimation of number of water containers sales are provided by the
business, and these are:

i. For every Monday and Thursday, the entity delivers 113 water containers
wherein 30% is to San Roque, 17.7% in Daanghari, 19.47% for Tangos
north, 15.23% for San Jose, 3.54% to Sipac, and 13.27% to Tangos South.
ii. For Tuesdays and Fridays, they have 112 water containers delivered.
25.89% is delivered to San Roque, 27.68% to Daanghari, 16.96% to
Tangos North, 8.03% to San Jose, 21.42% to Tangos South and none for
Sipac most of the time.
iii. For Wednesdays and Saturdays, they deliver 123 water containers. 32.52%
of those get delivered to San Roque, 28.45% to Daanghari, 12.2% to
Tangos North, 5.69% to San Jose, 3.25% to Sipac, and 17.89% to Tangos
South.

Navotas City is located at the northern part of the National Capital Region.
The said city is composed of two districts wherein the company is located in the
District 2 of Navotas City, particularly in Barangay San Roque. Its customers are
usually from the same district as Select Water Station. Furthermore, few
customers are nearby the said district and barangay. Furthermore, these are the
barangays where their customers are situated, thus included in the locale of the
paper:

i. San Roque
ii. Tangos North
iii. San Jose
iv. Daanghari
v. Sipac-Almacen
vi. Tangos South

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 Figure 3. Research Locale

As has been mentioned, Select Water Refilling Station is located in San

Roque. Tangos North and San Roque are hybrid barangays wherein there are
roads that are narrow, decent, and large. Both, San Jose and Daanghari, streets
have decent to large roads. Sipac - Almacen is the farthest among the barangays
from the point of San Roque, but is mixed with narrow streets and decent roads.
Lastly, Tangos South only has narrow roads.

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3. Alternative Courses of Action

a. Development of Model

i. Network Optimization Model

To better understand how Select Water Refilling Station can

optimize their delivery services, the model to be used will be the Network
Optimization for the transportation problem. This model was used on three
occasions to provide the group with the optimal solutions to the business’
problem.

Moreover, a network optimization model mainly focuses on the

use of a spreadsheet in order to formulate and solve the concern of the
business with regards to operating their network – a system consisting of
components that also have direct connections between other components
of the network, ideally and advantageously. In addition to this, the
networks are composed to depict flows from points of origin and as well
as routes to points of destinations. In the case of the transportation
problem of the company, a network optimization model can be developed
since it involves shipping water containers in which its purpose is to
establish the procedure that reduces the total cost of the shipments the
most.

That being said, the company needed to figure out which vehicles
and which destinations would be ideal to use when meeting the demand of
the destinations, all while minimizing the cost of repair and maintenance
for their delivery fleet. Additionally, contracts with their customers have
allowed Select Water Refilling Station to allocate specific days to fulfill a
weekly fixed demand.

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Figure 4: Results of The Network Optimization Spreadsheet Model

As presented above, Figure 4 shows the developed network

optimization spreadsheet model used to determine how many water
containers should be shipped and transported from Barangay San Roque to
each of the other barangays in Navotas City including San Roque itself
with the use of a Motor-vehicle. Within the spreadsheet model, the
formula to get the Net Flow value of each junction point in the network is
to offset the SUMIF formula of the “To” range of cells from the SUMIF
formula of the “From” range of cells (outflow minus inflow), where the
same formula will be used to solve and get the Net Flow of the other
junction points, but the only difference is that the criteria inputted in the
formula should be the corresponding point of which Net Flow is being
solved. Apart from this, the next formula inputted is for the Total Cost,
which is the SUMPRODUCT of the “Ship” range of cells and the “Unit
Cost” range of cells.

On this note, the given data of the Unit Cost for each shipment,
along with the Supply/Demand specified at each of the 6 barangays: San
Roque, Tangos North, Daanghari, Tangos South, San Jose, Sipac-Almacen
were also revealed. As shown in Figure 4, the Unit Cost to any of the
barangays cost P2 per shipment. Besides this, the Supply value of the
Motor-vehicle, which is picked up from the company’s location in San
Roque, reaches 113 shipments a day. This amount corresponds to the fixed
Demand value at each of the 6 barangays, where the demand for water

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 container deliveries reaches 34 shipments at San Roque; 20 shipments at
Tangos North; 22 shipments at Daanghari; 18 shipments at Tangos South;
4 shipments at San Jose; and 15 shipments at Sipac-Almacen.

Figure 5: Solver Parameters of Network Optimization Spreadsheet Model

Furthermore, Figure 5 reveals the following solver parameters that

the researchers have worked with in order to identify the shipment load
allocation to each destination, in which will ideally amount to the most
minimized cost that will be incurred for the shipments themselves. At first,
the Set Objective is the Total Cost, which should be set to minimum, since
the researchers are determining the most optimal value in terms of
shipment allocations to reduce the total cost of the water container
shipments of Select Water Refilling Station within Navotas City.
Following this, the changing variable cells will be the “Ship” range of
cells since these are related directly to the Set Objective, which is the Total

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 Cost, in order to have an effect as the ideal shipping quantities through the
distribution network will also be shown in these cells. Lastly, the only set
of constraints is that the “Net Flow” range of cells are equal to the
“Supply/Demand” range of cells, where it will be required that the Net
Flow generated at each junction point (node) must be equal to the
specified amount of the Supply/Demand at the same.

ii. Assignment Model

For the second problem the researchers will know how many units
must be shipped from each vehicle to each of the 6 warehouses located in
Navotas City. In order to solve the problem, the researchers will be using
the transportation problem as the basis for determining how many units
must be transported to the warehouses.

Figure 6. Results of the Assignment Spreadsheet Model for Monday and Thursday Shipment
Quantity

The spreadsheet model in Figure 5 shows the solved transportation

problem of the company with regards to its delivery and transportation.
The company had problems with only having 3 sources of trucks as
deliveries. They need to maximize it per distribution of warehouses. The

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 spreadsheet model utilized Liner Optimization For Minimization with
regards to its total cost for transportation.

The data gathered was used to determine the most efficient

transportation route the company can implement in order to maximize the
use of delivery trucks and prevent the company from overspending from
transportation costs only. The model shows that the new vehicle is the
only one who will deliver to San Roque; existing decent-size vehicle and
new vehicle will be the ones who will deliver to Daanghari; Existing
decent-size vehicle vehicle will be the one who will deliver to Tangos
North; while the new vehicle will deliver to San Jose; the existing
decent-size vehicle will deliver to Sipac and lastly the small and old
vehicle will deliver to Tangos south. With the gathered data, it is shown
that the trucks being used were able to maximize well and at the same time
satisfy the needs of supply from each warehouse with a minimized total
cost of P78.10.

Figure 7. Results of The Assignment Spreadsheet Model for Tuesday and Friday Shipment
Quantity

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 Since there are fixed demands, the model was again employed to
address the demand per barangay on Tuesdays and Fridays, which can be
seen in Figure 6. Unlike The prior model, the demand for San Roque
shifted from 34 shipments to 29 shipments, demand at Daanghari saw a
rise from 20 shipments to 31 shipments, and demand at Tangos North
decreased from 22 shipments to 19 shipments. San Jose also decreased its
demand on Tuesdays and Fridays as the barangay only requires 7
shipments. Sipac-Almacen on the other hand does not require any
shipments on the mentioned days, while Tangos South requires 24
shipments.

Figure 8. Results of The Assignment Spreadsheet Model for Wednesday and Saturday Shipment
Quantity

The last application of the model was for the scheduled deliveries
every Wednesday and Saturday as presented in Figure 7. The changes in
demand are as follows: San Roque increased to 40 shipments, Daanghari
was raised to 35 shipments, while Tangos North had a reduced shipment

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 quantity of 15 shipments, San Jose’s shipments remained at 7 on
Wednesdays and Saturdays, while Sipac-Almacen required 4 shipments.
Also decreased on these days was the demand of Tangos South from 24
orders on Tuesdays and Fridays to 22 orders every Wednesday and
Saturday.

With the constraints mentioned previously, the shipment quantities

being delivered would require different vehicles to transport the
company’s products depending on the destination passed and capacity of
vehicles.

Figure 9. Solver Parameters of Assignment Spreadsheet Model

Figure 9 shows how the researchers solve the problem using the
Assignment Model. These are the following solver parameters that the
researchers have come up with in order to provide the optimal solutions
for the business’ problem. The main objective of the Assignment model is
to minimize cost as much as possible, therefore the “min” is filled in. With
that being said, the Set Objective will be the Total Cost as this is where the

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 Solver will try to achieve the most minimal cost. Following this, the
changing variable cells will be the “ShipmentMTH” for Figure 6. The
said range of cells are directly attributable to the Total Cost which is also
known as the Set Objective. Thereafter, analyzing the constraints, some of
them should be equal to “0” because the entity prohibits the use of certain
vehicles in particular places. The “0” value can be traced in Figure 6 with
Figure 8. Moreover, vehicles have maximum capacity that they can carry
for the whole day, but the business has to deliver all the fixed demand to
their respective destinations. Thus, they are part of constraints. Thereafter,
the main objective for the problem is to minimize cost as much as
possible, therefore the “min” is filled in.

b. Results Analysis

With the given data, the developed network optimization model was able
to reveal that the resulting total optimized (minimized) cost for the shipment of
water containers to 6 of the other barangays in Navotas City amounted to P226
per day. Coupled with this, the quantities of shipment loads to each barangay were
also determined, where 34 water containers were delivered to San Roque; 20
water containers to Tangos North; 22 water containers to Daanghari; 18 water
containers to Tangos South; 4 water containers to San Jose; and lastly 15
containers to Sipac-Almacen. Considering the Supply/Demand values fixed in
each barangay of the given model, the shipment loads were able to satisfy and
meet the said values; but regardless of this, the resulting total cost within the
network optimization model was comparatively higher than the total cost within
the assignment model.

The optimization of the deliveries for every Monday and Thursday

resulted in a total cost of P78.10. For the model that optimized the cost of repair
and maintenance for deliveries on Tuesdays and Fridays totalled P81.55, which

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 ranks second highest amongst the three models. Lastly, the highest costing days
for delivery are Wednesdays and Saturdays which saw a total cost of P87.90.

Given the need to optimize the vehicles and delivery routes of the
company according to the changing daily demand, most if not all spreadsheet
models varied in the type of vehicle and destination. This can be seen in how the
shipment quantity per vehicle shifts in the models.

With the results of the optimization model, it can be derived that the most
expensive and inefficient vehicles in terms of maintenance and repair per delivery
would be the small and old vehicles. Alternatively, the models also suggest that
operating these vehicles in the locations of Tangos South and Sipac-Almacen
would be the most costly when meeting customer demands. In general, it is most
effective to use the company’s existing decent-sized vehicles or new vehicles
when delivering to areas where these vehicles are permitted. The most economical
would be the new vehicles as it costs significantly less to maintain, although the
savings would be offset by the purchase of these vehicles.

c. Implications of Models Used

Both models have its own pros and cons as the two of them have different
issues within the company. When solving either problem 1 or problem 2, both
models are applicable. However the solutions used for this problem are different
from each other. It shows what solution is more beneficial to the company or what
solution solves primarily the problem.

For Network Optimization, the researchers cannot consider all of the

concerns mentioned by the owners of business because of the complexity of the
problem disclosed. Yet, the researchers believe that it still does the job in
providing the water containers to respective establishments and customers by

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 using the motor vehicle in which the business has the option to use, but again, it
does not answer every problem provided by the entity.

Regarding the Assignment Model, the researchers manage to consider all

constraints mentioned by the business, from prohibiting certain vehicles in certain
places to assigning cost per unit with the main objective of minimizing the total
cost of repair and maintenance. However, it cannot be disregarded that the
assignment model can only be utilized if the supplies and demands are fixed or
constant. The demands must come from the source of supplies, while the supplies
must be distributed to the demands. Also, its cost assumption is directly
proportional to the number of units distributed.

4. Optimal Solution

Optimal solution, according to its definition, refers to the best solution for a
company to solve a problem or achieve what it’s aiming for. In addition, an optimal
solution uses the resources needed in the most efficient and effective way possible. With
that being said, it produces the greatest possible return for the company. Furthermore,
there are multiple types of linear programming problems. The first one is the
manufacturing problem, which is concerned about maximizing the production rate or net
profits of a company’s manufactured products. The second one is diet problems that
includes maximizing the intake of specific foods high in specific nutrients to aid in the
implementation of a specific diet plan. The purpose of this problem is to find a set of food
that will meet a set of daily nutritional requirements for the least amount of money.

The other two are the assignment problem and the transportation problem. Both
can be confused with each other due to their similarities being that they both have
supplies and demands, and they both allocate for the least possible cost. However, it is
important to note the main purpose of either problem. Assignment problem deals with
allocating various jobs to various people in the organization, and it is required to be done

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in such a way that the overall processing time is less, overall efficiency is high and
overall productivity is high. A transportation problem, on the other hand, is concerned
with transportation methods or selecting routes in a product distribution network among
the manufacturing plant and distribution warehouse, or the supply and demand, situated
in different regions or local destinations. All in all, the clear distinction between the
assignment and transportation problem is that in the assignment problem, the
management of the company aims at assigning jobs to various people. In the
transportation method, the management is searching for a distribution route, in order to
figure out the minimization of cost and maximization of profit.

For the group’s problem, the optimal solution would be the assignment model,
since the assignment model focused more on the constraints being addressed in the
problem instead of the network optimization which is the transportation problem that did
not really consider the factors that were hoped for by the business. The assignment model
is a special case of transportation problems where each supply point should be assigned
to a demand point and each demand should be met that can further include more
constraints which the entity finds to be definitely necessary. The group realized that the
best model applicable for the problem is this model as it assumes that any damage from
any route can result in damages and therefore negative results for the company, and so it
is used to analyze a system to find the most efficient route for resource allocation. Upon
using the assignment model, the group used data elements such as the supply, destination,
as well as the unit cost of shipping. The problem also fits the criteria of the said model,
by assigning the three different vehicles used by Select Water Refilling Station in order
to transfer the demand to various destinations along Navotas.

To reiterate, comparing the results from Network Optimization and Assignment

model, key requirements provided by the entity are all addressed by the Assignment
model, wherein the Network Optimization still able to accomplish the main concern of
the problem which is about transporting it to respective destinations but it does not totally
answer the problems given by the establishment. Thus, the two have distinctive results
from one to another, where both have significant differences in minimizing the total cost

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 of repair and maintenance, and in fact, the Network Optimization Model results provided
more cost for the business.

5. Conclusion and Recommendations

a. Conclusion

Select Water Station is having a lot of problems in terms of assigning and

minimizing the total cost of the business. For them to have a better financial
condition and performance, it is pointed out that it would be best for them to
explore the opportunities embedded in this particular issue, cost of repair and
maintenance. Since the allocation of funds to the cost of repair and maintenance is
proportional to the total number of units shipped and what type of vehicle is used,
the researchers utilized Excel programming to assist the business in shipping the
water containers to establishments efficiently and effectively. With the help of this
particular programming, the business can implement optimum strategic
management to accurately allot funds to the cost of repair and maintenance of the
vehicles, and at the same time, to maximize the profit.

With the given information by the entity, the researchers are able to come
up with certain objectives and models that are applicable to the business which
are the Assignment Model and Network Optimization. However, only the
Assignment Model is the best solution for the problem given by the entity because
of the constraints which are only applicable to the Assignment Model. With that
being said, some requirements or constraints cannot be integrated into Network
Optimization. Since the given data is about cost, then therefore the objective
would be to minimize cost as much as possible. Afterwards, assigning certain
constraints to some vehicles are incorporated into the Excel programming,
particularly the solver. The researchers did the solver three times because of the
request of the entity to perceive which vehicle incurs more expenses than the

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 other in a week. In addition to that, the entity has 3 different demands in a week.
These demands are constant as these are fixed contracts with the customers.

Looking at the result, the Mondays and Thursday, under Figure 6, incurs
expenses the lowest compared to the other two, Tuesday and Fridays in Figure 7,
and Wednesdays and Saturdays in Figure 8. Though, the difference of the three is
not as significant as it looks, it may be material if all costs are accumulated for a
month or a year which can be used to replace the old vehicle instead of repairing
it. Nevertheless, the business can save up from 500 PHP to 1,000 PHP each
month by assigning these to their respective results of the assignment model.

b. Recommendations

Based on the results of the Assignment Model, the company has an old
vehicle in which they still keep because of its capability to go through very
narrow roads. The business can actually invest in a better vehicle that can provide
more productivity to their employees by having a vehicle with larger capacity.
This can also add up value to customers as they can receive their water containers
sooner than expected. In fact, this will help them to attract more loyal customers,
and eventually come up with another assignment model even for non-fixed
number of demands as long as the consistency of demand will not affect the
assignment model materially.

Moreover, the business may choose to invest in a universal vehicle that

can be used in different places that can greatly help the owners of business to have
better economic decision making. Even if there would be any emergency situation
where a vehicle cannot suddenly be used, they would still have an option to use a
universal vehicle to guarantee uninterrupted service to customers and secure their
satisfaction.

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