Operations Research Project

A report presented in fulfillment of the term project in Operations Research to: Dr. Sambit Mukherjee Associate Professor-Operations Management and Decision Sciences, XIMB

Presented by: Albert Aristotle Nanda (u11122) Amit Kumar (u111123) Ankit Anil Saxena (u111127) Raunak Sachdev (u111157) Pratibha Chaudhry (u111159) Rohit Basuri (u111160)

Acknowledgement:
We would like to acknowledge the constant motivation and support given to us by Dr. Sambit Mukherjee, which has driven us to come out with this report. We would like to thank the other teams also who provided great support and help at various points during the project.

Table of Contents
Problem Statement........................................................................................................................................4 Decision Variables Defined..........................................................................................................................5 Objective Function........................................................................................................................................6 Results Obtained using Lindo......................................................................................................................7 Conclusion...................................................................................................................................................10

PROBLEM STATEMENT:
The Pandora Sawmill Companys CEO asks to assess the next months schedule of log hauling to his three sawmills. He has to make sure that there is a steady, adequate flow of logs to all sawmills to capitalize on the growing lumber market on the planet. His secondary target is to minimize the cost of transportation. The harvesting group is planning to move to three new sites for logging. The distance from all the sites to all the sawmill is indicated in Table 1. The average hauling cost is $3 per mile for loaded as well as the empty trucks (hence costs have to be rationalized on the to and fro distance). The logging supervisor gives the estimates of the number of truckloads of logs being dispatched from each harvest site on a daily basis. There is a variation in the number of truckloads because of terrain and different cutting patterns for each site. Finally, the sawmill managers have the estimated truckloads of logs their mills will be needing each day for the next month. All these estimates are given in Table 1. Logging Site Mill A Mill B Mill C Maximum truckloads per day per logging site 22 32 47

1 2 3 Mill Demand(Truckloads/day)

10 12 32 32

17 19 28 37

52 22 17 32

The next step is to determine the cost to haul from each site to each mill: Logging Site Mill A Mill B Mill C 1 2 3 $ 60* $72 $192 $102 $114 $168 $ 312 $132 $102

(10*2) * $3 = $60

Decision Variables Defined:

The Company manufactures 3 products taking limestone, electricity, water, fuel and labor as raw materials. Thus the decision variables are defined as follows: X11 - Cost of hauling from logging site 1 to mill A. X12 - Cost of hauling from logging site 1 to mill B. X13 - Cost of hauling from logging site 1 to mill C. X21 - Cost of hauling from logging site 2 to mill A. X22 - Cost of hauling from logging site 2 to mill B. X23 - Cost of hauling from logging site 2 to mill C. X31 - Cost of hauling from logging site 3 to mill A.
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X32 - Cost of hauling from logging site 3 to mill B. X33 - Cost of hauling from logging site 3 to mill C.

Objective Function:
To minimize hauling costs and meet each of the saw mills daily demand while not exceeding the maximum number of truckloads from each site. MIN 60 X11 + 72 X21 + 192X31 + 102X21 + 114X22 + 168X23 + 312X31 + 132X32 + 102X33 Subject to: X11 + X21 + X31 >= 32 X12 + X22 + X32 >= 37 X13 + X23 + X33 >= 32 X11 + X12 + X13 <= 22 X21 + X22 + X23 <= 32 X31 + X32 + X33 <= 47 Truckloads to mill A Truckloads to mill B Truckloads to mill C Truckloads from site 1 Truckloads from site 2 Truckloads from site 3

X11 , X12 , X13 , X21 , X22 , X23 , X31 , X32 , X33 >= 0 Therefore, Applying these equations as parameters in Lingo software we obtained the optimal solution. The formulation of the problem and the output obtained are attached. The output obtained is as follows: The values of the different decision variables so as to minimize the daily haul cost for the company are: X11=22, X12=0, X13=0 X21=10, X22=22, X23=0
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X31=0, X32=15, X33=32 And the optimal solution of the objective function (i.e minimum daily haul cost) =$10332

Result obtained using Lingo:

Global optimal solution found. Objective value: Infeasibilities: Total solver iterations: Model Class: Total variables: Nonlinear variables: Integer variables: Total constraints: Nonlinear constraints: Total nonzeros: Nonlinear nonzeros: 9 0 0 16 0 36 0 Variable X11 X21 X31 X12 X22 X32 X13 X23 X33 Row 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

10332.00 0.000000 6 LP

Value 22.00000 10.00000 0.000000 0.000000 22.00000 15.00000 0.000000 0.000000 32.00000 Slack or Surplus 10332.00 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 22.00000 0.000000 0.000000 10.00000 22.00000 0.000000 0.000000 15.00000 32.00000

Reduced Cost 0.000000 0.000000 66.00000 0.000000 0.000000 0.000000 276.0000 84.00000 0.000000 Dual Price -1.000000 -126.0000 -168.0000 -102.0000 66.00000 54.00000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000

Conclusion:
Sl.no. 1 2 3 4 5 6 7 8 9 variable X11(Cost mill A) X12(Cost mill B) X13(Cost mill C) X21(Cost mill A) X22(Cost mill B) X23(Cost mill C) X31(Cost mill A) X32(Cost mill B) X33(Cost mill C) value of hauling from logging site 1 to 22 of hauling from logging site 1 to 10 of hauling from logging site 1 to 0 of hauling from logging site 2 to 0 of hauling from logging site 2 to 22 of hauling from logging site 2 to 15 of hauling from logging site 3 to 0 of hauling from logging site 3 to 0 of hauling from logging site 3 to 32 0 84 276 0 0 0 66 0 0 Cost saving

Based on the above observations we may conclude/infer the following :

1) We need to concentrate on sending Logs from logging site to the saw mill based on the value. The

higher the value it needs to be considered first. We need to consider routes X33, X22 and X11, X23 and X12 in that order while shipping Logs. 2) We need to avoid routes where the cost saving is the highest. E.g.- X31, X32 and X13 in this case. 3) As may be observed from the optimal solution that we have zero value of logs transferred from logging site to the saw mill whenever we have significant cost savings associated.

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