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Aggregate Planning (Boilin' Oil)
Aggregate Planning - Boilin Oil
Agenda:
- Problem outline
- Creating the model
- Solver
Problem Outline
The worksheet titled "template" contains some basic headings to help get us started model for the Boilin Oil Case (Pg. 101 in course pack).
- There are two different modes of production, with the following characteristics:
Inputs Outputs Mode 1 1 Crude A, 3 Crude B 2.5 Motor Gasoline, 1 Heating Oil Mode 2 2 Crude A, 1 Crude B 0.7 Motor Gasoline, 2 Heating Oil
The goal is to determine how many production runs to have for each mode based on following information:
- You can only obtain up to 100,000 bbls of Crude A at $18 per bbl
- You can only obtain up to 150,000 bbls of Crude B at $22 per bbl
- You must sell at least 100,000 bbls of motor gasoline at $30 per bbl
- You must sell at least 75,000 bbls of heating oil at $20 per bbl
Creating the Model
Input the required data into the model.
Input formulas that will calculate the following, based on the number of productio
- Total gasoline and heating oil produced in each mode - Multiply the number of production runs by the output of each product per run. Repeat this for mode 2
- Calculate the total bbls produced for both gasoline and heating oil. - The sum of t gasoline produced in each mode. Repeat for the calculation of heating oil produced.
Calculate the total bbls required for both Crude A and Crude B. - The sum of the Cru required in each mode. Repeat for the calculation of Crude B required.
- Calculate total revenue and total cost based on the information provided in the P Outline section as well as the calculations made in step 3 above. - Total revenue fo = total gas produced x per unit price Repeat this process for heating oil, and calcula costs for Crude A and Crude B in a similar fashion.
- Calculate Net Margin by adding the revenues and subtracting the costs.
Solver Time!
The objective function in this example is Net Margin, which we want to maximize. O decision variables are the number of production runs in each mode. We must meet t constraints that were listed in Problem Outline.
You should find that the optimal solution is to have 45,000 production runs in Mode 15,000 production runs in Mode 2.
Check out the extra practice lab (Mountain Wear) that was also posted this This should give you some extra practice with model building before Quiz 2 9).
