Process FlexibilityProblem description
Considerasettingrelated totheexampleonprocess flexibility,butnowforacompanyhaving sixplants (P1,P2,…, P6),andeighttypesofproductswithrespectivedemands (D1,D2,…,D8).Assumethatthe demands are independent. The plant capacities and demand statistics (mean and standard deviation, in units per month) are described in the followingtables:
Each product demand follows a normal distribution (truncated at zero to avoid negative values).
The company is deciding the product allocation plan: which product should be produced at each plant? Knowing that the full flexible scheme (where each plant produces all products) implies a huge investment,thecompany ishiringyouasconsultantsothatyoucanprovide analternativeconfiguration that could still achieve a monthly performance, measuredin:
1) expected volume of sales,and
close to the performance of the full flexible scheme, but with fewer arcs (where arcs represent the allocation of products to plants). Of course, the smaller the number of arcs, the better (without compromising much the performance quality).
To this end, propose a product allocation plan and simulate its performance. In the main document of your submission, describe the proposed allocation by drawing a graph with nodes and arcs (e.g., see slide 53 for the long chain), and explain the rationale behind your proposal. Report the performance measures obtained (including 95% CI for the expected volume of sales) for both your proposal and the full flexible configuration, and summarize your findings. Attach the Excel formulations in a separate file as an appendix to the main document.
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