Operations Research Project
Operations Research Project. (Industrial Engineering)
You have recently been hired as an intern by GCM, a prestigious consulting firm. Congratulations! The company now assigned you to work for Steelco Inc., which manufactures I, W, U, H, and L beams. You are required to help Steelco develop an optimized work schedule for the plant over the next 12 months. Last year, under a similar demand and without any optimization tools, the company cleared around $40,000,000 in profits from these five products.
To manufacture beams, Steelco purchases recycled steel for $400/ton and new steel for $600/ton. Due to the quality of the steel, only 80% of the recycled steel can be used to produce the products. Furthermore, at most 6,000 tons of recycled steel can be purchased each month and only 5,000 tons of new steel can be purchased at any month.
Each ton of I, W, U, H, and L beams that is produced is sold by the price described in Table 1. Due to quality requirements, at least 40%, 20%, 60%, 10%, and 25% of I, W, U, H, and L beams, respectively, must be manufactured from new steel.
Each ton of product held over in inventory from one month to the next month costs the company $40/ton. If demand at each month is not met, then there is a penalty cost of $100/ton for I beams, $300/ton for W beams, $250/tons for U beams, $600/ton for H beams, and $1000/ton for L beams. In such a case, the item is placed on back order and the order must be shipped to the customer at some future time. Demand of each product over the next 12 months is shown in Table 2. You must assume that you have nothing in inventory or items that are back ordered, and that you must end at the end of the 12th month with the same condition.
As a standard policy of GCM, you need to prepare a report to Steelco Inc. Standard format, margins, and appropriate grammar are expected. The format of the report is a one-page executive summary and a technical report (no page limit).
The executive summary is intended for the CEO of Steelco Inc. and is designed to convince him/her that your solution is better than the status quo. That is, the executive summary should include all information you feel is pertinent to your answer and should be written so that an educated (not necessarily technical) person can read, understand, and be convinced to follow your advice. The executive summary should contain proper statement of the problem, main details of the analysis, results, and recommendation(s).
The technical report is intended to someone from either GCM or Steelco who has expertise in industrial engineering and operations research. This person will read the technical report to validate your methodologies and verify the correctness of your decisions. You may want to include the reasons and justification of your decisions. The technical report should include an introduction, description or statement of the problem, assumptions, mathematical model, computer implementation, results, analysis and interpretation of results, recommendation(s), and conclusion. These documents must be well-written and formatted professionally.
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