For mathWHIZ only

Leung/MS3053

MS 3053

Comprehensive Business Case Study: Agrifarm Distribution Network

Agrifarm Company is in the business of buying and selling grain. The main aspect of the company’s business is arranging for the purchased grain to be shipped to customers. The profitability of the business has declined in the recent years and the management believes that if it can keep shipping costs low, profitability will improve.

The company recently purchased from its Midwestern contracted farms (supply chain partners) 3 rail cars of grain at Muncie, 6 rail cars at Brazil, and 5 rail cars at Xenia. At the same time, four long term customers at the East Coast placed orders for processed grains. Their specific locations and order sizes are as follow:

Location of customer Number of rail carloads of grain ordered Macon, GA (#6) 3

Greenwood, SC (#7) 4 Concord, SC (#8) 3 Chatham, NC (#9) 6

All shipments must be routed through a grain processing center at either Louisville or Cincinnati before sending to customer destinations. Shown below are the shipping costs per rail carload of grain from the origins to Louisville and Cincinnati and the costs to ship from the processing center to the final customer destinations.

To From Louisville (#4) Cincinnati (#5)

Muncie (#1) $8000 $6000 Brazil (#2) $3000 $8000 Xenia (#3) $9000 $3000

To From Macon (#6) Greenwood (#7) Concord (#8) Chatham (#9)

Louisville (#4) $44000 $34000 $34000 $32000 Cincinnati (#5) $57000 $35000 $28000 $24000

Leung/MS3053

You are asked to conduct an analysis and make recommendations that will help Agrifarm increase profitability by optimizing the performance of its agricultural distribution network. In summary, you need to develop a logistic integer programming (IP) model, perform appropriate analysis using Excel spreadsheet and solver, recommend a distribution system to be implemented by the Agrifarm, and finally, present a formal business communication report.

For full credit, your business analytical report must contain the following items:

• A cover page listing the names of all team member(s). No names can be added after the submission.

• An executive summary outlining the logistics problem, available business actions to solve the problem as well as the final decisions and recommendations based on your analysis.

• A network diagram showing the origins and their capacities, destinations and their demands, processing center hubs, all possible logistic connections (bounds) between these groups and their respective costs. The diagram must be fully labeled.

• A logistic integer program (IP) which is used to optimize this distribution system. Label or write remarks of the objective function and the various constraints if you like.

• A print out of your cell formulations programmed to the Excel spreadsheet. You can use the “Display Formula” feature in Excel to display all cell formulations before printing. Be sure you type your name(s) or team ID on the spreadsheet before printing it out.

• A print out of the optimal solution (i.e., distribution / routing plan) obtained by Excel. Be sure you type your name(s) or team ID on the spreadsheet before printing it out.

• A brief narrative discussion explaining the logistics model, how you perform the analysis (i.e., methodology) and the final decisions and recommendations. Justifications to your recommendations are also expected.