Supply Chain Networking

Graded Assignment 2:  Colombian Premium Coffee

A traditional Colombian Coffee manufacturer called CPC has hired your services as a supply chain consultor to analyze the distribution of its brand-new premium product, named Coffee Indeed ®. This product is 1 package containing 1-kilogram of ground and roasted Arabica coffee to be commercialized and distributed in three cities: Bogotá (DC 1), Medellín (DC 2), and Cali (DC 3). Due to governmental tax benefits, the company roasts and packs the product in two factories: Barranquilla (Plant 1) and Santander (Plant 2). CPC hires carriers to transport the products from the plants to each of the three distribution centers (DCs). Each DC has a different demand, and each plant has a different production capacity.

Demand:

• Bogotá: 345,000 units per week
• Medellín: 263,000 units per week
• Cali: 172,000 units per week

Plant Capacities:

• Barranquilla: 610,000 units per week
• Santander: 350,000 units per week

Part 0 (ungraded)

0 points possible (ungraded)

This question works as a checkpoint to support you in building your model.

Have in mind that this Graded Assignment does not constraint the number of pallets to be an integer; therefore, you can use the number of pallets with decimal places.

Under the same assumption, the price per pallet is proportional to the number of units it’s carrying, so you can analyze the transportation cost in the same units that Demand and Capacity are expressed. We know this is not always the case in real life but think of this as a simplified model.

Please, make your model and set all decision variables into “1”.

1. A) What is the capacity constraint of Barranquilla (answer in number of units)

1. B) What is the total number of units of products transported from Barranquilla (Plant 1) to all DCs?
2. C) What is the total number of units of product transported from all plants to Medellín (DC 2)?  incorrect
3. D) What is the total demand of Medellín (DC 2) in units?  correct

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Part 1

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Leonard Long, the network design manager, asked you to create a network design model to optimize the transportation flow of Coffee Indeed ® from the plants to the DCs.

CPC organizes the units of product in pallets, each pallet holds 1,000 units (one thousand units). The price table of the carrier to move 1 pallet from each plant to each DC ($/pallet) is shown below:

What is the minimum total weekly cost for distributing the products from the plants to the three DCs?

Round your answer to the nearest integer with no commas or currency signs. For example, if your answer is $168,987.25 then you would enter 168987.

How many plants are used?

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Part 2

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Also read: SUPPLY CHAIN MANAGEMENT ASSESSMENT

The marketing team realizes that a 1-kilogram package might not attend all types of demand for premium coffee and decide to test a second product. This other product is 1 package containing 500 grams of the ground and roasted Arabica coffee to be commercialized in the same cities.

Both plants can produce both products: the 1-kilogram Coffee Indeed ® (product 1) and the 500-grams Coffee Indeed ® (product 2). Capacity in units applies to any product unit, independently of its weight or packaging. This new product 2 is transported in the same vehicles of product 1 using the same transportation costs; however, 1 pallet can hold 2000 units (two thousand) of product 2.

As the team foresees light cannibalization of the market share, the planning team forecasted a new demand for both products.

What is the minimum weekly cost for moving both products from the plants to the three DCs?

Round your answer to the nearest integer with no commas or currency signs. For example, if your answer is $168,987.25 then you would enter 168987.  incorrect

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Part 3

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You are informed that due to a severe fire in plant 2, some packaging machinery was lost. To keep both plants producing both types of products, the maintenance manager Ms. Dawn Wright has redistributed the remaining machinery in both plants. This move enabled both plants with the flexibility of producing both types of products; however, it restricted the production capacities as described below:

Demand:

• Barranquilla (Plant 1) cannot produce more than 300,000 500-grams Coffee Indeed ® (product 2) per week.
• Santander (Plant 2) cannot produce more than 250,000 1-kilogram Coffee Indeed ® (product 1) per week.

Create a linear program that optimizes the flow of each product from plants to DCs while adhering to these new capacity constraints.

Please, consider at all times that total capacities of both plants haven’t changed as described in the problem statement.

Calculate the minimum weekly cost for satisfying the demand of the three DCs. How much more expensive is this solution than the one in Part 2?

Round your answer to the nearest integer with no commas or currency signs. For example, if your answer is $168,987.25 then you would enter 168987.

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Part 4

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The Financial team believes that you haven’t included the fixed cost of running a production line at a plant in your model. The controller tells you that CPC spends $12,000 for each type of product plant 1 produces, and $8,000 for each type of product plant 2 produces. In other words, if Plant 2 is producing one product, it costs $8,000 to run it, but if that plant is producing both products, CPC spends $16,000.

How should we adjust the variables and constraints in the model to implement the changes requested by the Financial team?

Check all that apply. Note that upon submission, if some points have been awarded, all options selected will be marked as green (even the wrong ones). If no points have been awarded, all options selected will be marked as red (even the right ones). A message indicating “correct”, “partially correct” or “incorrect” will appear below the question. We know this can be confusing and are working with edX software engineers on this issue.

Add four new constraints to allow outbound shipments of either product from either plant only if the corresponding production line is open.

Add two new constraints to allow outbound shipments from a plant only if it is open.

Add three new constraints to allow outbound shipments from a plant only if it is open.

Add two binary variables to represent opening each of the two production lines.

Add four binary variables to represent opening each of the two production lines at each of the two plants.

None of the above

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Part 5

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Building off of the model from Part 3 and considering the changes you identified in Part 4, create a linear program that optimizes the flow of each coffee product from plants to DCs, while adhering to the capacity constraints from Part 3 as well as the fixed cost per product per plant.

Which of the following statements are true for the optimal solution to this problem?

Select all the correct answers. Note that upon submission, if some points have been awarded, all options selected will be marked as green (even the wrong ones). If no points have been awarded, all options selected will be marked as red (even the right ones). A message indicating “correct”, “partially correct” or “incorrect” will appear below the question. We know this can be confusing and are working with edX software engineers on this issue.

Barranquilla (Plant 1) produces both product 1 and product 2.

Barranquilla (Plant 1) produces only product 1.

Barranquilla (Plant 1) produces only product 2.

Santander (Plant 2) produces both product 1 and product 2.

Santander (Plant 2) produces only product 1.

Santander (Plant 2) produces only product 2

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Part 6

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What is the total weekly cost for flowing both coffee products from the two plants to the three DCs for the problem as described in Part 5?

Round your answer to the nearest integer with no commas or currency signs. For example, if your answer is $168,987.25 then you would enter 168987.

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Last Updated on January 29, 2021