Case Study on Operation Research

Background

Aluminum Company of Canada Limited (Alcan) was an integrated producer of aluminu m products. The Foil Mill produced aluminum foil of different widths for a varie ty of different end uses. Space limitations required that a limited number of st andard widths of aluminum foil be carried in stock from which customers orders wer e slit. Low turnover on some standard widths and large scrap losses occurred whe n filling customers orders of certain widths.

Case Statement Re-assessment of the current inventory policy in the Foil Mill of Aluminum Compa ny of Canada Limited (Alcan)

Process Separator Select coil from stock in Foil Mill Customer Order specifying width, g auge & surface Roll coil to desired thickness & finish Slitter

Slitter was used to slit the coil to desired width Separator was used to slit an d then separate coils which had been pack rolled in two layers. Rolling in two l ayers was done for thinner gauge orders to give sufficient strength to the foil for slitting.

Difficulties in Slitting Operation

A minimum of 5 mm must be trimmed from each edge of the standard widths in order to guarantee clean edges. Two adjacent widths have tendency to interlock as the y were being coiled. To break them apart required the use of a special tool & a sledge hammer which damages the outer edges of the foil. To overcome this, the c ore on which the foil was wound extended 2.5 mm on either side of the coil.

Selection of Standard Widths

The customers could order any width, but some of possible widths had never been ordered. The number of different standard widths that could be held as inventory was constrained by space limitations. The Sheet Mill wanted the number of width s it produced kept to a minimum.

Scrap Loss Slitting multiple widths from wider standard widths resulted in less scrap than cutting a single width from a narrower standard width. Scrap = (Standard Width Customer Width) x Weight of Std. Width Roll Standard Widt h

Calculation of Scrap Loss Standard Width Customer Width I II III IV V 200 300 400 500 600 Standard Width C ustomer Width I II III IV V 200 300 400 500 600 A 210 10 M M M M A 210 B 420 20 120210 20 M M B 420 C 620 20 D 820 M M 20 M M D 820 M M 0.02439 M M F 1100 100 M M 100 M E 1100 G 1300 100 100 100 M 100 F 1300 20 200 M 120 20 C 10/210 620 0.047619 0.047619 0.032258 M M M M 0.285714 0.032258 0.047619 M M M 0.193548 0.0 32258 0.090909 0.076923 M M 0.090909 M 0.076923 0.076923 M 0.076923

Calculation of Scrap Loss Standard Width Customer Width A 210 95 M M M M B 420 190 1143 190 M M C 620 194 194 M 1161 194 D 820 M M 195 M M E 1100 1000 M M 1000 M F 1300 1000 1000 1000 M 1000 0.047619 x Cij I II III IV V 200 300 400 500 600 Cij 2000 4000 6000 8000 11000 13000

Assignment Problem

Xij is defined as difference of ith standard width with jth customer width Cij i s defined as the weight of width 210mm to the actual ith standard width being us ed for jth customer width Objective function is to minimize Z= Cij Xij subject t o certain restrictions

Assignment Problem Problem : Standard Width A = 210 B = 420 C = 620 D = 820 E = 1100 F = 1300 Custo mer Width I = 200 II = 300 III = 400 IV = 500 V = 600 VI = 0

Assignment Problem Scrap loss Matrix Standard Width Customer Width A 95 M M M M 0 B 190 1143 190 M M 0 C 194 194 M 1161 194 0 D M M 195 M M 0 E 1000 M M 1000 M 0 F 1000 1000 1000 M 1000 0 I II III IV V VI

Assignment Problem Row Reduction Standard Width Customer Width A 0 M M M M 0 B 95 949 0 M M 0 C 99 0 M 161 0 0 D M M 5 M M 0 E 905 M M 0 M 0 F 905 806 810 M 806 0 I II III IV V VI

Assignment Problem Row Reduction Standard Width Customer Width A 0 M M M M 0 B 95 949 0 M M 0 C 99 0 M 161 0 0 D M M 5 M M 0 E 905 M M 0 M 0 F 905 806 810 M 806 0 I II III IV V VI

Assignment Problem Row Reduction Standard Width Customer Width A 0 M M M M 0 B 95 949 0 M M 0 C 99 0 M 161 0 0 D M M 5 M M 0 E 905 M M 0 M 0 F 905 806 810 M 806 0 I II III IV V VI

Assignment Problem Row Reduction Standard Width Customer Width A 0 M M M M 0 B 95 949 0 M M 0 C 99 0 M 161 0 0 D M M 5 M M 0 E 905 M M 0 M 0 F 905 806 810 M 806 0 I II III IV V VI

Assignment Problem Second Iteration Standard Width Customer Width A 0 M M M M 0 B 95 143 0 M M 0 C 905 0 M 967 0 806 D M M 5 M M 0 E 905 M M 0 M 0 F 905 0 810 M 806 0 I II III IV V VI

Assignment Problem Standard Width Customer Width A 0 M M M M 0 B 95 143 0 M M 0 C 905 0 M 967 0 806 D M M 5 M M 0 E 905 M M 0 M 0 F 905 0 810 M 0 0 I II III IV V VI

Assignment Problem Final Assignment: Standard Width Customer Width A 0 M M M M 0 B 95 143 0 M M 0 C 905 0 M 967 0 806 D M M 5 M M 0 E 905 M M 0 M 0 F 905 0 810 M 0 0 I II III IV V VI

Assignment Problem The assignments are: Customer Width Standard Width A C B E F D Total Scrap Scrap (in Kg) 95 194 190 1 000 1000 0 2479 I II III IV V VI

Verification using Tora Software Input Data:

Output pdf

Conclusion

Lowest scrap value is achieved using Assignment Method Manual calculations are v erified using Tora software Scrap Loss matrix can be modified based on forecast The above procedure sets a base for determining an appropriate inventory policy Further Tora or other OR software can be used to handle large amount of data

Reference Book: by Cases in Operation Research Cristoph Haehling von Lanzenauer ALCAN Cristoph Haeh ling von Lanzenauer D D Wright Case : by