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MANAGEMENT SCIENCE (EM 602)

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MANAGEMENT SCIENCE (EM 602);NJIT;GROUP PROJECT;SOUTHERN MISSISSIPPI PULP & PAPER COMPANY (SMP&P);BACKGROUND;SMP&P is a fully integrated paper company with extensive holdings in woodlands, several large;mills, and nationwide distribution facilities. The company manufactures a wide variety of paper;products under its own brand name, and a more limited product line under contract for private;distributors. SMP&Ps oldest mill, Bayou 1, is located in Pass Christian, Mississippi and produces;four major products, book paper, coarse paper, container board and food board. The flow of;materials through the mill is illustrated below;CHIPPING;KRAFT;PULPING;BEATING;MACHINING;hardwood;BLEACHING;book paper;coarse paper;softwood;SEMI-CHEMICAL PULPING;container;board;food board;PROCESS DESCRIPTION;The milling process begins with chipping in which two different grades of hardwood and one type;grade of softwood are used as inputs. After chipping, the hardwood outputs enter Kraft pulping or;semi-chemical pulping. The softwood and hardwood outputs from chipping enter the Kraft pulping;operation. Some of the hardwood outputs from chipping transverse through semi chemical pulping;process. No softwood chipping outputs can enter semi chemical pulping. From Kraft pulping, some;products enter the bleaching stage while others go directly through beating. Semi-chemical pulping;products go directly to the beating stage process. The outputs of the beating process are inputs into;machining which produces the four major products, book paper, coarse paper, container board and;food board.;Hardwood and softwood inputs for chipping are available from internal company sources in limited;quantities. Additional quantities can be purchased at a slightly higher cost. The related availabilitys;and costs are as follows;INTERNAL SOURCES;IN TONS PER YEAR;WOOD TYPE;Hardwood - grade 1 110,000 tons per year;Hardwood - grade 2 88, 500 tons per year;Softwood;160,000 tons per year;INTERNAL;COST;EXTERNAL;COST;$18 per ton;$18.10 per ton;$19 per ton;$18.65 per ton;$18.20 per ton;$ 20.95 per ton;When required, up to 15,000 tons per year of softwood Kraft pulp can be purchased. Quantity;discounts are available on these purchased quantities so that the first 5000 tons/yr. would cost;$57/ton while the second 10,000 tons/yr. cost $53/ton. This purchased pulp cannot be bleached and;is used as an input into the beating process.;The following process yields (tons output/tons input) and capacities (tons input/year) were provided;by the operations manager;PROCESS;HARDWOOD - 1;Chipping;Kraft Pulping;Semi- Chemical Pulping;Bleaching;Beating;Machining;.969;.88;.765;.90;.99;.98;YIELDS;HARDWOOD - 2;.942;.88;.755;.90;.99;.98;SOFTWOOD CAPACITIES;.98;.88;---.825;.99;.98;700,000;130,000;125,000;170,000;300,000;285,000;MARKET DEMANDS & OTHER REQUIREMENTS;The four final products must be composed of at least 25% of grade 1 hardwood and at least 50%;softwood. At least 10% of the composition must consist of outputs from the bleaching process. Due;to contractual requirements a minimum of 33,400 tons of coarse paper, 117,800 tons of container;board and 61,500 tons of food board must be produced in the upcoming year. SMP&P marketing has;determined that all of the book paper that can be produced will be sold as well as any excess of the;other three products above there minimum requirement.;OPERATIONAL COSTS;Company records show that variable operating cost ($/ton output) for each process are defined as;follows;PROCESS;Chipping;Kraft Pulping;Semi- Chemical Pulping;Bleaching;Beating;Machining;OPERATING COST;$ 2.40 per ton;$ 13.12 per ton;$ 18.98 per ton;$ 6.03 per ton;$.77 per ton;$ 7.16 per ton;Book paper sells for $210 per ton, $ 125 per ton for coarse paper, $133 per ton for container board;and $128 per ton for food board.;QUESTIONS;A. Develop and solve a linear programming model to determine output and input requirements;which will maximize profits.;B. Senior management is considering implementing modifications to the Bayou 1 plant to;increase output capacity. Due to budget constraints only one operation or process can be;modified. The cost of increasing capacity is approximately the same for each operation and;would result an increase of capacity by 10%. Which operation (process) would you;recommend to increase capacity. Use sensitivity analysis to support your answer.

 

Paper#17452 | Written in 18-Jul-2015

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