Operations and Supply Chain Management The Core

472 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
The next step is to insert this table in Excel along with a copy of the table to indicate the candidate
solution and a smaller table to calculate the costs based on the candidate solution. The following
screen capture from Excel shows how this would be set up.
The blank cells in the candidate solution table represent the amount to ship from each factory to
each destination—they will be set up as changing cells in Solver. The Demand Met row in that
table sums up each column in the table, telling us how much demand is being met in each city
by our solution. For example, the formula in cell B14 is 5SUM(B11:B13). Similarly, the Capacity
Used column sums up each row in the table, telling us how much product is shipped from each
plant in our solution. For example, the formula in cell J11 is 5SUM(Bl1:I11). The cells in the
Cost Calculations table each multiply the relevant cells from the candidate solution and the cost
data tables, telling us how much our candidate solution costs for each factory–customer combination.
For example, the formula in B18 is 5B11*B4. The Total cell simply sums up all the costs
in the table.
Next, we need to set up Solver to let it solve the problem for us. This is fairly easy given the
structure of the tables above. We need to tell Solver the following things:
∙ We want to minimize the total cost.
∙ It can change the values of the empty cells in the Candidate Solution table.
∙ The amount shipped to each customer must match the amount demanded.
∙ The amount shipped from each factory must not exceed the capacity of that factory.
After starting Solver, we would set up the parameters as shown below. Be sure to set the options
to “Assume Linear Model” and “Assume Non-Negative.” (The latter could also be accomplished
by adding a constraint that all changing cells be greater than or equal to zero.)