MANAGEMENT SCIENCE FINAL REPORT

MINIMIZING TRANSPORTATION COST

ASSINGID BY, MR. TUFAIL AHMED SHEIKH SUBMITTED BY, HABIB.UR.REHMAN MUHAMMAD AMIR MUHAMMAD AHMED

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Table of Contents
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 About noor Rice mills Rice Processing Products Processing units Distribution Centers Calculating Transportation Cost Current Model Current Model Total Cost Production capacity Mode of Transportation Demand & Supply Network Representation Decision Variable & Constraint Proposed Model Proposed Model Total Cost Linear Programming Results Solution list Comparison & recommendation 3 4 5 6 6 7 8 8 9 9 10 11 12 13 13 14 14 15

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ABOUT NOOR RICE MILLERS:

Noor Rice Mills has established in 1974, by the help & support of family enterprise as a farmer & grower of different kind of rice at their own fields. Noor rice has own farms & established cultivation in joint hands in the association of other farmers & now have more than 900 growers as cooperative member to produce their rice of different qualities to noor Rice mills. As a whole sole proprietor of all lands and grown crops. Noor Rice Mills is a synonymous of high quality products & fulfill 100% commitment & customer satisfaction. We at noor rice Mills have always believed in offering a best quality in its category to our customers. We work on the thought that QUALITY SPEAKS. It is the quality which represents us again & again. Since the beginning, Mohammad munir sheikh the chairman of noor rice mills provided strong education to their joiner become as future followers to meet the world-class standard as state-of-art. The young executive Mr. imtiyaz Ali sheikh, has completed his education from Greenwich University in business discipline & got various internship in foreign plants for quality processing units, to meet up to date challenges in modern business quality production. Noor Rice Mills extend satisfaction to their customer at the level of high quality, competitive pricing, timely delivery, packing customization requirements. We ensure a constant effort to pass on the benefit of the best costing to our esteemed buyers/customers.

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RICE PROCESSING:
Several steps are involved in rice processing, brief review steps followed by noor rice mills is shown below: Cleaning: Milling starts with the cleaning of rice. This is a multi-step process where foreign material like straws, mud, balls, threads, stones, paddy, & metal particals are removed from the rice. Husking: The selected Basmati paddy is then allowed to slowly reduce its moisture by natural-sun-drying-method, to achieve optimum moisture content for husking. Whitening: Rice is a delicate grain, requires extra care in procressing. Any rough handling during processing can cause the grains to break or develop cracks. Warehousing: One of the main peculiarities of Basmati rice is enhancement in its taste and aroma when it is seasoned for eight-to-nine months. Color sorting: Color sorting is a very intricate process & ensure consistent quality of rice.

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PRODUCTS:
Noor Rice doesnt make any compromise on quality, they have broder rage of rice, which are packed for export & local wholesale accordingly in different type but having quality assurance in all products. IRRI-6: White + Parboiled + Brown KS-282: White + Parboiled + Brown IRRI-9: White + Parboiled + Brown PK-386: White + Parboiled + Brown PK-198: White + Brown PK-385: White + Brown Super kernel Basmati: White + Parboiled + Brown 1121: White + Parboiled

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NOOR RICE MILLERS PROCESSING UNITS:

PROCESSING UNIT A: Husking & reprocessing unit, main road, Khairpur Nathan shah, Distt. Dadu, sindh, Pakistan PROCESSING UNIT B: Husking, Reprocessing & Parboiled unit, nor rice complex, by-pass road near PSO petrol pump, Khairpur Nathan shah, Distt. Dadu sindh, Pakistan

NOOR RICE MILLERS DISTRIBUTION CENTERS:

DISTRIBUTION CENTER 1: Export office, Sachal Goth Near Suparco, University Road Karachi, Pakistan DISTRIBUTION CENTER 2: Syedna Tahir Saifuddin Road, Near City Court Karachi DISTRIBUTION CENTER 3: S-119, Gulbai S.I.T.E. Karachi, Pakistan

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CALCULATING TRANSPORTATION COST PER 50KG BAG:

Noor rice have two rice processing units which are their source of supply to their three different distribution centers, there is no restriction for supply at any of its processing unit, their aim is cost minimization by fulfilling demand at each of their distribution center, both of their processing unit are free off to supply any of their distribution centers & similarly each distribution center is free off to receive goods from any of its processing units, here we are calculating cost per 50kg bag from each source to each destination By considering mileage, fuel consumption, repair & maintenance, loading cost & other expenses the average cost for transporting per 50kg bag is shown below either company is ten-wheeler, six-wheeler or any of its trucks

From Processing Unit A to Distribution Center 1: 70 PKR From Processing Unit A to Distribution Center 2: 73 PKR From Processing Unit A to Distribution Center 3: 77 PKR From Processing Unit B to Distribution Center 1: 80 PKR From Processing Unit B to Distribution Center 2: 84 PKR From Processing Unit B to Distribution Center 3: 86 PKR Formula: transportation cost for each source to destination/no. of Bags supplied

DISTRIBUTION CENTER PROCESSING UNIT

1
70 PKR 80 PKR

2
73 PKR 84 PKR

3
77 PKR 86 PKR

A B
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Current Model:
DISTRIBUTION CENTER PROCESSING UNIT

No. of Bags Supply

1600 1800

A B No. of Bags Demand

1000 800 1800

400 400 800

0 600 600

Current Model Total Cost structure:

DISTRIBUTION CENTER PROCESSING UNIT

1
PKR

2
PKR

3
PKR

Total
PKR

A B Total

70000 64000 134000

29200 33600 62800

0 51600 51600

99200 149200
248400

ASSINGING VARIABLES:
DISTRIBUTION CENTER PROCESSING UNIT

1
X11 X21

2
X12 X22

3
X13 X23

A B

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DAILY PROCESSING OR PRODUCTION CAPACITY:

PROCESSING UNIT A: 90,000kg 80,000/50= 1600Bags

PROCESSING UNIT B: 50,000kg 90,000/50= 1800Bags of 50kg

MODE OF TRANSPORTATION:
Trucks Loading Capacity: Four-wheeler: 200 Bags Six-wheeler: 400 Bags Ten-wheeler: 600 Bags Trucks Available at Processing Units: Processing Unit A: Four-wheeler: 2 Six-wheeler: 2 Ten-wheeler: 1 Processing Unit B: Four-wheeler: 2 Six-wheeler: 4 Ten-wheeler: 2

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DEMAND & SUPPLY:

DEMAND AT DISTRIBUTION CENTERS: Distribution Center 1: 1800 Bags approx Distribution Center 2: 800 Bags approx Distribution Center 3: 600 Bags approx

SUPPLY FROM PROCESSING UNITS: Processing Unit A: 1600 Bags per day Processing Unit B: 1800 Bags per day Company has excess supply or excess production capacity of 200bags as compare to its demand, this excess production units will be stored at warehouses locating at their processing units, because demand will not always remain constant therefore in case of any excess demand i.e. seasonal demand or any surprise orders can be well managed by consuming this ideal capacity.

DISTRIBUTION CENTER PROCESSING UNIT

No. of Bags Supply

1600 1800

A B No. of Bags Demand

XA1 XB1 1800

XA2 XB2 800

XA3 XB3 600

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NETWORK REPRESENTATION:
DISTRIBUTION CENTER 1 1800 Bags

PROCESSING UNIT A 1600 Bags XA1 DISTRIBUTION CENTER 1 800 Bags

XA2

XA3 PROCESSING UNIT B 1800 Bags

XB1

XB2

DISTRIBUTION CENTER 1 600 Bags

XB3

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DECISION VARIABLE: 70X11+73X12+77X13+80X21+84X22+86X23 CONSTRAINTS: Supply Constraints: XA1+XA2+XA3 <=1600 XB1+XB2+XB3<=1800 Demand Constraints: XA1+XB1 = 1800 XA2+XB2= 800 XA3+XB3= 600

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RESULTS:
Proposed Model: DISTRIBUTION CENTER PROCESSING UNIT

No. of Bags Supply

1600 1800

A B No. of Bags Demand

800 1000 1800

800 0 800

0 600 600

Proposed Model Total Cost structure: DISTRIBUTION CENTER PROCESSING UNIT

1
PKR

2
PKR

3
PKR

Total
PKR

A B Total

56000 80000 136000

58400 0 58400

0 51600 51600

114400 131600
246000

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LINEAR PROGRAMING MODEL RESULTS:

XA1 Minimize Constraint 1 Constraint 2 Constraint 3 Constraint 4 Constraint 5 Solution-> 70 1 0 1 0 0 800 XA2 73 1 0 0 1 0 800 XA3 77 1 0 0 0 1 0 XB1 80 0 1 1 0 0 1000 XB2 84 0 1 0 1 0 0 XB3 86 0 1 0 0 1 600 <= <= = = = 1600 1800 1800 800 600 246000 10 0 -80 -83 -86 RHS Dual

SOLUTION LIST:
Variable XA1 XA2 XA3 XB1 XB2 XB3 slack 1 slack 2 artfcl 3 artfcl 4 artfcl 5 Optimal Value (Z) Status Basic Basic NONBasic Basic NONBasic Basic NONBasic Basic NONBasic NONBasic NONBasic Value 800 800 0 1000 0 600 0 200 0 0 0 246000

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COMPARISION & RECOMMENDATION:

Total cost of transportation in current model is 248400 while proposed model total cost of transportation is 246000, it shows by applying proposed model Noor rice can minimize their daily transportation expense by 2400PKR

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