The Building Block Method

Problem: Combining production and shipping models into one large model, a common approach to problem solving.

(This example uses the full power of your spreadsheet software to develop larger applications using smaller ones as building blocks. In this way, comprehensive models can be created which can simultaneously cover many different aspects of a business situation.)

You run three plants. Each plant is capable of producing six products from six raw materials. You also operate two steel mills that can ship steel as a raw material to any of your plants. You want to know the amount of steel each mill should ship to each plant and the number of products each plant should produce to maximise your total profit.

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The PRODMIX and SHIPPING worksheets are combined in this problem which involves maximising the profit from several manufacturing plants while minimising the cost of shipping raw materials from multiple sites.

The objective of optimisation is to maximise total profits. The total profit is the sum of individual plant profits, minus the sum of the shipping costs from the individual steel mills.

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