• Implemented mixed integer linear programming for language to equation conversion using MS Excel • Performed rigor calculation and scenario analysis on 6 different cases using Excel solver and QM solver • Integrated decision tree analysis to cross validate and to choose between different solutions • Suggested new manufacturing portfolio which will result in net profit increment of 19%

1. 1
Dragan Kolobaric fa5527
Nishant Pathak fy4913
Srinivasa Gowtham gd7875
Krushal Chaudhary gb7704
Wayne State University
Course: DETERMINISTIC OPTIMIZATION
(Course Code: IE 6560)
Date: December 1st, 2016
Course Project
Group 10

2. 2
 Portfolio selection for North American Operations
of global Italy based corporation for specially
equipment and automotive interior components
tooling
 Executive Management tasked the operation
department to confirm Business Plan (BP)
projections based on historical human resources
and product development data
 Objective is to maximize sales and maintain
profit margin with resources and product
development capabilities constrains.
 Priority 1 is to develop North America capacity
with Italy support and outsourcing the last.

3.  Product sales and development data is obtained from
corporation database and an average is utilized with minimal
historical data on file.
Product Avg. Sale Price Profit [%]
1 Ultrasonic Welding 95,000.00$ 13
2 Ultrasonic Punching 156,000.00$ 12
3 Lamination Tools 251,000.00$ 24
4 Foaming Tools 168,000.00$ 26
5 Cutting tools 178,000.00$ 20
6 In-mold graining Tools 541,000.00$ 25
7 Forming Tools 321,400.00$ 42
8 Thermoforming Tools 465,000.00$ 38
9 Vacuum Forming Tools 195,000.00$ 11
10 Cast Skin Tools 362,800.00$ 18
Product Desing Fabrication Machining Assembly
Test runs/
Tunig
1 Ultrasonic Welding 120 130 132 180 55
2 Ultrasonic Punching 195 180 200 230 48
3 Lamination Tools 220 210 220 120 85
4 Foaming Tools 175 165 250 100 50
5 Cutting tools 160 85 274 80 40
6 In-mold graining Tools 247 140 240 145 80
7 Forming Tools 260 80 320 180 90
8 Thermoforming Tools 340 165 280 250 100
9 Vacuum Forming Tools 156 90 240 140 50
10 Cast Skin Tools 310 180 350 120 80
Total:
North America Current 8 10 10 12 10 50
North America 1st Year 12 10 20 18 15 75
North America 2nd year 15 10 30 25 20 100
Italy Resources Available - employees
5 12 10 12 10
Manhours
Emplyee head count projections

4.  Resources capabilities/ development selection for specific products
 Outsourcing restrictions are highlighted.
BinaryFormat:
Product
NorthAmerica Italy
Outsourc
e
NorthAmerica Italy
Outsourc
e
NorthAmerica Italy
Outsourc
e
NorthAmerica Italy
Outsourc
e
NorthAmerica Italy
Outsourc
e
1 UltrasonicWelding 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0
2 UltrasonicPunching 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0
3 LaminationTools 1 1 0 1 1 1 1 1 1 1 1 0 1 1 0
4 FoamingTools 1 1 0 1 1 1 1 1 1 1 1 0 1 1 0
5 Cuttingtools 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0
6 In-moldgrainingTools 1 1 0 1 1 1 1 1 0 1 1 0 1 1 0
7 FormingTools 1 1 0 1 1 1 1 1 1 1 1 1 1 1 0
8 ThermoformingTools 1 1 0 1 1 1 1 1 0 1 1 1 1 1 0
9 VacuumFormingTools 1 1 0 1 1 1 1 1 0 1 1 0 1 1 0
10 CastSkinTools 0 1 0 1 1 1 0 1 0 1 1 0 1 1 0
ResourceCapabilites/Selection
Design Fabrication Machining Assembly TestRuns/Tuning

5. 5
 An Integer linear programming was used with objective to maximize sales and resources
constrains
Priority-1) Z1= S1T1+S2T2+S3T3+S4T4+S5T5+S6T6+S7T7+S8T8+S9T9+S10T10
Priority-2) Z2= S1T1+S2T2+S3T3+S4T4+S5T5+S6T6+S7T7+S8T8+S9T9+S10T10
Priority-3) Z3= S1T1+S2T2+S3T3+S4T4+S5T5+S6T6+S7T7+S8T8+S9T9+P10T10
Final Z= Z1+Z2+Z3
Where decision Variables being product/ tool:
T1, T2, T3, T4, T5, T6, T7, T8, T9, T10
And sales per unit is:
S1, S2, S3, S4, S5, S6, S7, S8, S9, S10
Subject to: T1, T2, T3, T4, T5, T6, T7, T8, T9, T10 = integer.

6.  Utilizing excel solver optimal solution has confirmed that both profit margin and
employee resources are in line with BP projections.
Current Year 1st Year 2nd Year
47 47 57
16 19 22
3 6 11
4 5 4
3 4 4
1 1 1
3 6 13
1 6 12
3 8 15
0 0 0
Total Sales: 11,475,200.00$ 17,306,400.00$ 26,216,200.00$
Total Employee needed: 30 40 55
Employee per BP: 50 75 100
Profit for a product Mix: 16% 18% 19%
Forming Tools
Thermoforming Tools
Vacuum Forming Tools
Cast Skin Tools
Product Mix
Ultrasonic Welding
Ultrasonic Punching
Lamination Tools
Foaming Tools
Cutting tools
In-mold graining Tools

7. 7
 The operation department has applied employee skill level approach in defining
constrains for resources development
Department: Level: Pessimistic Optimistic Years of experience
Beginner 30% 65% 1-3
Intermediate 65% 95% 2-7
Advance 99% 100% > 4 years
Beginner 50% 75% 1-3
Intermediate 75% 100% 2-7
Advance 99% 100% > 4 years
Beginner 50% 75% 1-3
Intermediate 75% 100% 2-7
Advance 99% 100% > 4 years
Beginner 50% 75% 1-3
Intermediate 75% 100% 2-7
Advance 99% 100% > 4 years
Beginner 35% 60% 1-3
Intermediate 60% 90% 2-7
Advance 99% 100% > 4 years
Test Runs/ Tuning
Work without Assistance
Design
Fabrication
Machining
Assembly

8.  Pessimistic approach is applied to Priority 1 of developing North American
resources, hiring beginner level employees.
1st Year: Skill level Beginner for new employees
Maximize Z: S1T1+S2T2+S3T3+S4T4+S5T5+S6T6+S7T7+S8T8+S9T9+S10T10
S.T.:
Design Constraint (.30 efficiency): Hours used*Products <= 17664
Fabrication Department constraint (.50 efficiency): Hours used*Products <= 19200
Machining Department constraint (.50 efficiency): Hours used*Products <= 19200
Assembly Department constraint (.50 efficiency): Hours used*Products <= 23040
Test runs/Tuning Department constraint (.35 efficiency): Hours used*Products <=19200
Since, Cast Skin Tool cannot be produced in North America:
T10=0 (in priority-1)

9.  Pessimistic approach for 2nd year requires addition of beginner and on-going
development of intermediate skill level employees.
Second Year: Skill level Intermediate for 1st year employees and beginner for new employees
Maximize Z: S1T1+S2T2+S3T3+S4T4+S5T5+S6T6+S7T7+S8T8+S9T9+S10T10
S.T.:
Design Constraint (.65 and 0.3 efficiency): Hours used*Products <= 22080
Fabrication Department constraint (.75 and .5 efficiency): Hours used*Products <= 19200
Machining Department constraint (.75 and .5 efficiency): Hours used*Products <=43200
Assembly Department constraint (.75 and .5 efficiency): Hours used*Products <= 38400
Test runs/Tuning Department constraint (.6 and .35 efficiency): Hours used*Products <=28320
Since, Cast Skin Tool cannot be produced in North America:
T10=0 (in priority-1)

10.  Optimistic approach is applied to Priority 1 of developing North American
resources, hiring beginner level employees.
1st Year: Skill level Beginner for new employees
Maximize Z: S1T1+S2T2+S3T3+S4T4+S5T5+S6T6+S7T7+S8T8+S9T9+S10T10
S.T.:
Design Constraint (.65 efficiency): Hours used*Products <= 20352
Fabrication Department constraint (0.75 efficiency): Hours used*Products <= 19200
Machining Department constraint (0.75 efficiency): Hours used*Products <= 19200
Assembly Department constraint (0.75 efficiency): Hours used*Products <= 23040
Test runs/Tuning Department constraint (.60 efficiency): Hours used*Products <=19200
Since, Cast Skin Tool cannot be produced in North America:
T10=0 (in priority-1)
Limitations of individual product:
T1<=47, T2<=19, T3<=6, T4<=5, T5<=4, T6<=1, T7<=6, T8<=6, T9<=8, T10<=7.
Sales value of all the product should not exceed the value of maximum possible sales:
C1T1+C2T2+C3T3+C4T4+C5T5+C6T6+C7T7+C8T8+C9T9+C10T10 <=

11.  Optimistic approach for 2nd year requires addition of beginner and on-going
development of intermediate skill level employees.
Second Year: Skill level Intermediate for 1st year employees and beginner for new employees
Maximize Z: S1T1+S2T2+S3T3+S4T4+S5T5+S6T6+S7T7+S8T8+S9T9+S10T10
S.T.:
Design Constraint: Hours used*Products <= 26400
Fabrication Department constraint: Hours used*Products <= 19200
Machining Department constraint: Hours used*Products <= 52800
Assembly Department constraint: Hours used*Products <= 44640
Test runs/Tuning Department constraint: Hours used*Products <=33600
Since, Cast Skin Tool cannot be produced in North America:
T10=0 (in priority-1)
Limitations of individual product:
T1=57, T2=22, T3=11, T4=4, T5=4, T6=1, T7=13, T8=12, T9=15, T10=10.
Sales value of all the product should not exceed the value of maximum possible sales:
C1T1+C2T2+C3T3+C4T4+C5T5+C6T6+C7T7+C8T8+C9T9+C10T10 <=
C1T1+C2T2+C3T3+C4T4+C5T5+C6T6+C7T7+C8T8+C9T9+C10T10
The assumption is that all employees in Italy are at 100 % skill level.

12. 12
 The final results points that sales and profit margin with both pessimistic and optimistic approach in resource skill
level planning pose no risk to a BP projections
 On other hand it highlights further optimization of BP and opportunities to utilize resources for more global growth
as planned resources in Italy would not be needed to a full extent to support North American operation growth over
next two years.
◦ Opportunities for additional profit improvements with improvement in employee skill level and utilization of available man-hours.
Sales
Total
Profit
Cost of shipping
in %
Final
Profit
Sales
Total
Profit
Cost of shipping
in %
Final
Profit
Current Year 11,994,000$ 15% 1% 14% 11,994,000$ 14% 0.6% 13% 14%
First Year 19,980,000$ 17% 1% 16% 19,846,000$ 18% 0.6% 17% 17%
Second Year 27,876,200$ 19% 1% 18% 29,844,200$ 19% 0.6% 18% 18%
Final Result
AveragePessimistic Approach Optimistic Approach
North America Italy Sale
1st Year 75 7 19,980,000$
2nd Year 100 9 27,876,200$
North America Italy Sale
1st Year 75 5 19,846,000$
2nd Year 100 7 29,844,200$
Actual Employee Requirments- Pessimistic
Actual Employee Requirments- Optimistic

13. 13

14. 14