# Jp Molassas

Topics: Costs, Cost, Price Pages: 3 (845 words) Published: May 21, 2006
JP Molasses
The analysis is divided into three sections:
Part I: description of the optimization model
Part II: solution to the present problem
Part III: recommendations on future improvements to increase profits Part I
Objective function: J.P. Molasses' goal is to maximize the profit generated from the refining of raw sugar into molasses and its byproducts and then shipping those products to customers. Decision variables:

a. The amount of raw sugar shipped from eight suppliers to two processing plants b. The amount of molasses and byproduct shipped to seven customers (a majority of which are internal and therefore don't generate profit accounted for in this model). c. Because these variables represent amount shipped they cannot be negative. Constraints:

a. Total raw sugar shipped from each supplier to each refinery must be less than or equal to the amount available to ship b. Total molasses shipped from each refinery to each customer must be equal to the quantity required by that customer. c. The two processing plants must operate at between 50-100% of capacity d. The amount of purified sugar produced at the Charleston plant is limited to 2,000,000 pounds per month because of storage constraints e. Total molasses shipped to customers (including excess) must be less than or equal to the total molasses produced

Part II
There are two solutions that provide the optimal profit given the current constraints under which JP Molasses operates. Under these conditions, the optimal profit is \$63,571. This profit margin is achieved in both cases with revenue of \$942,354 and cost of \$412,333 for material purchased and \$466,450 for fixed and variable costs in processing, for total cost of \$878,783.

This optimal profit can be achieved with two different allocations of raw sugar shipments to processing plants, as below :

Cell Name Value from Answer 1 Value from Answer 2 \$B\$6 Spectra Charleston...