Page 119 - DCOM303_DMGT504_OPERATION_RESEARCH

Operations Research

Notes Self Assessment

Fill in the blanks:
9. Degeneracy involves ………………steps.
10. To resolve degeneracy at the initial solution, allocate a small positive quantity e to one or
more unoccupied cell that have ………………..transportation costs.
11. …………………..may occur either at the initial stage or at subsequent iterations.



Case Study South India Soaps Ltd.

The South India Soaps Ltd. (SISOL) operated 3 factories from which it shipped soaps to
regional warehouses. In 2007, the demand for soaps was 24,000 tonnes distributed as
follows:

Region Demand in 000’ tones
Cochin 5
Nellore 4
Salem 4
Madurai 11
24

One-shift production capacity in each of the 3 factories was as follows:

Region Demand in 000’ tones
Chennai 12
Coimbatore 7
Bangalore 7
26

Estimated transport costs (in hundred rupees per 000’ tones) are given below:
Factory Regional warehouses
Cochin Nellore Salem Madurai
Chennai 95 105 80 15
Coimbatore 115 180 40 30
Bangalore 155 180 95 70

SISOL followed a policy of decentralization under which each of the four regional
warehouses was under the direct supervision of a regional sales manager and he was
responsible for the profitability of operation under his control.
Over a period of time, this procedure lead to increasing friction in the organization. There
were questions whether this procedure achieved the objectives of minimizing transport
costs; also there was no coordination. For instance in 2005, the sales manager of Madurai
& Nellore placed their orders with the Chennai factory which did not have the capacity to
meet all demands. This led to inefficient and duplicate orders, friction etc. The final pattern
that emerged in 2005 was as follows:

Contd...

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