Valley Electric Company generates electrical power at four coal-fired power plant in Pennsylvania, West Virginia, Kentucky and
Question:
The power-producing capabilities of the coal produced by these suppliers differs according to the quality of the coal. For example, coal produced by APCO provides 27.2 million BTUs per ton while coal produced at Balfour provides 28.1 million BTUs per ton.
Valley Electric also purchases coal from three back-up auxiliary suppliers as needed (i.e., it does not have fixed contracts wit these producers). In general, the coal from these back-up suppliers is more costly and lower grade:
The demand for electricity at Valley Electrics four power plants is as follows. (Note that it requires approximately 10 million BTUs to generate 1 MW hr):
For example, the Alton plant must produce at least 4,700,000 million BTUs next year, which translates to approximately 470,000 megawatt hours.
Coal is primarily transported from the producers to the power plants by rail and the cost of processing coal at each is different. Following are the combined transportation and processing costs for coal each from each supplier to each plant.
Formulate and solve linear programming model to determine how much coal should be purchased and shipped from shipped from each supplier to each power plant in order to minimizecost.
Step by Step Answer:
Operations Management Creating Value Along the Supply Chain
ISBN: 978-0470525906
7th Edition
Authors: Roberta S. Russell, Bernard W. Taylor