Learning Goal: I’m working on a supply chain project and need the explanation and answer to help me learn.

Using LINGO to analyze
Northwest Newsprint’s distribution options. Begin by following the structured modeling process:
Frame the problem
– What decision(s) does NW Newsprint need to make?
– What are the decision variables?
– What are the limits/constraints affecting the decision?
– How should NW Newsprint determine if the solution is optimal?
– What alternatives need to be considered?
Construct a LINGO model to analyze the decision using SETS and DATA. All the data
you need is contained in an Excel worksheet. NOTE: The Spruce mill has the lowest capacity
and can only service 5 of the 9 distribution centers

1. What is Northwest’s overall objective? What are the decision variables? What type of
constraints do we need to consider

2. Formulate an LP model and obtain a solution that maximizes profit. Remember that
according to the case, each mill must operate at least six days out of seven. How does
your solution differ from the original allocation given in Exhibit 4? What are the benefits
of this optimization?

3. Can Northwest save money through freight rate discounts on volumes larger than
100,000 tons? If so, how much?

4. What strategic alternatives should Northwest consider for the current newsprint capacity? Should a 58,000 ton/year machine at Naomee Mills be converted to groundwood specialties? Why or why not?

5. Can you recommend specific “delivery swap” arrangements to improve Northwest’s profitability?

6. Should Northwest build a new mill in Georgia? Under what conditions, if any, should this
project be undertaken?

7.How would your analysis change if newsprint demand followed the pessimistic projection? How would it change under the optimistic projection?