1. Prepared By: Maxine Cunningham John Schmidt Jonathan Braams 4/4/2009 Production Facility Optimization

2. Model Design Introduction Methodology Analysis Conclusion Executive Summary Problem Summary: Currently operating 4 production facilities Looking to relocate one plant Model Building: Replicate current layout Build functionality to “open or close” facilities Interface Design: Easy manipulation of the model Simple to interpret Dynamic and updateable Recommendation: Relocation of Leduc plant to south Edmonton Over $120,000 reduction in annual delivery costs Move from a 4 plant to a 3 plant system Millions of dollars saved annually

3. Model Design Introduction Methodology Analysis Conclusion Current Layout: Leduc Strathcona 2 west Edmonton Key Questions: 1.Operate in current state or relocate Leduc? 2.If so, where? 3.Other efficiency recommendations? Problem `

4. Model Design Introduction Methodology Analysis Conclusion 1 ) Determining Demand Locations Question of Concern Considering the client’s demand dispersion, how should we go about splitting up the demand appropriately? Answer Mimicked client’s approach to splitting up demand into 159 locations.

5. Model Design Introduction Methodology Analysis Conclusion Determining Demand Locations

6. Model Design Introduction Methodology Analysis Conclusion 2) Candidate Location Selection Question of Concern What variables need to be considered when choosing potential candidate locations for our client?

7. Model Design Introduction Methodology Analysis Conclusion Candidate Location Selection 1)Current Layout-West End Plant (2), Sherwood Park (1), Leduc Plant (1)

8. Model Design Introduction Methodology Analysis Conclusion Candidate Location Selection 2) Medium Industrial Constraint

9. Model Design Introduction Methodology Analysis Conclusion Candidate Location Selection 3) Qualitative Considerations- Future Growth

10. Model Design Introduction Methodology Analysis Conclusion Answer: 16 Candidate Locations (Southern Area) Candidate Location Selection

11. Model Design Introduction Methodology Analysis Conclusion 3) Distance Calculation Question of Concern How do you maximize distribution efficiency? Answer By Decreasing the distances travelled Goal To take our 16 Candidate plant locations and our 4 current plant locations (20 plant locations) and determine the distances from each plant location to all the 159 demand locations.

12. Model Design Introduction Methodology Analysis Conclusion Distance Calculation Step 1: Midpoint Calculation

13. Model Design Introduction Methodology Analysis Conclusion Step 2 : Plot potential and current plant locations Distance Calculation

14. Model Design Introduction Methodology Analysis Conclusion Step 3 : Calculate Distance between each plant and all demand points 159 X 20= 3,180 Distance Calculation

15. Model Design Introduction Methodology Analysis Conclusion Distance Calculation

16. Model Design Introduction Methodology Analysis Conclusion Abs(X 2 – X 1 ) (X 2,Y 2 ) (X 1,Y 1 ) Abs(Y 2 – Y 1 ) Rectilinear Distance Calculation Rectilinear Distance Calculation to Km’s Distance Calculation s=1: Rectilinear metric

17. Model Design Introduction Methodology Analysis Conclusion 4) Distance-Time Conversion Question of Concern Given distances how do you accurately calculate time? Answer By using data and linear approximation Goal To convert all distances (km) to time in order to apply costs. (Clients costs are given per hour)

18. Model Design Introduction Methodology Analysis Conclusion Time (min) Distance (km) Step 1: Plot Time vs. Distance with actual client data ( No significant correlation) Distance-Time Conversion

19. Model Design Introduction Methodology Analysis Conclusion Time (min) Distance (km) Step 1: Plot Time vs. Distance with actual client data ? ? ? ? Distance-Time Conversion

20. Model Design Introduction Methodology Analysis Conclusion Time (min) Distance (km) Time (min) Distance (km) “Outside City Travel” “Within City Travel” Step 2: Split data into two groups : “within city travel” & “outside city travel” Distance-Time Conversion

21. Model Design Introduction Methodology Analysis Conclusion Time (min) Distance (km) Time (min) Distance (km) “Outside City Travel” “Within City Travel” Step 2: Split data into two groups : “within city travel” & “outside city travel” Distance-Time Conversion

22. Model Design Introduction Methodology Analysis Conclusion Time (min) Distance (km) Time (min) Distance (km) “Outside City Travel” “Within City Travel” Step 3: Calculate Coefficient/ Speed for each group y = βx + ε β = 64 km/h y = βx + ε β = 45 km/h Distance-Time Conversion

23. Model Design Introduction Methodology Analysis Conclusion Step 4: Multiply each coefficient by each and every distance to obtain time Distances (km) Time (min) ÷ (speed) Example WCT  14 km (distance) ÷ 45km /h (coefficient) =.31 hours (19 min) OCT  36 km (distance) ÷ 64km /h (coefficient) =.56 hours (34 min) Distance-Time Conversion

24. Model Design Introduction Methodology Analysis Conclusion Mission Impossible The Brilliant Spreadsheet The Beautiful Model

25. Model Design Introduction Methodology Analysis Conclusion The Complex Communication Binary cell activates (turning on a plant) Time Minimization performed Colors and transparency assigned to each demand location Interface retrieves demand, utilization, and cost information User clicks a candidate location 01

26. Model Design Introduction Methodology Analysis Conclusion Model Demonstration

27. Model Design Introduction Methodology Analysis Conclusion Model Demonstration

28. Model Design Introduction Methodology Analysis Conclusion Model Demonstration

29. Model Design Introduction Methodology Analysis Conclusion Current Plant Mix

30. Model Design Introduction Methodology Analysis Conclusion Turn off Leduc – Inefficient Plant

31. Model Design Introduction Methodology Analysis Conclusion Optimal 4-Plant Mix

32. Model Design Introduction Methodology Analysis Conclusion Turn off Inefficient Plant

33. Model Design Introduction Methodology Analysis Conclusion Data Selection

34. Model Design Introduction Methodology Analysis Conclusion Industrial Zones

35. Model Design Introduction Methodology Analysis Conclusion Planned Neighbourhoods

36. Model Design Introduction Methodology Analysis Conclusion Truck Routes

37. Model Design Introduction Methodology Analysis Conclusion Total Transportation Costs Current Costs

38. Model Design Introduction Methodology Analysis Conclusion Total Transportation Costs Annual Savings $128,000 +

39. Model Design Introduction Methodology Analysis Conclusion Benefits Provided with a dynamic and updateable decision making tool Over $128,000 in annual delivery cost savings Over $1.7 Million discounted savings in perpetuity Significant operation costs reductions; moving from 4 to 3 plants Quicker delivery times to south Edmonton Happy Customers / Happy Client

40. Model Design Introduction Methodology Analysis Conclusion Close Leduc and Acheson plants Open new facility in candidate location four “CL4” Annual delivery cost savings of over $128,000 Immense operational cost savings from reducing plants

41. Model Design Introduction Methodology Analysis Conclusion Questions?