of the pig hearts contributed largely to the inventory and distribution sectors of American Edwards Laboratories. The company experienced shortages in certain valve sizes and a surplus in others. 2.
The solution approach proposed and its data requirements. a.
The solution approach proposed was a linear programming optimization model. It was meant to assist in determining the optimum quantity of hearts to be ordered from the company’s vendors based on data from previous distributions. The data required for this model included procurement, processing and inventory costs, heart valve sales, raw heart supply by vendor, and vendor heart valve size distributions and yields. In order for the model to work properly, data had to be collected on all incoming valves, the valve source, and its final status. 3.
The financial impact as well as the impact on business processes and people involved. a.
Before the implementation of the optimization model, American Edwards Laboratories was spending nearly $80,000 every month on excess inventory. In the first three months, excess costs were reduced to less than $10,000 per month resulting in annual savings of over $1 million. The implementation of the model gave production managers more control and the ability to forecast more accurately. With more accurate forecasting, shortages were identified well in advance which gave the opportunity to the company to implement corrective measures. 4.
Might there be a typo in some of the constraints presented in the appendix? a.
The demand constraints should be written as follows: i.
.3X
a
+ .1X
b
> 100 ii.
.5X
a
+ .6X
b
> 300 iii.
.2X
a
+ .3X
b
> 250
