Chemical Engineering July 2023 - 35

FIGURE 2. This diagram is the spreadsheet setting and results for Scenario 1
FIGURE 3. This diagram is the spreadsheet setting and results of Scenario 2 - with maximum inventory limit
Minimum = C ∑t St
(4)
Where:
C = unit purchase cost
For a given demand across all time
period, Dt, the ATM can determine the
minimum purchase price, to ensure
optimal supplies across all period t, St.
An example case
This case study is based on actual
data of an operating company in Malaysia.
The company has to maintain
a large inventory of mechanical seals
for the pumps. The replacement of
pump seals is necessary after a certain
period of operation to ensure
good reliability for the pumps. As
part of the maintenance schedule,
the number of seals to be replaced
each month is known.
The company consists of three
operating plants and a central warehouse.
At any given time, each of
the plants and the warehouse must
have at least one seal unit to cater
for unexpected events. Otherwise,
the production schedule may be afCHEMICAL
ENGINEERING WWW.CHEMENGONLINE.COM
JULY 2023
fected, since some pumps have to
be shut off temporarily in any unexpected
event. To avoid overstocking
of seals, the company sets a maximum
limit of eight units across all
facilities at any time. This is because
the seals would degrade after prolonged
storage. Hence, it is unwise
to have large inventory for such expensive
units (the pump seal costs
approximately $2,500 per unit).
Two scenarios are analyzed using
the ATM: that is, with and without
maximum inventory limit constraint.
35

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Chemical Engineering July 2023

Table of Contents for the Digital Edition of Chemical Engineering July 2023

Chemical Engineering July 2023 - Intro
Chemical Engineering July 2023 - Cover1
Chemical Engineering July 2023 - Cover2
Chemical Engineering July 2023 - 1
Chemical Engineering July 2023 - 2
Chemical Engineering July 2023 - 3
Chemical Engineering July 2023 - 4
Chemical Engineering July 2023 - 5
Chemical Engineering July 2023 - 6
Chemical Engineering July 2023 - 7
Chemical Engineering July 2023 - 8
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Chemical Engineering July 2023 - Cover3
Chemical Engineering July 2023 - Cover4
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