Supply Chain Analytics: Aus Farm Corporation- Nick Fraser Case- Supply Chain Assignment Help

Internal Code: 2ICH

Supply Chain Assignment Help:

Task: In May 2018, Nick Fraser, the General Manager of the NSW Division of Aus Farm Corporation, received notification from Roos Energy that natural gas supplies were being rapidly depleted. In the event of a shortage, Roos Energy, the main producer and distributor of natural gas in the Pacific region, would allocate gas to its customers under the following provisions established by the Federal Commission: First Priority: Residential and commercial heating and cooling Second Priority: Commercial and industrial firms that use natural gas as a source of raw material Third Priority: Industrial firms that use natural gas as a boiler fuel In the communication, it was mentioned that most of Aus Farm's uses were in the second and third priority classifications. Hence, Aus Farm would probably be subjected to "rolling brownouts", temporary and periodic curtailments of natural gas supplies. Roos Energy planned to monitor its pipeline pressures and order reductions to maintain minimum levels. Roos Energy preferred that its customers initiate the reduction process  to minimize the effect on their industrial processes. Roos Energy was authorized, however, to curtail supplies unilaterally if pipeline pressure fell below minimum levels. The natural gas shortage was created by the unprecedented heat wave of the summer of 2017. Electrical generating plants were operating at capacity to supply electricity to operate air conditioning and refrigeration units. Although long-range plans called for these utility companies to convert to coal, oil, or nuclear fuel, natural gas remained the dominant boiler fuel. Curtailment plan Aus Farm's problem was to determine which of its complexes would be least affected by a gas curtailment. Its NSW Division is located in the Greater Sydney area; plants are located in the suburbs of Westpark and Rosehill. Both of these areas would be included in the curtailment region in the event of a brownout. Except for Aus Farm's ammonia operations, all gas purchased was used as boiler fuel. In its ammonia plant, gas was used as a source of raw materials (the manufacture of ammonia uses natural gas in the steam reforming process). In a detailed discussion with the CEO of Roos Energy, Aus Farm learned that Roos Energy would not specify the products to be curtailed. The curtailment procedure would be based primarily on a customer's usage pattern. Hence, Aus Farm had the flexibility to absorb curtailments where they would have minimum impact on profits. Based on this information, Aus Farm called a staff meeting to discuss a contingency plan for allocation of natural gas among the firm's products if curtailments became a reality. The specific objective was to minimize the impact on profits/overhead contribution. After a week of study, the information in Tables 1 and 2 was presented to Aus Farm management. Aus Farm's contract with Roos Energy specified a maximum of 45,000 cu.ft. X 103 per day for its complexes. However, curtailments are projected to be based on actual usage rather than contractual maximums. The current natural gas usage is 42,840 cu. ft. x 103 per day. Roos Energy projects curtailments in the range of 20 to 40 percent.

1. Define the business problem
2. Formulate a linear program for 20% and 40% curtailment of natural gas usage.
3. Discuss the sensitivity analysis
4. Provide a discussion of Aus Farm’s options and your recommendations for action