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Members: 1. MOHD AQHAIRI BIN BAHARI B050810175 2. LAW MEI LIN B050810007

CHAPTER 7 : SUPPLY CHAIN (PART 2) 7.5 Transportation Method 7.6 Design and Solution 7.7 Global Supply Chain. Members: 1. MOHD AQHAIRI BIN BAHARI B050810175 2. LAW MEI LIN B050810007 3. AZMI BIN HASSAN B050810064 4. MOHD NAZIH BIN JAAFAR B050810237 . 7.5 Transportation Method.

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Members: 1. MOHD AQHAIRI BIN BAHARI B050810175 2. LAW MEI LIN B050810007

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  1. CHAPTER 7 : SUPPLY CHAIN (PART 2)7.5 Transportation Method7.6 Design and Solution7.7 Global Supply Chain Members: 1. MOHD AQHAIRI BIN BAHARI B050810175 2. LAW MEI LIN B050810007 3. AZMI BIN HASSAN B050810064 4. MOHD NAZIH BIN JAAFAR B050810237

  2. 7.5 Transportation Method 7.5.1 Introduction to Transportation Problem 7.5.2 The Greedy Heuristic 7.5.3 Solving Transportation Problems with Linear Programming 7.5.4 Generalizations of the Transportation Problem 7.5.4.1 Infeasible Routes 7.5.4.2 Unbalanced Problems 7.5.6 More General Network Formulations

  3. Transportation Problem • Is a mathematical model for optimally scheduling the flow of goods from production facilities to distribution centers. • Ex: Plants Warehouses

  4. Assumptions: • Fixed amount of product is transported from a group of sources (plants) to a group of sinks (warehouses). • The unit cost of transporting from each source to each sink is known. • Goals: • Find the optimal flow paths • Amounts to be shipped to minimize the total cost of all shipments.

  5. Example 1: • The Pear Disk Drive Corporation produces several capacities of Winchester drives for personal computers. In 1999, Pear produced drives with capacities from 20 to 160 gigabytes (GB), all in the 3.5 –inch form factor. The most popular product is the 80-GB drive, which is sold to several computer manufacturers. Pear produces the drives in three plants located in Sunnyvale, California; Dublin, Ireland; and Bangkok, Thailand. Periodically, the shipments are made from these three production facilities to four distribution warehouses located in the United States in Amarillo, Texas; Teaneck, New Jersey; Chicago, Illinois; and Sioux Falls, South Dakota. Over the next month, it has been determined that these warehouses should receive the following proportions of the company’s total production of the 80-GB drives:

  6. The production quantities at the factories in the next month are expected to be (in thousands of units) • Since the total production at the three plants is 260 units, the amount shipped to the four warehouses will be (roundded to the nearest unit)

  7. Shipping costs per 1,000 Units in RM Unforseen problems: Forced shutdown at a plant Unanticipated swings in the regional demand Poor weather along some routes

  8. The Greedy Heuristic • Constructing a transportation tableau. 420 380 280 250 420 420 420 420 380 380 380 380 280 280 280 280 250 250 250 250 1280 990 1440 1520 1280 1280 1280 1280 990 990 990 990 1440 1440 1440 1440 1520 1520 1520 1520 1550 1420 1660 1730 1550 1550 1550 1550 1420 1420 1420 1420 1660 1660 1660 1660 1730 1730 1730 1730

  9. Solution: Let xij be the amount of flow from source ito sink j, x11 = 45, x23 = 7, x21 = 35, x33 = 40, x22 = 78, x34 = 55, other xij = 0 • The total cost for this solution is (45)(250) + (35)(1280) + …. = RM 304,900

  10. Solving Transportation Problems with Linear Programming • Let m be the number of sources • Let n be the number of sinks xij = flow from source i to sink j for 1 i m and 1 j n cij = cost of shipping one unit from i to j • Total cost of all shipments: cijxij

  11. Constraints: • Total amount shipped out of each source equals the amount available at that source • The amount shipped into any sink equals the amount required at that sink.

  12. Let ai be the total amount to be shipped out of source i Let bj be the total amount to be shipped into sink xij = aifor 1 i m xij = bj for 1 j n xij 0 for1 i m and1 j n

  13. For the case of Pear Disk Drive Company, • m = 3 and n = 4 • Total cost of shipments: 250x11 + 420x12 + 380x13 + …… + 1730x34 • Constraints: x11 +x12 +x13 +x14 = 45 x21 +x22 + x23 +x24 = 120 x31 +x32 + x33 +x34 = 95 x11 +x21 + x31 = 80 x12 +x22 + x32 = 78 x13+x23 + x33 = 47 x14 +x24 + x34 = 55 • Nonnegativity constraints : xij0 for1 i 3 and 1 j 4

  14. Problem entered in Excel Solver. • Solution: • Note: 1. For Cell O9: =SUMPRODUCT (B9:M9,B5:M5). Copied to O10 to O15 2. For Cell O7 = SUMPRODUCT (B5:M5,B7:M7). • Total cost is RM297,800

  15. Solver Parameter

  16. Infeasible Routes • Routes Dublin Chicago & Bangkok Sioux Falls were eliminated. • Total cost is RM298,400.

  17. Unbalanced Problems • Total amount shipped from the sources is not equal to the total amount required at the sinks. • Reason: Demand exceeds the supply and vice versa. • Solution: Method 1 : Add either a dummy row or a dummy column to absorb the excess supply or demand Method 2: Alter the appropriate set of constraints to either or form.

  18. Example • Total demand is 278 while total supply is 260. • To balance problem, add an additional fictitious factory for the 18-unit shortfall. • Greedy Heuristic: Add dummy row (4 rows and 4 colums) (All shortfall to Sioux Falls warehouse ) p/s: One can assign zero to all costs in the dummy column.

  19. Linear Programming: • The optimal solution calls for assigning the shortfall: 8 units to Chicago and 10 units to Sioux Falls.

  20. More General Network Formulations • Solving more complex network distribution problems. • Ex: Transshipment problem. • A transshipment node is either a supply or a demand node. • Balance of flow rules:

  21. Supply = negative number attached to the node • Demand = Positive number attached to the node Ex: Pear Disk Drive Problem with taransshipment nodes

  22. There are a total of 10 decision variables. • The objective function is to minimize 250 x16 +76 x14 + 380 x15+ 1440 x25+ 1660 x35+ 110 x46 + 95 x48+ 180 x56+ 120 x57+ 195 x58 • Total supply available = 260 units • Demand = 285 units • Thus, apply rule 2..

  23. By applying rule 2, eight constraints for this problem: Node 1 : - x14 -x15- x16 -45 Node 2: - x25 -120 Node 3: - x35 -95 Node 4: x14 –x46– x48 25 Node 5: x16 +x46+ x56 –x56 –x57 –x58 47 Node 6 : x16+x46 +x56 80 Node 7: x56 78 Node 8: x48 + x58 55

  24. 7.6 Design and Solution Design in terms of Manufacturing. -Also known as DFM (Design for Manufacturing/Manufacturability) -general engineering art of designing products in such a way that they are easy to manufacture. -This design practice not only focuses on the design aspect of a part but also on the producibility. -In simple language it means relative ease to manufacture a product, part or assembly. -the important part that need to be reconsider before make a product. (design, product processing)

  25. Design for Logistic • Economic packaging and transportation • Designing products that can be efficiently packed and stored • Concurrent and parallel processing • Modify the manufacturing process (product design) • Postponement/delay differentiation • Aggregate demand information is more accurate than disaggregate data.

  26. Advantages • More compact • Better freight rate (transportation) • Allows better management of warehouse space • Reduce lead time (processing)

  27. Case Study 1(Transportation) • IKEA – Home furnishing products Problem Description : To create and maintain flexible transport solutions in order to meet all the service needs of customers in the most efficient and environmentally aware way. Solution : Uses railway and combined road-rail transport

  28. .

  29. Case Study 2 (Parallel Processing) -Parallel processing is the ability to carry out multiple operations or tasks simultaneously. -The concept of parallel manufacturing has been applied in many industries including the high tech and the automobile industries.

  30. Parallel Processing Example :

  31. Case Study 3 (Postponement) - Deliberate action to delay final manufacturing or distribution of a product until receipt of a customer order. - The concept of postponement was first suggested by Alderson in 1950. He recommended that producers should add options or make differentiating changes to the product close to the time of purchase by the end use customer. -Benetton, instead of dyeing the yarn first like other sweater makers, knit plain wool into sweaters and postpone colouring the entire inventory.

  32. Postponement

  33. Postponement The advantage of postponement is based on two fundamental understandings: • Aggregate demand of similar products (or same product group) is more predictable compared to demand for individual types - and that it is the finished product which has the short life cycle and high risk of obsolescence.

  34. 7.7 Global Supply Chain An integrated process where several business entities such as suppliers, manufacturers, distributors, and retailers work together to plan, coordinate and control materials, parts and finished goods from suppliers to customers. One or more of these business entities operate in different countries.

  35. Objective function of GSCM • GSGM minimizes a weigted of total cost and activity days

  36. Advantage of Global Supply Chain Reduced total costs. Inventory reduction Improved fulfillment cycle time Reduce cycle time Increased forecast accuracy Productivity increase Improved capacity Expend international connections Increase intellectual assets Delivery improvement

  37. OBSTACLES:

  38. International influences on logistic issues

  39. SELECTING A GLOBAL SUPPLY CHAIN MODEL :

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