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Logistics Systems Analysis Mid-Term Review
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  1. Logistics Systems AnalysisMid-Term Review John H. Vande Vate Spring, 2001 1

  2. Supply Chain Costs Holding Waiting Rent Moving Handling Transport EOQ Trade off Holding and Moving Costs cQ + d/Q minimized with Q = d/c Subjects Covered 2

  3. Project Inventory Analysis Modeling Inventory Analysis At the Plant Shipments of size Q to DC Inventory at plant per shipment: (Q/2)*(Q/P) Shipments per year: D/Q Total Inventory: (Q/2)*(D/P) + Q/2 EOQ: minimize fD/Q + h(Q/2)*(1+D/P) Q* = (2fD/h)P/(P+D) Subjects Covered 3

  4. Inventory Analysis Plant to Warehouse Inventory at plant per shipment: (Q/2)(Q/P) Shipments per year: unknown Shipments generated by DC served through warehouse: D/Q Total Plant inventory per DC served through warehouse: (Q/2)(D/P) EOQ to warehouse: Q* = (2fDw/h)P/(P+Dw) but what’s Dw? Project 4

  5. Inbound Q/2 from each plant that serves it Outbound “Option” or mix of items shipped together Total Demand at warehouse for Assembly: DO “Production Rate” of Option at Warehouse: DO Inventory per shipment to DC: (Q/2)(Q/DO) Shipments per year: D/Q EOQ: min fD/Q + h(Q/2)(1 + D/DO) Q* = (2fD/h)DO/(DO +D) but what’s DO? Warehouse Inventory 5

  6. Inventory per shipment to DC: (Q/2)(Q/DO) Shipments per year: D/Q Inventory per year: (Q/2)(D/DO) if served with this option DO= Sum of Demands at DC’s served with this option If Shipment size Q for this option is relatively constant across the DC’s Total Outbound Inventory Cost for the Option is (average Q/2)*[Do we serve any DC with this option?] Outbound Inventory to DC 6

  7. Modeling “Rules” • Use meaningful (helpful) names • Comment extensively • Keep data and model separate • Keep model general where possible 7

  8. Capital Utilization influences financial performance Total Capital influences Capital Utilization Inventory Levels contribute to Capital Cash-to-Cash Cycle influences Capital Value of Inventory Savings “Finance” 8

  9. Extension of EOQ to variable demand Simple formula for headways: H(t) = (2Fixed/cD’(t)) Estimate of Total Cost Reconstructing implementable headways 1-1 Distribution 9

  10. Correct Models Relate decision whether or not to ship with volume shipped Q[t]  Ship[t]*Remaining Demand Better Models Do not aggregate constraints Q[s, t]  Ship[s]*Demand in Period t Models for Variable Demand 10

  11. Different Objectives Item-miles miles max distance … Two varieties of models Do we locate here or not? What is the position of the facility? Location 11

  12. Measures of Distance Rectilinear Euclidean Iterative scheme for locating a single facility using Euclidean Distances Extension to locating several facilities Locate Allocate Location 12