The approach used to solve the network design problem is based on a Benders' decomposition method where the sub-problem is a mixed integer programming problem. The master problem consists of choosing the best configuration $Q$ given the current set of constraints, where $Q$ is the warehouses capacity vector. Once this configuration is found, a cut is generated by searching for the smallest stable transportation cost for this configuration. The problem of finding the smallest stable transportation cost is itself solve by bender decomposition where the master problem search for the worst demand for the fixed configuration and the cut generating sub-problems are simple flow problems using fixed configuration and demands. This section first present some useful definitions, then successively proposes the formulations for the flow sub-problem, the stable transportation cost sub-problem and finally the global design problem. The distribution network contains mills, warehouses and customers zones. The problem, for every period, consist of transiting manufactured products through warehouses to the customers. The following definitions will be useful. The flow of products is defined by the two following set of variables. The quantity of product transiting from the mill to the warehouse. Since later we want to find a demand that maximizes the cost of the flow problem, it is useful to consider the dual of the previous problem in order to have a maximization objective function. where $lambda$, $alpha$, $mu$ and $sigma$ are, respectively, the dual variables of constraints ef{lambda}, ef{alpha}, ef{mu}, and ef{sigma}. We call $Phi(Q,d)$ the optimal value of the objective function for the linear program ( ef{FlowDual}). ... ... middle of paper ... ...st $r_j$, the variable inventory cost $i_j$ and the transportation cost $Phi(Q)$ knowing that we will have to face the worst demand for that network. A binary variable $o_j$ determines whether or not warehouse $j$ is open. To ensure that there is always enough space in the warehouses to fulfill any demand we require that $sum_{j in W} Q_j geq sum_{s in S} d_s$. The design problem is. Let $Delta$ be the finite set of possible value of the binary variables $delta^+, delta^-, w, f$ and let $h_r(delta) = (sigma_{r,delta},z_{r,delta},alpha_{r,delta},mu_{r,delta}), r = 1 ldots m_delta$ be the set of extreme points of the problem ( ef{WorstBin}) with the value of the binary variable fixed. Since problem ef{Design1} is convex with respect to variables $gamma$ we can use a Benders' decomposition approach to solve the following network design problem.
This constraint ensures that the hop-count for each node-pair (s, d) does not exceed the pre-specified bound〖 H〗_(s,d).
The merchandise is imported through several ports including of Los Angeles, Houston; New York; and Savannah, Ga. The company utilizes strategically placed distribution warehouses in Texas for storage and shipment of items to their district stores. To manage the availability of supplies the organization utilizes Oracles Transportation Management system which offers a single platform of which to manage all transportation activities throughout their Supply Chains. The use of the software creates flexible process automation within logistics network worldwide. The software is used in conjunction with Oracles other products that integrate accounting, marketing and sales functions into one program. By including these functional areas in their management system the company is able to monitor their total operating costs and
...dustrial Distribution allows me to pursue my interests in both Business and Engineering, and therefore I chose that major. Also, it will help me to build my personal characteristics that will make me successful in this major. As my education continues, I look forward to learning how manufacturers and distributors maintain good communication and relations, so that the products can be distributed efficiently and avoid problems. If there are problems, I would also like to comprehend ways to solve those problems. In the future, I hope to work for a company such as Amazon, Dell, or Boeing in the field of logistics. These companies depend on logistics in planning and conducting their operations. Since logistics and relations between manufacturer and distributor are critical to the everyday operations of businesses, understanding this will help me in my future endeavors.
Lastly, the stores and warehouses are not communicating well which is resulting in confusion for both parties. Store managers waste time by having to spend store hours on the phone with the DC to expedite demanded stock. This time waste can be avoided by properly organizing the warehouse and having informed workers who can get the job done right and on time. Also worth mentioning is the current condition of the warehouse; there is inventory underneath conveyors and scattered across aisles, making it harder to track down stock. Analysis &
In order to minimize the total shipping costs in the Darby distribution system, linear programming can be used.
With that being said, knowing the routes products take in getting from point A to point B requires a planning process with the ability to create practical shipment arrangements by consolidating orders to optimal shipping volumes by also taking into consideration the variety of trucks, the number of stops in routes, and the potential for outside restrictions according to the Supply Chain Digest (Web, 2014). With most companies that process shipping trucks, drivers spend valuable time waiting for the trucks to be loaded and unloaded with product shipment, causing a loss in revenue gained through quicker delivery times customer. With proper planning and implementation of a network wide system throughout PepsiCo’s supply chain, the delivery function more specifically that shows outbound and inbound capacity, appointment schedules, and available times for delivery receipts, drivers can be aware of time slots that they can get in and out with to better utilize time and capital. With the determination between the differences of inbound and outbound shipments, PepsiCo will be able to further improve carrier efficiency and reduce their overall transportation costs.
Cormen T. H, Leiserson C. E., Rivest R. L. and Stein C. [1990] (2001). “Introduction to Algorithms”, 2nd edition, MIT Press and McGraw-Hill, ISBN 0-262-03293-7, pp. 27–37. Section 2.3: Designing algorithms..
The goal of this distribution strategy is to mark up our prices minimally as we have to make some profit. However, due to the low cost of production and relatively low cost of expenses, our distribution strategy relies on moving large quantities of inventory consistently. The more volume we move, the more profit we will make (Refer to Appendix
Generates only a single point solution for each iteration, a sequence of those converging to the optimal solution.
Zanjirani F., Rezapour, S. & Kardar, L. (2011) Logistics operations and management concepts and models, 1st ed. London ; Elsevier.
In the early 1960’s, Michigan State University became the first academic institution to offer coursework in physical distribution and logistics while other academic institutions began to recognize transportation as a major. (Ballou, 2007) In 1964, the lines of separation began to blur as the idea of managing logistics to manage business activity began to take hold in industry although business, as well as academia, still considered purchasing and physical distribution as managed in parallel with logistics with little to no coordination. (Ballou, 2007) Such activities gave rise to the National Council of Physical Distribution Management (NCPDM) in 1963, now called the Council of Supply Chain Management Professionals (CSCMP) (Southern, 2011) but the delineation between management of physical distribution and physical supply would prove to be an economically unsustainable model.
All choices made by Seven-Eleven are structured to lower its transportation and receiving costs. For example, its area-dominance strategy of opening at least 50 to 60 stores in an area helps with marketing but also lowers the cost of replenishment. All manufacturing facilities are centralized to get the maximum benefit of capacity aggregation and also lower the inbound transportation cost from the manufacturer to the distribution center (DC). Seven-Eleven also requires all suppliers to deliver to the DC where products are sorted by temperature. This reduces the outbound transportation cost because of aggregation of deliveries across multiple suppliers. It also lowers the receiving cost. The information infrastructure is set up to allow store managers to place orders based on analysis of consumption data. The information infrastructure also facilitates the sorting of an order at the DC and receiving of the order at the store. The key point to emphasize here is that most decisions by Seven-Eleven are structured to aggregate transportation and receiving to make both cheaper.
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
There are two main phases that are important in the movement of materials: material management and physical distribution. Materials management is the timely movement of raw materials, parts, and supplies. The physical distribution is the movement of the firm’s finished products to the customers. Both phases involve every stage of the process including storage. The ultimate goal of logistics is to coordinate all efforts of the company to maintain a cost effective flow of goods.
Customer order and decoupling point are what sets the inventory position in the production and tell them how they operate.