WHY NETWORK PLANNING?

_ Find the right balance between inventory,

transportation and manufacturing costs,
_ Match supply and demand under
uncertainty
by positioning and managing inventory
effectively,
_ Utilize resources effectively by sourcing
products from the most appropriate
manufacturing facility

TIGA LANGKAH HIRARKI
_ Network design
Number, locations and size of
manufacturing plants and warehouses
Assignment of retail outlets to
warehouses
Major sourcing decisions
Typical planning horizon is a few years.
_ Inventory positioning:
Identifyingstocking points
Selecting facilities that will produce to
stock and thus keep inventory
Facilities that will produce to order and
hence keep no inventory
Related to the inventory management
strategies
_ Resource allocation:
Determine whether production and
packaging of different products is
done at the right facility
What should be the plants sourcing
strategies?
How much capacity each plant should
have to meet seasonal
demand?

NETWORK DESIGN
_ Physical configuration and infrastructure of
the supply chain.
_ A strategic decision with long-lasting
effects
on the firm.
_ Decisions relating to plant and warehouse
location as well as distribution and sourcing

REEVALUASI INFRASTRUKTUR
_ Changes in:
demand patterns
product mix
production processes
sourcing strategies
cost of running facilities.
_ Mergers and acquisitions may mandate the
integration of different logistics networks

KEY STRATEGIC DECISIONS
_ Determining the appropriate number of
facilities such as plants and warehouses.
_ Determining the location of each facility.
_ Determining the size of each facility.
_ Allocating space for products in each
facility.
_ Determining sourcing requirements.
_ Determining distribution strategies, i.e., the
allocation of customers to warehouse

OBJECTIVE AND TRADE OFFS
_ Objective: Design or reconfigure the
logistics network in
order to minimize annual system-wide cost
subject to a
variety of service level requirements
_ Increasing the number of warehouses
typically yields:
An improvement in service level due to
the reduction in average travel
time to the customers
An increase in inventory costs due to
increased safety stocks required
to protect each warehouse against
uncertainties in customer
demands.
An increase in overhead and setup costs
A reduction in outbound transportation
costs: transportation costs
from the warehouses to the customers
An increase in inbound transportation
costs: transportation costs from
the suppliers and/or manufacturers to the
warehouses.

DATA COLLECTIONS
_ Locations of customers, retailers, existing
warehouses and
distribution centers, manufacturing facilities,
and suppliers.
_ All products, including volumes, and special
transport modes
(e.g., refrigerated).
_ Annual demand for each product by
customer location.
_ Transportation rates by mode.
_ Warehousing costs, including labor,
inventory carrying
charges, and fixed operating costs.
_ Shipment sizes and frequencies for
customer delivery.
_ Order processing costs.
_ Customer service requirements and goals.
_ Production and sourcing costs and
capacities

DATA AGREGATION
_ Customer Zone
Aggregate using a grid network or other
clustering technique for
those in close proximity.
Replace all customers within a single
cluster by a single customer
located at the center of the cluster
Five-digit or three-digit zip code based
clustering.
_ Product Groups
Distribution pattern
Products picked up at the same source and
destined to the same customers
Logistics characteristics like weight and
volume.
Product type
product models or style differing only in the
type of packaging.

REPLACING ORIGINAL DATA WITH
AGREGAT DATA
_ Technology exists to solve the logistics
network design problem with the original
data
_ Data aggregation still useful because
forecast
demand is significantly more accurate at the
aggregated level
_ Aggregating customers into about 150-200
zones usually results in no more than a 1
percent error in the estimation of total
transportation costs

GENERAL RULE FOR AGREGATION
_ Aggregate demand points into at least 200
zones
Holds for cases where customers are
classified into classes
according to their service levels or frequency
of delivery
_ Make sure each zone has approximately an
equal
amount of total demand
Zones may be of different geographic
sizes.
_ Place aggregated points at the center of
the zone
_ Aggregate products into 20 to 50 product
groups

AGGREGASI CUST BASED ON 3 DIGIT ZIP
CODES
Total Cost:$5,796,000
Total Customers: 18,000
Total Cost:$5,793,000
Total Customers: 800
Cost Difference < 0.05%

AGREGASI PRODUK
Total Cost:$104,564,000
Total Products: 46
Total Cost:$104,599,000
Total Products: 4
Cost Difference: 0.03%

TRANSPORTATION RATE
_ Rates are almost linear with distance but
not
with volume
_ Differences between internal rate and
external rate

INTERNAL TRANSPORTATION RATE
_ For company-owned trucks
_ Data Required:
Annual costs per truck
Annual mileage per truck
Annual amount delivered
Trucks effective capacity
_ Calculate cost per mile per SKU.

EXTERNAL TRANSPORTATION RATE
TWO MODE TRANSPORTATION
_ Truckload, TL
_ Country sub-divided into zones. One
zone/state
except for:
Big states, such as Florida or New York
(two zones)
_ Zone-to-zone costs provides cost per mile
per
truckload between any two zones.
TL cost from Chicago to Boston =
Illinois-Massachusetts cost per mile X
Chicago-Boston
distance
_ TL cost structure is not symmetric
_ Less-Than-Truckload, LTL
_ Class rates
standard rates for almost all products or
commodities shipped.
Classification tariff system that gives
each shipment a rating or a class.
Factors involved in determining a
products specific class include:
product density, ease or difficulty of
handling and transporting, and liability for
damage.
After establishing rating, identify rate
basis number.
Approximate distance between the loads
origin and destination.
With the two, determine the specific
rate per hundred pounds
(hundred weight, or cwt) from a carrier tariff
table (i.e., a freight rate
table).
_ Exception rates provides less expensive
rates
_ Commodity rates are specialized
commodity-specific rates

SMC3Z CZARLITE
_ Engine to find rates in fragmented LTL
industry
_ Nationwide LTL zip code-based rate
system.
_ Offers a market-based price list derived
from
studies of LTL pricing on a regional,
interregional,
and national basis.
_ A fair pricing system
_ Often used as a base for negotiating LTL
contracts
between shippers, carriers, and third-party
logistics
providers


FIGURE 3-7: Transportation rates for
shipping 4,000 lb



MILEAGE ESTIMATION
_ Estimate lona and lata, the longitude and
latitude of point a (and similarly for point b)



CIRCUIT FACTOR, P
_ Equations underestimate the actual road
distance.
_ Multiply Dab by .
_ Typical values:
= 1.3 in metropolitan areas
= 1.14 for the continental United States

CHICAGO BOSTON DISTANCE
_ lonChicago = -87.65
_ latChicago = 41.85
_ lonBoston = -71.06
_ lonBoston = 42.36
_ DChicago, Boston = 855 miles
_ Multiply by circuity factor = 1.14
_ Estimated road distance = 974 miles
_ Actual road distance = 965 miles
_ GIS systems provide more accuracy
_ Slows down systems
_ Above approximation good enough!

WAREHOUSE COST
_ Handling costs
Labor and utility costs
Proportional to annual flow through the
warehouse.
_ Fixed costs
All cost components not proportional to
the amount of
flow
Typically proportional to warehouse size
(capacity) but in a
nonlinear way.
_ Storage costs
Inventory holding costs
Proportional to average positive
inventory levels.


DETERMINING FIXED COST

FIGURE 3-8: Warehouse fixed costs as
a function of the
warehouse capacity

DETERMINING STORAGE COST
_ Multiply inventory turnover by holding cost
_ Inventory Turnover =
Annual Sales / Average Inventory Level

WAREHOUSE CAPACITY
_ Estimation of actual space required
_ Average inventory level =
Annual flow through warehouse/Inventory
turnover ratio
_ Space requirement for item = 2*Average
Inventory Level
_ Multiply by factor to account for
access and handling
aisles,
picking, sorting and processing facilities
AGVs
_ Typical factor value = 3

WH CAP. EXAMPLE
_ Annual flow = 1,000 units
_ Inventory turnover ratio = 10.0
_ Average inventory level = 100 units
Assume each unit takes _ 10 sqft. of space
_ Required space for products = 2,000 sqft.
_ Total space required for the warehouse is
about 6,000 square feet

POTENTIAL LOCATIONS
_ Geographical and infrastructure conditions.
_ Natural resources and labor availability.
_ Local industry and tax regulations.
_ Public interest.
_ Not many will qualify based on all the
above
Conditions

SERVICE LEVEL REQ
_ Specify a maximum distance between each
customer and the warehouse serving it
_ Proportion of customers whose distance to
their assigned warehouse is no more than a
given distance
95% of customers be situated within 200
miles of
the warehouses serving them
Appropriate for rural or isolated areas

FUTURE DEMAND
_ Strategic decisions have to be valid for 3-5
years
_ Consider scenario approach and net present
values to factor in expected future demand
over planning horizon

NUMBER OF WH


INDUSTRY BENCHMARK
NUMBER OF DC


MODEL VALIDATION
_ Reconstruct the existing network
configuration using the
model and collected data
_ Compare the output of the model to
existing data
_ Compare to the companys accounting
information
Often the best way to identify errors in
the data, problematic
assumptions, modeling flaws.
_ Make local or small changes in the network
configuration to
see how the system estimates impact on
costs and service
levels.
Positing a variety of what-if questions.
_ Answer the following questions:
Does the model make sense?
Are the data consistent?
Can the model results be fully explained?
Did you perform sensitivity analysis?

TEKNIK SOLUSI
_ Mathematical optimization techniques:
1. Exact algorithms: find optimal solutions
2. Heuristics: find good solutions, not
necessarily
optimal
_ Simulation models: provide a mechanism to
evaluate specified design alternatives created
by
the designer.

EXAMPLE
_ Single product
_ Two plants p1 and p2
Plant p2 has an annual capacity of
60,000 units.
_ The two plants have the same production
costs.
_ There are two warehouses w1 and w2 with
identical
warehouse handling costs.
_ There are three markets areas c1,c2 and c3
with
demands of 50,000, 100,000 and 50,000,
respectively.

UNIT DISTRIBUTION COST








THE OPTIMIZATION MODEL
The problem described earlier can be framed
as the
following linear programming problem.
Let
_ x(p1,w1), x(p1,w2), x(p2,w1) and x(p2,w2)
be the flows from
the plants to the warehouses.
_ x(w1,c1), x(w1,c2), x(w1,c3) be the flows
from the warehouse
w1 to customer zones c1, c2 and c3.
_ x(w2,c1), x(w2,c2), x(w2,c3) be the flows
from warehouse w2
to customer zones c1, c2 and c3

The problem we want to solve is:
min 0x(p1,w1) + 5x(p1,w2) + 4x(p2,w1)
+ 2x(p2,w2) + 3x(w1,c1) + 4x(w1,c2)
+ 5x(w1,c3) + 2x(w2,c1) + 2x(w2,c3)

subject to the following constraints:
x(p2,w1) + x(p2,w2) s 60000
x(p1,w1) + x(p2,w1) = x(w1,c1) + x(w1,c2) +
x(w1,c3)
x(p1,w2) + x(p2,w2) = x(w2,c1) + x(w2,c2) +
x(w2,c3)
x(w1,c1) + x(w2,c1) = 50000
x(w1,c2) + x(w2,c2) = 100000
x(w1,c3) + x(w2,c3) = 50000
all flows greater than or equal to zero.

OPTIMAL SOLUSI



MODEL SIMULASI
_ Useful for a given design and a micro-level
analysis. Examine:
Individual ordering pattern.
Specific inventory policies.
Inventory movements inside the
warehouse.
_ Not an optimization model
_ Can only consider very few alternate
models

WHICH ONE TO USE?
_ Use mathematical optimization for static
analysis
_ Use a 2-step approach when dynamics in
system has to be analyzed:
Use an optimization model to generate a
number
of least-cost solutions at the macro level,
taking
into account the most important cost
components.
Use a simulation model to evaluate the
solutions
generated in the first phase.

DSS FOR NETWORK DESIGN
_ Flexibility to incorporate a large set of
preexisting network
characteristics
_ Other Factors:
Customer-specific service level
requirements.
Existing warehouses kept open
Expansion of existing warehouses.
Specific flow patterns maintained
Warehouse-to-warehouse flow possible
Production and Bill of materials details
may be important
_ Robustness
Relative quality of the solution
independent of specific environment,
data variability or specific settings

3.3. INVENTORY POSITIONING
_ Multi-facility supply chain that belongs to a
single firm
_ Manage inventory so as to reduce system
wide cost
_ Consider the interaction of the various
facilities and the
impact of this interaction on the inventory
policy of each
facility
_ Ways to manage:
Wait for specific orders to arrive before
starting to manufacture them
[make-to-order facility]
Otherwise, decide on where to keep
safety stock?
Which facilities should produce to stock
and which should produce to
order?
_ Assume -
SI: amount of time between when an
order is placed until
the facility receives a shipment (Incoming
Service Time)
S: Committed Service Timemade by the
facility to its own
customers.
T: Processing Time at the facility.

_ Net Lead Time = SI + T - S

_ Safety stock at the facility:
SI + T > S
zh SI + T S
Reducing committed service time
from facility 2
to facility 1 impacts required inventory at
both
facilities
Inventory at facility 1 is reduced
Inventory at facility 2 is increased
Overall objective is to choose:
the committed service time at each
facility
the location and amount of inventory
minimize total or system wide safety
stock cost.
_ Large contract manufacturer of circuit
boards and other high
tech parts.
_ About 27,000 high value products with
short life cycles
_ Fierce competition => Low customer
promise times
< Manufacturing Lead Times
_ High inventory of SKUs based on long-term
forecasts =>
Classic PUSH STRATEGY
High shortages
Huge risk
_ PULL STRATEGY not feasible because of
long lead times
_ OBJECTIVES:
Reduce inventory and financial risks
Provide customers with competitive
response times.
_ ACHIEVE THE FOLLOWING:
Determining the optimal location of
inventory across the various stages
Calculating the optimal quantity of
safety stock for each component at each
stage
_ Hybrid strategy of Push and Pull
Push Stages produce to stock where the
company keeps safety stock
Pull stages keep no stock at all.
_ Challenge:
Identify the location where the strategy
switched from Push-based to Pullbased
Identify the Push-Pull boundary
_ Benefits:
For same lead times, safety stock
reduced by 40 to 60%
Company could cut lead times to
customers by 50% and still reduce safety
stocks by 30%
FIGURE 3-11: How to read the diagrams
_ If Montgomery facility reduces committed
lead time to 13
days
assembly facility does not need any
inventory of finished goods
Any customer order will trigger an order
for parts 2 and 3.
Part 2 will be available immediately, since it
is held in inventory
Part 3 will be available in 15 days
13 days committed response time by the
manufacturing facility
2 days transportation lead time.
Another 15 days to process the order at
the assembly facility
Order is delivered within the committed
service time.
_ Assembly facility produces to order, i.e., a
Pull based
strategy
_ Montgomery facility keeps inventory and
hence is managed
with a Push or Make-to-Stock strategy.
FIGURE 3-12: Current safety stock
location
FIGURE 3-13: Optimized safety stock
FIGURE 3-14: Optimized safety stock
with reduced lead time
FIGURE 3-15: Current supply chain
FIGURE 3-16: Optimized supply chain
_ Identifying the Push-Pull boundary
_ Taking advantage of the risk pooling
concept
Demand for components used by a
number of finished
products has smaller variability and
uncertainty than that
of the finished goods.
_ Replacing traditional supply chain
strategies that
are typically referred to as sequential, or local,
optimization by a globally optimized supply
chain
strategy.
FIGURE 3-17: Trade-off between quoted
lead time and safety stock
_ For the same lead time, cost is reduced
significantly
_ For the same cost, lead time is reduced
significantly
_ Trade-off curve has jumps in various places
Represents situations in which the
location of
the Push-Pull boundary changes
Significant cost savings are achieved.
_ Prevalent strategy for many companies:
try to keep as much inventory close to
the customers
hold some inventory at every location
hold as much raw material as possible.
_ This typically yields leads to:
Low inventory turns
Inconsistent service levels across
locations and products,
and
The need to expedite shipments, with
resulting increased
transportation costs
_ Consider a two-tier supply chain
Items shipped from manufacturing
facilities to primary
warehouses
From there, they are shipped to
secondary warehouses
and finally to retail outlets
_ How to optimally position inventory in the
supply
chain?
Should every SKU be positioned both at
the primary and
secondary warehouses?, OR
Some SKU be positioned only at the
primary while others
only at the secondary?
FIGURE 3-18: Sample plot of each SKU
by volume and demand
_ High variability - low volume products
_ Low variability - high volume products, and
_ Low variability - low volume products.
_ High variability low volume products
Inventory risk the main challenge for
Position them mainly at the primary
warehouses
demand from many retail outlets can be
aggregated reducing
inventory costs.
_ Low variability high volume products
Position close to the retail outlets at the
secondary
warehouses
Ship fully loaded tracks as close as
possible to the
customers reducing transportation costs.
_ Low variability low volume products
Require more analysis since other
characteristics are
important, such as profit margins, etc.
_ Supply chain master planning
The process of coordinating and allocating
production, and distribution strategies and
resources to maximize profit or minimize
systemwide
cost
_ Process takes into account:
interaction between the various levels of
the supply chain
identifies a strategy that maximizes
supply chain
performance
_ Facility locations: plants, distribution
centers and demand
points
_ Transportation resources including internal
fleet and
common carriers
_ Products and product information
_ Production line information such as min lot
size, capacity,
costs, etc.
_ Warehouse capacities and other
information such as certain
technology (refrigerators) that a specific
warehouse has and
hence can store certain products
_ Demand forecast by location, product and
time.
_ Sourcing Strategies:
where should each product be produced
during
the planning horizon, OR
_ Supply Chain Master Plan:
production quantities, shipment size and
storage
requirements by product, location and time
period.
FIGURE 3-19: The extended supply
chain: from manufacturing to order
fulfillment
_ Will leased warehouse space alleviate
capacity problems?
_ When and where should the inventory for
seasonal or promotional
demand be built and stored?
_ Can capacity problems be alleviated by re-
arranging warehouse
territories?
_ What impact do changes in the forecast
have on the supply chain?
_ What will be the impact of running
overtime at the plants or outsourcing
sourcing production?
_ What plant should replenish each
warehouse?
_ Should the firm ship by sea or by air.
Shipping by sea implies long
lead times and therefore requires high
inventory levels. On the
other hand, using air carriers reduces lead
times and hence
inventory levels but significantly increases
transportation cost.
_ Should we rebalance inventory between
warehouses or replenish
from the plants to meet unexpected regional
changes in demand?
Network Design Inventory Positioning
and Management
Resource Allocation
Decision focus Infrastructure Safety stock
Production Distribution
Planning Horizon Years Months Months
Aggregation Level Family Item Classes
Frequency Yearly Monthly/Weekly
Monthly/Weekly
ROI High Medium Medium
Implementation Very Short Short Short
Users Very Few Few Few
_ Optimizing supply chain performance is
difficult
conflicting objectives
demand and supply uncertainties
supply chain dynamics.
_ Through network planning, firms can
globally optimize
supply chain performance
Combines network design, inventory
positioning and
resource allocation
Consider the entire network
account production
Warehousing
transportation inventory costs
service level requirements.
_ Demonstrate applicability of risk pooling
and
postponement, EOQ modeling, and
inventory sizing to improve customer service
in make-to-order job shop setting
_ Demonstrates value from getting and
looking
at data
_ Background and context
_ Why are lead times long?
_ How might they be reduced?
What are the _ costs? benefits?
Stephen C. Graves Copyright 2003
All Rights Reserved
_ Make-to-order job shop operation
_ 600 SKUs made from 4 sheet bar (4 alloys)
_ Goal to reduce 7-week customer lead times
_ Expediting is ad hoc scheduling rule
_ Six months of inventory
_ Manufacturing cycle time is 2 3 weeks
_ Limited data
Stephen C. Graves Copyright 2003
All Rights Reserved
4 Bar 1/4 Plate 1/8 Plate 0.015 Sheet
Tubing
Sheet Bar Roll Clean Anneal
(forged ingot)
Repeat
0 s n s 3
Finish
(cut, weld, etc.)
Production Order #1
Production Order #2 Production Order #3
Production Orders
Stephen C. Graves Copyright 2003
All Rights Reserved
_ From sales order to process order takes 2
weeks
_ Typical order requires multiple process
orders, each 2 3 weeks
_ Expediting as scheduling rule
_ Self fulfilling prophecy?
Stephen C. Graves Copyright 2003
All Rights Reserved
_ New accounts and new business
_ Protect current business from switching to
substitutes or Chinese competitor
Possibly _ less inventory
_ Better planning and better customer
service
_ Savings captured by customers?
Stephen C. Graves Copyright 2003
All Rights Reserved
_ Hold intermediate inventory
How would this help?
How much? Where?
Eliminate _ paper-work delays
_ Reduce cycle time for each process order
How? What cost?
Stephen C. Graves Copyright 2003
All Rights Reserved
( )
( )
2 2
2
KB KF hBDB hFDF
Cost T T
T
K K
+ = + +

+
Stephen C. Graves Copyright 2003
All Rights Reserved
( )
*
*
2 400 400
0.02 years
.06 100 526000 .06 125 183000
B F
B B F F
T
h D h D
T
=
+
+
= =
+
_ Characterize demand by possible
intermediate for each of two alloys
_ Pick stocking points based on risk pooling
benefits, lead time reduction, volume
_ Determine inventory requirements based
on
inventory model, e. g. base stock
Stephen C. Graves Copyright 2003
All Rights Reserved
Popularity Material Gauge - Description
Jan Feb Mar Apr May Jun Jul Aug Sep
Total Cum %
1 1011 0.002 Foil 618 1,079 1,215 1,188
1,020 290 1,590 849 1,017 8,866 22%
2 1004 0.015 Sheet 68 611 1,263 167
1,917 803 321 377 404 5,931 37%
3 1003 0.005 Sheet 263 576 584 812 617
969 572 359 909 5,661 50%
4 1029 0.500 Disk - 10" dia 275 0 353 0
581 0 530 414 1,017 3,170 58%
5 1009 0.030 Sheet 0 122 614 275 422
360 686 246 177 2,902 65%
6 1008 0.040 Sheet 321 101 191 486 8 98
263 176 690 2,334 71%
7 1002 0.010 Sheet 20 56 287 179 41 204
560 143 276 1,766 76%
8 1014 0.250 Plate 6 12 0 770 0 752 0 0
174 1,714 80%
9 1007 0.060 Plate 0 146 32 117 129 414
581 26 191 1,636 84%
10 1012 0.125 Plate 228 8 32 90 432 17 8
0 450 1,265 87%
11 1013 0.150 Plate 1,100 0 0 0 0 35 0 0
0 1,135 90%
12 1028 0.500 Ring - 10" OD x 8.5" ID 0
189 0 48 293 93 0 0 174 797 92%
1999 Invoiced Sales - Pounds per month
13 1010 0.020 Sheet 0 54 102 183 45 54
126 92 119 775 94%
14 1017 0.750 Tube - 3/4" 0 0 0 8 12 558
0 0 12 590 95%
15 1015 0.375 Plate 0 0 0 0 0 0 375 0 0
375 96%
16 1018 0.015 Tube - 1.0" OD 8 0 0 0 0
230 0 41 0 279 97%
17 1001 0.005 Sheet - 1.0" x 23.75" 171 0
0 20 0 0 0 17 0 208 97%
18 1016 0.500 Tube - 0.50" OD 3 0 0 51 6
54 33 27 33 207 98%
19 1023 0.010 Sheet - 1.0" x 23.75" 0 99
14 18 0 0 0 0 0 131 98%
20 1027 0.015 Sputter Target - 2.0" x 5.0"
0 105 0 0 0 0 0 0 0 105 98%
Other - - 17 Other Items 217 36 57 86 100
40 52 43 35 666 100%
40,513
Alloy 1
Stephen C. Graves Copyright 2003
All Rights Reserved
Sales
Rank Material Gauge - Description Jan
Feb Mar Apr May Jun Jul Aug Sep Total
Cum %
1 2040 0.015 Welded Tube .75" OD 296
936 2,989 1,366 2,468 989 657 528 1,392
11,623 27%
2 2031 0.020 Sheet Annealed 761 521
826 671 889 1,004 3,975 27 7 8,681 48%
3 2035 0.030 Sheet Annealed 1,638 116
1,138 634 524 579 1,672 703 517 7,520
65%
4 2041 0.020 Welded Tube .75" OD 0 50
316 3 379 0 2,856 0 0 3,604 74%
5 2043 0.015 Welded Tube 1.0" OD 0 0
480 444 0 77 118 343 0 1,462 77%
6 2027 0.060 Plate Annealed 0 0 277 323
60 0 504 12 205 1,382 80%
7 2050 0.015 Welded Tube 1" OD With
Cap 0 0 0 1,003 0 0 176 0 0 1,179 83%
8 2029 0.045 Sheet Annealed 137 122
430 18 37 16 0 368 5 1,133 86%
9 2026 0.010 Sheet Annealed 0 0 435 0
251 412 0 0 0 1,098 88%
10 2051 0.022 Welded Tube 1.25" OD 0 0
0 1,014 0 0 0 0 0 1,014 91%
11 2025 0.002 Foil Annealed 551 0 0 0 0 0
0 0 0 551 92%
12 2034 0.125 Plate Annealed 0 35 78 63
34 0 0 208 0 418 93%
13 2045 0.030 Welded Tube 1.0" OD 0 0
370 0 0 1 0 0 41 412 94%
1999 Invoiced Sales - Pounds per Month
14 2044 0.020 Welded Tube 1.0" OD 0 0
0 32 241 108 4 0 0 386 95%
15 2047 0.030 Welded Tube 1.5O" OD 0
255 100 0 0 0 0 0 0 355 96%
16 2039 0.020 Welded Tube .50" OD 0 0
181 142 0 0 0 0 0 323 96%
17 2052 0.035 Tube 1.25" OD 0 0 302 0 0
0 0 0 0 302 97%
18 2036 0.015 Sheet Annealed 108 0 13
56 0 27 0 0 1 205 98%
19 2046 0.015 Welded Tube 1.5" OD 0 0
0 0 40 0 133 0 0 173 98%
20 2012 0.045 4" Repair Disk 0 8 6 15 0
84 7 9 8 137 98%
Other - - 35 Other Items 77 118 64 67 113
133 44 24 112 753 100%
42,709
Alloy 2
Stephen C. Graves Copyright 2003
All Rights Reserved
Alloy #1 Product Heirarchy
(Top 20 Items - 98% of Sales)
4
8
12
15
10
11
1/8" Plate
4,104 lbs/mo
1/4" Plate
5,463 lbs/mo
23% RSD
4" Bar
6,817 lbs/mo
25% RSD
2
5
6
9
13
14
16
18
20
1
3
7
17
19
0.030" Sheet
2,053 lbs/mo
28% RSD
30% RSD
Stephen C. Graves Copyright 2003
All Rights Reserved
Alloy #2 Product Heirarchy
(Top 20 Items - 98% of Sales)
6
12
1/8" Plate
5,181 lbs/mo
1/4" Plate
6,726 lbs/mo
59% RSD
4" Bar
7,474 lbs/mo
59% RSD
2
3
4
8
10
13
14
15
16
17
20
1
5
7
18
19
0.015" Sheet
1,808 lbs/mo
65% RSD
11
9
0.030" Sheet
204 lbs/mo
126% RSD
59% RSD
Stephen C. Graves Copyright 2003
All Rights Reserved
Sales
Rank Material Gauge - Description Jan
Feb Mar Apr May Jun Jul Aug Sep
Total
(Pounds)
Monthly
Average
Standard
Deviation % RSD
From 0.030" Sheet
1 1011 0.002 Foil 618 1,079 1,215 1,188
1,020 290 1,590 849 1,017 8,866 985 372
38%
3 1003 0.005 Sheet 263 576 584 812 617
969 572 359 909 5,661 629 235 37%
7 1002 0.010 Sheet 20 56 287 179 41 204
560 143 276 1,766 196 168 85%
19 1023 0.010 Sheet - 1.0" x 23.75" 0 99
14 18 0 0 0 0 0 131 15 32 223%
17 1001 0.005 Sheet - 1.0" x 23.75" 171 0
0 20 0 0 0 17 0 208 23 56 242%
Monthly Subtotal 1,072 1,810 2,100 2,217
1,678 1,463 2,722 1,368 2,202
90% Input required at yield 1,191 2,011
2,333 2,463 1,864 1,626 3,024 1,520
2,447 18,480 2,053 569 28%
From 0.125" Plate
0.030" Sheet to Supply Above 1,191 2,011
2,333 2,463 1,864 1,626 3,024 1,520
2,447 18,480 2,053 569 28%
2 1004 0.015 Sheet 68 611 1,263 167
1,917 803 321 377 404 5,931 659 594
90%
16 1018 0.015 Tube - 1.0" OD 8 0 0 0 0
230 0 41 0 279 31 76 245%
20 1027 0.015 Sputter Target - 2.0" x 5.0"
0 105 0 0 0 0 0 0 0 105 12 35 300%
18 1016 0.015 Tube - 0.50" OD 3 0 0 51 6
54 33 27 33 207 23 22 94%
14 1017 0.015 Tube - 3/4" 0 0 0 8 12 558
0 0 12 590 66 185 282%
13 1010 0.020 Sheet 0 54 102 183 45 54
126 92 119 775 86 54 63%
5 1009 0.030 Sheet 0 122 614 275 422
360 686 246 177 2,902 322 224 70%
6 1008 0.040 Sheet 321 101 191 486 8 98
263 176 690 2,334 259 214 83%
9 1007 0.060 Plate 0 146 32 117 129 414
581 26 191 1,636 182 194 107%
Monthly Subtotal 1,591 3,150 4,535 3,750
4,403 4,197 5,034 2,505 4,073
90% Input Required at Yield 1,768 3,500
5,039 4,167 4,893 4,663 5,594 2,783
4,525 36,932 4,104 1213 30%
From 0.250" Plate
0.125" Plate to Supply Above 1,768 3,500
5,039 4,167 4,893 4,663 5,594 2,783
4,525 36,932 4,104 1213 30%
10 1012 0.125 Plate 228 8 32 90 432 17 8
0 450 1,265 141 185 131%
11 1013 0.150 Plate 1,100 0 0 0 0 35 0 0
0 1,135 126 365 290%
Monthly Subtotal 3,096 3,508 5,071 4,257
5,325 4,715 5,602 2,783 4,975
80% Input Required at Yield 3,870 4,385
6,339 5,321 6,656 5,894 7,002 3,479
6,219 49,165 5,463 1273 23%
From 4.0" Sheet Bar
0.250" Plate to Supply Above 3,870 4,385
6,339 5,321 6,656 5,894 7,002 3,479
6,219 49,165 5,463 1273 23%
8 1014 0.250 Plate 6 12 0 770 0 752 0 0
174 1,714 190 328 172%
15 1015 0.375 Plate 0 0 0 0 0 0 375 0 0
375 42 125 300%
4 1029 0.500 Disk - 10" dia 275 0 353 0
581 0 530 414 1,017 3,170 352 337 96%
12 1028 0.500 Ring - 10" OD x 8.5" ID 0
189 0 48 293 93 0 0 174 797 89 107
121%
Monthly Subtotal 4,151 4,586 6,692 6,139
7,530 6,739 7,907 3,893 7,584
90% Input Required at Yield 4,612 5,096
7,436 6,821 8,367 7,487 8,786 4,326
8,427 61,357 6,817 1722 25%
Stephen C. Graves Copyright 2003 Alloy 1
All Rights Reserved
Sales
Rank Material Gauge - Description Jan
Feb Mar Apr May Jun Jul Aug Sep
Total
(Pounds)
Monthly
Average
Standard
Deviation % RSD
From 0.030" Sheet
11 2025 0.002 Foil Annealed 551 0 0 0 0 0
0 0 0 551 61 184 300%
9 2026 0.010 Sheet Annealed 0 0 435 0
251 412 0 0 0 1,098 122 190 156%
Monthly Subtotal 551 0 435 0 251 412 0 0
0
90% Input required at yield 612 0 484 0
279 458 0 0 0 1,833 204 256 126%
From 0.015" Sheet
1 2040 0.015 Welded Tube .75" OD 296
936 2,989 1,366 2,468 989 657 528 1,392
11,623 1291 900 70%
5 2043 0.015 Welded Tube 1" OD 0 0 480
444 0 77 118 343 0 1,462 162 202 125%
7 2050 0.015 Welded Tube 1" OD With
Cap 0 0 0 1,003 0 0 176 0 0 1,179 131
332 254%
18 2036 0.015 Sheet Annealed 108 0 13
56 0 27 0 0 1 205 23 37 163%
19 2046 0.015 Welded Tube 1.5" OD 0 0
0 0 40 0 133 0 0 173 19 45 232%
Monthly Subtotal 404 936 3,483 2,869
2,508 1,093 1,084 871 1,393
90% Input required at yield 449 1,040
3,870 3,188 2,787 1,215 1,205 967 1,548
16,269 1,808 1175 65%
From 0.125" Sheet
0.030" Sheet to Supply Above 612 0 484 0
279 458 0 0 0 1,833 204 256 126%
0.015" Sheet to Supply Above 449 1,040
3,870 3,188 2,787 1,215 1,205 967 1,548
16,269 1808 1175 65%
2 2031 0.020 Sheet Annealed 761 521
826 671 889 1,004 3,975 27 7 8,681 965
1184 123%
4 2041 0.020 Welded Tube .75" OD 0 50
316 3 379 0 2,856 0 0 3,604 400 933
233%
14 2044 0.020 Welded Tube 1.0" OD 0 0
0 32 241 108 4 0 0 386 43 83 193%
16 2039 0.020 Welded Tube .50" OD 0 0
181 142 0 0 0 0 0 323 36 72 200%
10 2051 0.022 Welded Tube 1.25" OD 0 0
0 1,014 0 0 0 0 0 1,014 113 338 300%
3 2035 0.030 Sheet Annealed 1,638 116
1,138 634 524 579 1,672 703 517 7,520
836 533 64%
13 2045 0.030 Welded Tube 1.0" OD 0 0
370 0 0 1 0 0 41 412 46 122 268%
15 2047 0.030 WELDED TUBE 1.5O" OD
0 255 100 0 0 0 0 0 0 355 39 87 221%
17 2052 0.035 Tube 1.25" OD 0 0 302 0 0
0 0 0 0 302 34 101 300%
8 2029 0.045 Sheet Annealed 137 122
430 18 37 16 0 368 5 1,133 126 163
130%
20 2012 0.045 4" Repair Disk 0 8 6 15 0
84 7 9 8 137 15 26 171%
Monthly Subtotal 3,597 2,113 8,022 5,717
5,136 3,464 9,718 2,074 2,127
90% Input required at yield 3,997 2,347
8,913 6,352 5,706 3,849 10,798 2,305
2,363 46,630 5,181 3053 59%
From 0.250" Plate
0.125" Sheet to Supply Above 3,997 2,347
8,913 6,352 5,706 3,849 10,798 2,305
2,363 46,630 5181 3053 59%
6 2027 0.060 Plate Annealed 0 0 277 323
60 0 504 12 205 1,382 154 183 119%
12 2034 0.125 Plate Annealed 0 35 78 63
34 0 0 208 0 418 46 67 145%
Monthly Subtotal 3,997 2,382 9,268 6,738
5,801 3,849 11,302 2,524 2,568
80% Input required at yield 4,996 2,978
11,585 8,423 7,251 4,811 14,128 3,156
3,210 60,538 6,726 3990 59%
From 4.0" Sheet Bar
0.250" Plate to Supply Above 4,996 2,978
11,585 8,423 7,251 4,811 14,128 3,156
3,210
90% Input Required at Yield 5,551 3,309
12,872 9,359 8,057 5,346 15,698 3,506
3,567 67,264 7,474 4433 59%
Alloy 2 Stephen C. Graves Copyright 2003
All Rights Reserved
Material
Monthly
Demand
Monthly
Sigma
Period
(Weeks)
Average
(Pipeline)
Period
Sigma
Service
Level
Reliability
Factor Buffer Safety Total
Alloy #1
0.125" Plate 4,104 1,213 1 947 583 95%
90% 958 191 2,100
0.030" Sheet 2,053 569 1 474 273 95%
90% 450 92 1,020
Alloy #2
0.125" Plate 5,181 3,053 1 1,196 1,467
95% 90% 2,412 361 3,970
0.015" Sheet 1,808 1,175 1 417 564 95%
90% 928 135 1,480
Estimated Inventory Requirements
Stephen C. Graves Copyright 2003
All Rights Reserved