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at
Supply Chain Management ( IE
659)
Professor Dr. Sanchoy K. Das
Case Study Project Team 6: Mirjam Milsch
Gaurav Majumdar
Karthigeyan
Machendran
Henry Mensah
Overview
1)Introduction of Moonchem
2)Problem Overview
3)Questions
4)Solution Strategy & Illinois Pilot
Study
5)Operational Data
5.1) Moonchems Existing Distribution
Strategy
5.2) Alternative 1: No Aggregation
Model
5.3) Alternative 2: Complete
Aggregation Model
5.4) Alternative 3:
Tailored
Milsch,
Majumdar, Machendran,
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Mensah
Aggregation Model
p.
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15
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1)
Introduction
of
Moonchem
a) Industrial Chemicals,
c) Food Additives,
Mensah
2) Problem Overview
Consignment Inventory.
However, only 20% of their total number of customers use
Consignment Inventory.
Mr. John Kresge, VP of Supply Chain Department, decided to look how
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3) Questions
1) What is the current Annual Cost of
Moonchems
Strategy of sending full truckloads to each
customer in
the Peoria region to replenish consignment
inventory?
2) Consider different delivery options and
evaluate the
costs of each. What delivery option do you
recommend
for Moonchem?
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4) Solution Strategy
ITR = (Annual Sales Value of Goods Sold) / (Average
Inventory Value)
Moonchem cant directly influence the demand from its
customers
But it can decrease the Average Inventory value by
decreasing :
Cycle Inventory
subsequently the Total Annual Costs incurred.
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Small
12
1000
Medium
5000
Large
12000
5) Operational Data
Logistics Contractor: Golden Trucking
Truck Capacity: 40,000 lbs
Transportation
Cost
Full Truckload,
Single Customer
Drop-off
Full Truckload,
Multiple Customers
Drop-off
$ 400/truck
$350/truck + $50/
drop-off
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5.2) Alternative 1 No
Aggregation Model
The products are delivered independently to each type of
customer on a Just-in-Time basis where the Optimal Order
Quantity for each type of customer is predicted using the basic
EOQ Inventory Model.
Q* = [(2*D*S)/(h*C)]
n = D / Q*
Annual Holding Cost, AHC = (Cycle Inventory) *h*C = (Q*/2)*h*C
Annual Ordering Cost, AOC = (D / Q*) * S
Total Annual Cost, TC = AHC + AOC
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5.2) Alternative 1 No
Aggregation Model
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in each truck.
Product Specific Order Costs, sL=sM=sS=$50
Combined Fixed Order Cost per Order (S*) =
QM = DM/n*
QS = DS/n*
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$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
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Total Costs
Total Cycle Inventory
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for
Mensah
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THANK YOU
FOR YOUR ATTENTION!
QUESTIONS ?
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