Logistik Moocs
"We need to make sure that we have suppliers nearby."
Strategic network planning
"We cannot sell what we cannot produce. We at the marketing department need to communicate with Production before agreeing to deliver large orders"
Master production scheduling
W2.A1. CC Rainger is a business to business distributor of MRO (maintain, repair and operate) products. They have more than 300 retail stores that they serve from a central warehouse. The company uses a 98% service level calculated on the proportion that can be satisfied directly from stock (demand fill rate). The cost for placing an order is $100 and the annual holding cost is 20%. They work 365 days/year. Lead time from supplier:14 days Lead time to Retailer:3 days Internal price:$25 Daily demand:75 units σ, Standard deviation during lead time:103 units Inventory carrying cost: 20 % 1a. What is the Economic Order Quantity (EOQ) (EOK)? 1b. What Safety Stock (Säkerhetslager) level does the company need to reach the desired service level? 1c. What Re-Order Point (ROP) (BP, Beställningspunkt) level does the company need to reach the desired service level?
whereD = Demand = 75 units per day × 365 days / year = 27375 units per year O = Incremental ordering cost per order = $100 i = incremental inventory carrying cost, relative cost per item and time unit = 20% c = Unit cost (or goods value) per item = $25 EOQ = sqrt( ( 2 × D × O ) / (i × c) ) = sqrt( ( 2 × 27375 × 100 ) / ( 25 × 0.2 ) ) = 1050 units 1b. SS = k × σσ = Standard deviation of demand during lead time = 103 units We need the safety factor k to calculate SS. We can get it from the loss factor table via the service function: Service function E(z) = (1 - FR) × Q / σ FR = Demand Fill Rate = 0.98 The order quantity Q is the EOQ from question 1a above. E(z) = (1 - FR) × Q / σ = (1 - 0.98) × 1050 / 103 = 0.204 The Service loss function table gives the safety factor k = 0.48 for the service function value of 0.204. SS = k × σ = 0.48 × 103 = 49.44 ≈ 50 (for safety stock calculations, always round off to the closest higher integer, in this case the closest 10 units) 1c. The Re-Order Point (ROP) is the Safety Stock plus the demand during lead time: ROP = SS + d × LTSS = Safety Stock = 50 (see question 1b above)d = Demand per day = 75 units per day LT = Lead Time = 14 days ROP = SS + d × LT = 50 + 75 × 14 = 1100 units
2. Is it true that VMI means that a stock is managed by a supplier?
Yes, but there are different types of arrangements where levels of responsibilities between supplier and customer may change. 2. Explanation: VMI = Vendor Managed Inventory. The supplier manages the stock levels for the customer and thereby has the opportunity to create a more efficient distribution.
W4.A3a. Tom, a production manager in a medium sized production company is struggling with scheduling and planning activities related to his production activities. With today's situation without any information systems support, he is thinking about implementation issues regarding the support for a Material Requirement Planning (MRP) system. What needs to be available to support implementation and ensure operation of such a system?
-Bill of Material system W4.A3a. Explanation: To be able to do Material Requirment Planning, the components and raw material needs for each end product has to be known. Other alternatives are not linked to MRP systems at all.
The company regard the Eastern European as fragmented. To cover as many customers as possible during their 48 hour delivery window, moving to consolidated shipments is considered. This means that a full-length truck could be loaded in Birmingham, driven to a distribution centre where the products are split into several shipments that are distributed individually.
-Consolidation will perhaps increase our total lead time, but it will definitely lower our distribution costs. -When our customers are clustered in a tight geographical region, we can use milk-runs to manage distribution and pickup.
4c. Total Cost of Ownership (TCO) is an important concept, not the least when outsourcing activities to external partners. The general manager of XXL Ltd. is about to take a decision on outsourcing production of several items to Asia due to the fact the company is lacking production capacity. He is however concerned that the total cost of the products, when arriving from suppliers, is going to be higher that anticipated due to:
-Handling costs -Transport costs and import tolls -Customs costs and reverse logistics costs
What Management Information Systems (MIS) does Mr. Smith need to improve operations?
-Customer Relationships Management system correct -Purchase Management System correct -Material Requirement Planning system correct -Manufacturing Planning System correct -Inventory Management System correct -Warehouse Management System correct W4.A2a. Explanation: The applications in the list support different functional areas, meaning that the systems are used within the organization. The functional areas in modern companies (especially medium and large sized companies) follow typical setups and hence has a need for all the systems in the list. In fact, Mr Smith might be interested to have look at an application suite type of product suited for the size of his company and the business he runs. Much is gained if the applications can share and exchange data easily.
Suppose a company wishes to increase their return of capital employed (ROCE) to 15%. Currently, their ROCE is 10% and their working capital turnover rate is 1,5. However, they believe it would be difficult do much about their yearly turnover and average-tied up capital (assets). 6a. What is the company's current profit margin? 6b. What profit margin is the company aiming for?
6a. Explanation: Profit margin x Working Capital turnover rate = ROCE => Profit margin = ROCE/Working capital turnover rate = 0.1 / 1.5 = 0.07 6b. Explanation: Profit margin = ROCE/Working capital turnover rate = 0.15 / 1.5 = 0.10
"When we market our products, we really need to focus on beating our competitor. We need to lower our price!"
Not related to any planning activities
A company that manufactures and sells guitars made changes in their product range. From the start they had 20 models. Then they reduced the number of models to 15. As a result, the company enjoyed a 10% increase in turnover. Za. How much did the stock level change? Inspired by the success, suppose the company aim for another 20% increase in turnover and with the same change in stock level as the last time they reduced the number of models. Zb. How many models should the company go for this time?
Za = -9.2% Zb = 10 models
4a. What is the result of a reduction in structural width? 4b. What is the result of a reduction in structural depth?
-The number of planning points are reduced thereby reducing the manufacturing complexity. -The operative control becomes easier due to the reduction in components. 4a. Explanation: Each node in the product structure is a planning point that requires administrative work as well as handling (sourcing, stock keeping, picking etc.). The wider the structure, the more components that need to be available at the same time. If the number of components is reduced, there will be less complexity regarding the operative control. The structural width has nothing to do with the number of suppliers, however. -The number of planning points are reduced thereby reducing the manufacturing complexity. -The lead-time is reduced due to the decrease of sequential operations. 4b. Explanation: Each node in the product structure is a planning point that requires administrative work as well as handling (sourcing, stock keeping, picking etc.). With a deeper structure, more operations are required to be performed in a certain sequence, potentially leading to longer lead times. Reducing the depth does not automatically make the product simpler, nor does it automatically effect the number of variants.
W1.A2. Customer Order Manager Kenny has recieved a request from a customer on how many units of a certain product he could deliver in week 1. In their manufacturing facility, the company works with frozen time periods of six weeks. The production quantity is 10 000 units, the lead time to finish their products is 3 weeks and they use a safety time of 1 week. However, the lead time to most of their customers is within a week. 2a. How many units can Kenny promise the customer in the first week? 2b. What is the forecast for week 7 using moving average (n=6)? 2c. What is the forecast for week 7 using exponential smoothing (α=0.3)? 2d. What is the Average Forecast Error (AFE) for the forecast during the six first weeks? 2e. What is the Mean Absolute Deviation (MAD) for the forecast during the six first weeks? 2f. After week 4, in what week must production be available in order to meet the demand? 2g. In reference to question 2f above, what should the planned production be? 2h. In reference to questions 2f-g, what is the PAB for week 7? 2i. In reference to questions 2f-g, what is the PAB for week 8?
https://learning.edx.org/course/course-v1:ChalmersX+ChM006x+1T2019/block-v1:ChalmersX+ChM006x+1T2019+type@sequential+block@6eaffb4c04d64078a9fbd1aaee2f6183/block-v1:ChalmersX+ChM006x+1T2019+type@vertical+block@62cf7c2e8096488c8c53c3a10998cce2 2a. The PAB for "week 0" is 6 000 units. Planned production in week 1 is 10000 units. Reservations until next replenishment (in week 4) is 2500 + 3800 + 3300 units. Hence, Kenny can promise ( 6 000 + 10000 ) - ( 2500 + 3800 + 3300 ) = 6400 units 2b. Using n=6, the moving average with respect to week 7 is simply ( 2500 + 3800 + 3300 + 4000 + 4000 + 4000 ) / 6 = 3600 units 2c. The forecast is calculated based on the sales (reservations) and the forecast of the previous week. Hence, the forecast using exponential smoothing with α= 0.3: 0.3 x 4000 + (1-0.3) x 3000 = 3300 units Kenny wish to follow up on forecasting, to get a feel for how well the forecasting has worked. 2d. Calculate the difference between the forecasts and reservations for each week 1-6 and then calculate the mean of the differences. ( (3000-2500)+(3900-3800)+(3200-3300)+(3900-4000)+(4500-4000)+(3000-4000) ) / 6 = (500+100-100-100+500-1000)/6 = -17 2e. Calculate the difference between the forecasts and reservations, in absolute values, for each week 1-6 and then calculate the mean of the differences. ( |(3000-2500)|+|(3900-3800)|+|(3200-3300)|+|(3900-4000)|+|(4500-4000)|+|(3000-4000)| ) / 6 = (500+100+100+100+500+1000)/6 = 383 In addition what has already been reserved (see above), let's assume Kenny receives an order of 2000 units for delivery in week 7 and another 2500 units for delivery in week 8. This order is agreed in week 1. Kenny runs some forecast tests and estimates 3600 units for week 7. According to the table above, production is planned for week 1 and week 4. 2f. From the table we see that the stock will fall to PAB 4400-(1200+2000) = 1200 units in week 7. Subsequently, PAB will fall to nominally 1200-(1000+2500) = -2300 units, i.e. well below zero, if stocks aren't replenished. There's a safety time of 1 week, meaning that prodction must start in week 7. 2g. Production in the set quantity of 10000 units is needed to start in week 7, to be able to safely meet the demand for week 7 and 8. 2h. PAB for week 6 is 4400 units. Kenny should request production of 10000 units in week 7 (see questions 2f-g above). Reservations are 1200 + 2000 units, according to the order recieved in week 1 (see above). That means the PAB for week 7 is ( 10000 + 4400 ) - ( 1200 + 2000 ) = 11200 units 2i. PAB for week 7 is 11200 units, see questions 2f-h above. Reservations are 1000 + 2500 units, according to the order recieved in week 1 (see above). That means the PAB for week 8 is 11200 - ( 1000 + 2500 ) = 7700 units
"We cannot start production until we have all the components as well as the production resources available. We need to specify when production needs to start and when it needs to be done."
Production activity control
Company 1: "We sell fast moving consumer goods. Our customers are local supermarkets that typically order once a week. The average number of articles in each order is around 60-70, and the volume varied between ½ to 3 pallets per order in total. We have 100 customers." Company 2: "We are a 1st tier supplier to the automotive industry. We produce suspension parts and ship to three car manufacturers. We need a warehouse for our distribution operation where we can consolidate products from our two plants. We typically produce 100 pallets per day and our customers order roughly the same amount. We plan on using AGVs for picking." Company 3: "We are an e-commerce company selling children's clothes online. We are used to high variation in order volume and typically ships 1-3 products per order. We receive deliveries via container twice per month and normally ships 250-350 orders per day, even if the number varies between 50-800 depending on season etc."
1. Company 1 and company 3 are suited for a U-shaped layout (Warehouse B) since they are relatively low in volume and have quite complex order structure. Company 2, on the other hand, would be best suited for warehouse A with a linear layout. This is because of the relatively large flow with a small amount of products. And with a linear warehouse it will be easier to AGVs (Automated Guided Vehicles).
W4.A3d. Information systems are dependent on data and information input. The quality of the data is of major concern. Which of the following are NOT considered traditional information quality factors?
-Flexible information -Low resolution information Information needs to timely, valid and complete to be able to use it for effective decision making. As it is in most cases used in structured management information systems, it does not need to be flexible and the resolution of the information has nothing to do with quality in this sense as it deals with management issues.
Athens Inc. are using a purchased component in their own assembly. The production runs 52 weeks/year and the consumption of the component is evenly distributed over the year. The purchase price is $23. The inventory carrying cost is 20%. The administrative cost for each purchase is $85. The component can only be purchased in regular tens (i.e. 10, 20, 30, 40 et c).The demand is as follows: Week: 123456789101112 Demand (pieces):19+24+21+18+23+14+31+19+21+20+21+21 1a. Athens Inc. want to calculate the EOQ,. How much shall they order each time, assume that the 12 weeks of demand above is representative for the full year. Calculate (EOQ): 1b. Athens Inc. are using their ERP systems material planning function for determining when orders to the supplier of the component shall be released. Assume that the safety stock level is 20 pieces and there are 100 pieces available in stock when production in week 1 starts. The lead time is 2 weeks from the supplier of the component. In which week should the first order to the supplier of the component be released?
1a. Explanation: Weekly demand = 1/12 * (19+24+21+18+23+14+31+19+21+20+21+21) = 21 pieces Yearly demand = 52 * 21 = 1092 pieces EOQ = sqrt ( (2 x D x O ) / (i x c) ) = sqrt ( ( 2 x 1092 x 85 ) / (0.20 x 23) ) = 201 pieces 1b. Explanation: (WEEK 2) There are 100 pieces available in stock when production starts in week 1. According to the demand specified above, the stock is down to 18 units in week 4, if it's not replenished. The stock should not fall below the safety stock level. Hence, the stock should be replenished by week 4. The lead time is 2 weeks, which means the order to the supplier should be released in week 2 if the stock is to be replenished by week 4. According to exercise 1a the EOQ is 201 which means the best option is to order 20 packages of 10 each = 200 pieces.
Suppose the CEO of a functionally organized company directs his/her managers to prepare for increased manufacturing batch sizes. Which two managers will most probably welcome this direction?
2. Explanation: The purchasing manager probably welcomes the direction since he/she gets a better chance to negotiate for better volume discounts. The production manager probably also welcomes the direction since he/she is able to reduce production set-up times. The sales and marketing manager might dislike the direction, if larger batches means longer order-to-delivery times. The finance manager probably dislikes the direction since he/she has to deal with cash-flow issues because of increased tied-up capital in raw materials and finished goods stocks.
W3. A2. Suppose a forwarder gives you a quote for the transport of a container from Paris to Shanghai. The cargo consists of 15 pallets, each with a volume of 1 m3 and weighing 210 kg.Compare the alternatives below in terms of the transport price. 2a. Full 40 ft container. You load the container yourself and it is transported unopened to the destination. Container rent: $100, transport door-to-door $1000. Calculate the transport price! 2b. Shared container. Forwarder picks up pallets and transports them to destination, they will be consolidated with other cargo for the sea voyage. Density cutoff at 270 kg/m3. Price per kg at 270 kg/m3 is $0,30. 2c. Two 20 ft containers. You load the containers yourself and they are transported unopened to the destination. Container rent: $70/container, transport door-to-door $600/container.
2a. Price = 100 + 1000 = $1100 2b. Price = 15 m3 x $0,30 x 270 kg = $1215. You have to calculate with 270 kg since the goods are low density (below the cutoff). 2c. Price = (70 + 70) + (600 + 600) = $1340
"We are a typical make-to-stock company. Our production line is extremely efficient since we reduced the number of variants and we are now producing large batches at a very competitive cost level. Also, since we reduced the number of warehouses from 10 to 3, our tied-up capital has decreased. However, we have, since the reduction, experienced an increase in lead-time from order to delivery that the customers do not accept. They want delivery the next day, or even the same day! Also, we are swamped with support calls from customers who need help and advice. We simply do not have the time! We have also seen indications that our customer base often buys our products together with other types, such as paint and extra lights etc. We do not offer these things, which makes our customers choose competitors that do instead." 2a. How will the stock level change if the company moves from 3 to 5 warehouses? 2b. How much of the original stock level (10 warehouses) will remain for 3 warehouses? 2c. How much of the original stock level (10 warehouses) will remain for 5 warehouses? 2d. What are the main roles the company need an intermediary distributor to play?
2a. Explanation: The change is given by the relation sqrt(new number of warehouses) / sqrt(old number of warehouses) = sqrt (5) / sqrt (3) = 1.291 i.e an increase by 29.1% 2b. Explanation: The change is given by the relation sqrt(new number of warehouses) / sqrt(old number of warehouses) = sqrt (3) / sqrt (10) = 0.548 i.e 54.8% remains. 2c. Explanation: The change is given by the relation sqrt(new number of warehouses) / sqrt(old number of warehouses) = sqrt (5) / sqrt (10) = 0.707 i.e 70.7% remains. 2d. -Contact role correct -Aggregation role correct -Spreading role correct -Consolidation role correct 2d. Explanation: Emilia's Excellent Energy Savers produces in large batches. This requires an intermediary to stock up on models so that the customers can order at their own frequency (Aggregation role). Also, the customers require short lead-times, something an intermediary can do (Spreading role). Since customers also seem to prefer buying Emilia's Excellent Energy Savers' products together with other items, an intermediary can create an assortment of products (Consolidation role). And last, the customers need support, something an intermediary can do when adopting the Contact role. The final role, Creating variants, is not required of the intermediary.
Suppose a company that manufactures and sells motorcycles have made changes in their product range. Previously, they had 10 models, now they have 6. The change was beneficial for the company and the turnover increased from $1 000 000 to $1 200 000. All other things are assumed to be the same. 3. How much did the stock level change?
3. Explanation: he stock level decreases by 15,1% and the turnover increases from $1 000 000 to $1 200 000. Since the constant is fixed, the comparison can be written: 𝑆𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙=𝐶𝑜𝑛𝑠𝑡𝑎𝑛𝑡*√(𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟⋅𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠) 𝑆𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙𝐵𝑒𝑓𝑜𝑟𝑒=𝐶𝑜𝑛𝑠𝑡𝑎𝑛𝑡*√(1000000⋅10) 𝑆𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙𝐴𝑓𝑡𝑒𝑟=𝐶𝑜𝑛𝑠𝑡𝑎𝑛𝑡*√(1200000⋅6) 𝐶ℎ𝑎𝑛𝑔𝑒(%) = ((𝑆𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙𝐴𝑓𝑡𝑒𝑟−𝑆𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙𝐵𝑒𝑓𝑜𝑟𝑒)/𝑆𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙𝐵𝑒𝑓𝑜𝑟𝑒) ⋅100= =(𝐶𝑜𝑛𝑠𝑡𝑎𝑛𝑡*√(1200000⋅6) - √(1000000⋅10) / 𝐶𝑜𝑛𝑠𝑡𝑎𝑛𝑡*√(1000000⋅10))* 100= = ( √(1200000⋅6) / √(1000000⋅10)) −1 ) ⋅100≈−15,1% I.e. the stock level is reduced by 15,1%
W2.A3. An assembly line produces 800 products per hour, with a standard deviation of demand during lead time of 100. For every product they make they use a Kanban system. The lead time from the inventory location to the assemble line is 2 hours. The boxes the product is transported in can carry 200 items and the company uses an alfa factor of 0.1. 3a. What's the number of Kanban cards they need? 3b. If they instead want to use a ROP system (Beställningspunkt), what will the ROP be? Assume Cycle Service (Lagerservicenivå) is used. 3c. What service level does the safety stock represent ? (The probability of not having a shortage during one inventory cycle.)
3a. Explanation: The number of Kanban cards, Y, can be calculated using the formula below, in which we need:D = Demand = 800 units per hourLT = Lead time = 2 hoursQ = Number of items/card (box) = 200 unitsα = Safety factor = 0.1Y = Number of cards = ( D × LT × (1+α) ) / Q = 800 × 2 × (1+0.1) / 200 = 8.8 ≈ 9 cards 3b. The Re-Order Point is the safety stock plus demand during lead time:ROP = D × LT + SS From the Kanban calculation, we get Y = ( D × LT × (1+α) ) / Q = ( D × LT + α × D × LT ) / Q = ( 800 × 2 + 0.1 × 800 × 2 ) / 200 = ( 1600 + 160 ) / 200 That means the Safety Stock is equal to 160 units. ROP = D × LT + SS = 800 × 2 + 160 = 1760 3c. Assume Cycle Service is used. The Safety Stock (SS):SS = k × σ ⇒ k = SS / σ = 160 / 100 = 1.6 k = Safety factor σ = Standard deviation of demand during lead time From the the normal distribution function table we see that a safety factor of 1.6 corresponds to a service level of 94.5%.
4. A company manufactures plastic coat hangers that are packed in cardboard boxes for transportation. A shipment consists of 96 boxes where each box contains 150 coat hangers. Each box has the outer dimensions 0.8 x 0.6 x 0.5 m and the inner dimensions 0.795 x 0.595 x 0.495 m. The boxes are loaded on 24 pallets. The pallets are 0.8 x 1.2 m and their maximum allowed load height is 1.3 m, but they are packed to the height of 1 m. When fully loaded with boxes, each pallet is 1.15 m high (this includes the height of the pallet itself). The pallets are loaded on a truck. The available capacity in the truck is 44 m3. Each coat hanger has a volume of 0.000045 m3.
4a. Explanation: The load factor on the box level is (96 boxes * 150 coat hangers * 0.000045 m3 per coat hanger) / (96 boxes * 0.795 m * 0.595 m * 0.495 m) = 0.03 4b. Explanation: The load factor on the pallet level is (96 boxes * 0.8 m x 0.6 m x 0.5 m) / (24 pallets * 0.8 m x 1.2 m x 1.3 m) = 0.77 4c. Explanation: The load factor on the vehicle level is (24 pallets * 0.8 m x 1.2 m x 1.15 m) / 44 m3 = 0.60 4d. Explanation: The overall load factor is (96 boxes * 150 * 0.000045 m3) / 44 m3= 0.015
Suppose we compare two companies that have exactly the same turnover (revenue) and return on capital employed (ROCE). Company A is fast moving with a working capital turnover rate of 10 times per year, but has quite a low profit margin of only 1%. Company B has a capital turnover rate of only 1 time per year, but has a moderately healthy profit margin of 10%. Both companies wish to show potential investors a better return on capital employed and/or profit margin. 5a. Which company would benefit the most from reducing costs? 5b. Which company would benefit the most from reducing average tied-up capital (assets)?
5a. Explanation: Company A has a profit margin of only 1% indicating that revenue and cost are very close while Company B has a profit margin of 10%. Company A would then benefit most from increasing the profit margin, e.g. by reducing cost. 5b. Explanation: On the other hand Company A turns it capital already 10 times a year while Company B only has a working capital turnover rate of 1, this indicates that Company B has most interest in increasing the working capital turn over rate.
5. Assume the demand for a product is 200 pieces per week. The demand is even and has no seasonal or other variations. The manufacturer's rate of production is the same as the demand, i.e. 200 pieces per week. Manufacturing of the product in question takes place continuously, with equal quantities produced each day. Safety stocks equivalent to two weeks' demand are kept in finished goods stocks. Withdrawals from finished goods stocks are 800 pieces every 28th day. The value of the products in finished stocks is €200/piece. 5a. How large is the average stock? 5b. What is the average tied-up capital? 5c. What is the average throughput time?
5a. Explanation: Average stock = Safety stock + Order quantity / 2 = 400 + 800/2 = 800 5b. Explanation: Average tied-up capital = Average stock * Product value = 800 * 200 = € 160 OOO 5c. Explanation: Average throughput time = Average stock / demand rate = 800 units / 200 units per week = 4 weeks
6. Perlor, a musical instruments manufacturer in Indonesia, make and sell guitars. Let's assume they operate at maximum capacity, making guitars seven days a week, 52 weeks per year, with a production result of 100 guitars per week. Perlor ship all guitars they can produce as soon as they can, keeping no safety stock. The guitars are shipped to Germany, where a wholesaler distributes them to all over Europe. Sales in units is the same as the production in Indonesia. The value of a guitar leaving production is €200. The cost of capital is estimated to 15%. The cost for holding inventory is 10%. Shipments dispatch every eight weeks. The shipping time is six weeks, and the cost is €5/unit. In Germany, the wholesaler keeps a safety stock corresponding to a week of sales. 6a. What is the average inventory in Indonesia? 6b. What is the average inventory during shipping? 6c. What is the average inventory in Germany? 6d. What is the inventory holding cost in Indonesia? 6e. What is the inventory holding cost during transportation? 6f. What is the inventory holding cost in Germany? 6g. What is the shipping cost? 6h. What is the total cost , considering the total inventory carrying cost and shipping?
6a. Explanation: The production is 100 units per week. Shipping from Indonesia every eight weeks means that they have to keep an average inventory of 8*100/2 = 400 units. 6b. Explanation: Looking at a 8 week shipping time cycle, 8 weeks of production will be dispatched, i e 800 units. These will be in transportation weeks 1-6 of the time. However, nothing is in transportation weeks 7-8. The average inventory during transportation is therefore 800*6/8 = 600 units. 6c. Explanation: The safety stock in Germany must be taken into account. It's assumed sales is the same as production, i e 100 units per week. Therefore, the average inventory is 400 + 100 = 500 units. 6d. Explanation: Inventory holding cost = Average inventory * Unit value * Inventory carrying cost percentage = 400 * 200 * (0,15+0,10) = 20 000 (€/year) 6e. Explanation: The unit value increases during transportation, from €200 to €205 since an additional €5 per unit is invested in shipping. Therefore, we can calculate with an average unit value of (200+205)/2. Inventory holding cost = Average inventory * Unit value * Inventory carrying cost percentage = 600 * (200+205)/2 * 0,15 = 18 225 (€/year). Note that the cost for holding inventory is not to be included during transportation since that is a cost the shipping operator takes care of. 6f. Explanation: Inventory holding cost = Average inventory * Unit value * Inventory carrying cost percentage = 500 * 205 * (0,15+0,10) = 25 625 (€/year). Note that the unit value has increased to €205 when the guitars arrive in Germany since an additional €5 per unit was invested in shipping. 6g. Explanation: 52 * 100 * €5 = 26 000 (€/year) 6h. Explanation: The total cost is given by summing up the contributions of the inventory holding costs in Indonesian, during transportation and in Germany and the shipping cost. Total cost = 20 000 + 18 225 + 25 625 + 26 000 = 89 850 (€/year).
W4.A3b. Communication of data and information exchange is a vital part of any companies and organizations today. Communication can be done in many ways and the alternatives varies in terms of efficiency. Electronic Data Interface (EDI) is an application available for most companies. What is an EDI?
A method for automatic data exchange between organizations EDI is a middleware that is used mainly by medium sized and large organization to exchange data in an automatic way and in a structured manner. It is a UN standard applied by industry.
"We must coordinate the spring campaign (that we have every year) with the production department better."
Sales and operation planning
"As Production manager, I absolutely hate to arrive on a Monday morning and find out that the sales people have managed to promise quantities that are not in my plan to produce. We really need to talk to each other more."
Master production scheduling
Candy producer Jim's Jellybeans have customers all over the world. To be able to meet demand, the company has been forced to operate 15 separate warehouses across the globe. Lately, however, development in IT and warehouse automation has created new possibilities for Jim's Jellybeans. The cost of the current operation is (for the whole company): Transportation: $1 000 000 Stock keeping: $15 000 000 Cost for tied-up capital: $2 000 000 The company is faced with three alternatives: Alternative 1: Automate picking. This means that each warehouse will be 30% more expensive (stock keeping cost) due to new equipment etc. But it also means that the order to delivery lead-time for each warehouse will decrease by as much as 60%. The reduced lead time lets the company reduce the number of warehouses to 10. As a result of this, transportation cost will double. Alternative 2: Automate everything. Here, the number of warehouses are reduced to 5. The remaining warehouses are heavily automated and stock keeping cost is increased by 70% for these. Transportation cost increases by 500%. Alternative 3: Do nothing. Keep the current system intact. Na. What is the cost for tied-up capital for alternative 1? Nb. What is the cost for tied-up capital for alternative 2? Nc. What is the total cost for alternative 1? Nd. What is the total cost for alternative 2? Ne. What is the total cost for alternative 3?
Na. The cost for tied-up capital after the number of warehouses has been reduced is given by: Previous cost for tied-up capital * sqrt(new number of warehouses) / sqrt(old number of warehouses) = = $2 000 000 * sqrt(10) / sqrt(15) = $1 632 993 Nb. The cost for tied-up capital after the number of warehouses has been reduced is given by: Previous cost for tied-up capital * sqrt(new number of warehouses) / sqrt(old number of warehouses) = = $2 000 000 * sqrt(5) / sqrt(15) = $1 154 700 Nc. The total cost is given by the transportation cost + stock keeping cost + tied-up capital. The transportation cost is two times the original transportation cost, i e $2 000 000. The stock keeping cost for the 10 remaining warehouses increases by 30%, i e 10 * $15 000 000/15 * 1.3 = $13 000 000. Total cost = $2 000 000 + $13 000 000 + $1 632 993 = $16 632 993. Nd. The total cost is given by the transportation cost + stock keeping cost + tied-up capital. The transportation cost is five times the original transportation cost, i e $5 000 000. The stock keeping cost for the 5 remaining warehouses increases by 70%, i e 5 * $15 000 000/15 * 1.7 = $8 500 000. Total cost = $5 000 000 + $8 500 000 + $1 154 700 = $14 654 700. Ne. The total cost is given by the transportation cost + stock keeping cost + tied-up capital. If we do nothing it's $1 000 000 + $15 000 000 + $2 000 000 = $18 000 000.
"If we have sold 100 SmoKings, we need to make sure that we have the components available when we are ready to assemble them, as well as the sub-systems that we buy directly from suppliers."
Order planning
W4.A3c. A warehouse company with high volume of incoming and out coming units every day is considering automatization of its identification system of incoming goods. A identification tag is attached to each item and it is not in line of sight. For automatization purposes, what is the most applicable solution?
Radio Frequency Identification (RFID) RFID is the only method that can be used without "line of sight". All other known alernatives rely on having "line of sight".
Regaring an investment in EDI communication technology, what advice would you give Mr. Smith?
The investment is quite high and is only profitable if many transactions are done each day that can benefit from the technology. W4.A2b. Explanation: In business, the main purpose with EDI is to lower the cost for transactions by implementing automatic data exchange. Therefore, a proper ROI is called for since the investment in EDI technology can be substantial, both when it comes to procuring and operating/maintaining.
2. The Kano model is a tool that can be used to.
Understand and explain how the performance of a supplier of products or services relates to customer expectations. correct
9. The chief executive officer of a computer manufacturing company seeks advice to boost overall business performance for a successful model. However, it's been on the market 12 months. What advice would you give the CEO?
We should seek to minimize tied up capital and production costs so that we stand better prepared to match the price levels offered by the upcoming competition and newer models. correct A computer that has been on the market for 12 months has reached the maturity/saturation phase or maybe even the Decline phase. This considering Moore's law stating that the price/performance ratio is doubled in about 18 months. From a logistic perspective its then best to minimize cost and tied up capital.
X. A company sells small items of glass, packed in cardboard boxes. Each box is filled to 86% of its volume. Each item has a volume of 0.00025 m3 and each box contains 140 items. In addition to the item the box also contains shock absorbing packaging in order to minimize risk of damaging the products during transport and handling. The shock absorbing packaging takes up 0,02 m3. The inner volume of the cardboard box is 0,064 m3. 468 boxes are loaded onto pallets. The pallets are 0.8 x 1.2 m and their maximum allowed load height is 1.4 m. When fully loaded with boxes, the load per pallet measures 0.8 x 1.08 x 1.26 m (excluding the pallet height). The pallets are then loaded onto a truck. The available capacity in the truck is 63 m3. And the pallets fill out 90% of the width, 75% of the length and 80% of the height. Xa. Calculate the load factor on the box level (%). Xb. Calculate the load factor on the pallet level (%). Xc. Calculate the load factor on the vehicle level (%). Xd. Calculate the overall load factor (%).
Xa. Explanation: The load factor on the box level is 86%, which is given directly. Xb. Explanation: The load factor on the pallet level is (0.8 x 1.08 x 1.26) / (0.8 x 1.2 x 1.4) = 0.81 Xc. Explanation: The load factor on the vehicle level is 0,90 * 0,75 * 0,80 = 0.54 Xd. Explanation: The required capacity is 468 boxes * required capacity per box (140 items/box * 0,00025 m3 per item + 0.02 m3 shock absorbing packaging/box) = 25,74 m3. The overall load factor is 25,74 m3 / 63 m3 = 0.41
Y.a Different levels of environmental impact and counter-measures Y.b Emissions
Y.a ( -On a regional and global level harmful environmental impact are more difficult to tackle compared to effects on a local level since the polluters often aren't affected by the direct consequences. -Moreover, on a global or regional scale, environmental impact often build up gradually over long periods of time. Therefore, it's often difficult to prove the responsibilities and the root causes to the effects. ) Y.b ( -The forming of NOx is always present to some degree in combustion engines. However, emissions can be effectively reduced by use of well-established technology such as catalytic converters. -Today, the main culprit of SOx emissions is the shipping industry. The reason is, of course, the high content of Sulphur in marine bunker oil. On the bright side, new regulations are introduced to drastically reduce the use of fuel with high Sulphur content. -CO2 is non-toxic. It's formed in all traditional combustion processes in which fossil fuels are used. Unlike other types of emissions, CO2 can't be reduced by use of filters or catalytic converters. Therefore, CO2 is one of the main contributors to the greenhouse effect. ) Y.c ( -It's possible to correlate atmospheric CO2 concentration levels to global temperature. Therefore, the CO2 levels of today are quite worrying in terms of global warming. Many politicians and other influencers agree to what earth science and climate change monitoring show and support immediate counter-measures. -Many of the negative environmental effects the transport industry have contributed to historically can be mitigated by using existing and future green tech. However, these savings are believed to not reach the full total saving effect since the general need for transports is expected to increase. )
1. In a distribution channel with shared transaction and material flow, there are several variants.
https://learning.edx.org/course/course-v1:ChalmersX+ChM005x+1T2018/block-v1:ChalmersX+ChM005x+1T2018+type@sequential+block@ff0f11a5299b44658a288b8618bb955b/block-v1:ChalmersX+ChM005x+1T2018+type@vertical+block@96f721d736f24ef4bc1f450c3303d02c - Cross-docking with sorting - Traditional warehousing and distribution - Direct cross-docking and merge-in-transit
1. Explanation: The supplier manages the stock level for the customer. This is when the customer gives power to the supplier to bypass the normal order process and the supplier decides when to order and also how much. This is also called Vendor Managed Inventory. Customer Managed Ordering. This is when the customer bypasses the normal order process at the supplier by connecting directly to the fulfilment part of the supplier's order process. The customer registers their order directly in the supplier's sales system. Collaborative Planning, Forecasting and Replenishment. This is a concept for supply chain collaboration, developed by the fast moving consumer goods (FMCG) industry to make sure that the supply chain as a whole is working towards the same goals. It has nothing to do with the images above. POS-data. POS is short for Point-of-Sales meaning that data is collected from as far downstream as possible in the supply chain, preferably from the cashier in the store, and shared with actors upstream to enable them to plan more efficiently.
https://learning.edx.org/course/course-v1:ChalmersX+ChM006x+1T2019/block-v1:ChalmersX+ChM006x+1T2019+type@sequential+block@225dec37ebde489f847b84db3c7fb493/block-v1:ChalmersX+ChM006x+1T2019+type@vertical+block@853663fe285842848b50ecca703e75f6
Route Planning (ruttplanering) W3. A3. A terminal has four customers that need delivery by truck. The customers have the following demand:
https://learning.edx.org/course/course-v1:ChalmersX+ChM006x+1T2019/block-v1:ChalmersX+ChM006x+1T2019+type@sequential+block@877eb0cfb2504ba48bdee72c8787d87c/block-v1:ChalmersX+ChM006x+1T2019+type@vertical+block@b7d4cbebd22c4bfb9623f8cca74f425e.