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Logistics Management Jagathy

Logistics Management Jagathy

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Sections

  • Logistics Management Logistics Management
  • The Value Chain (Porter[1985]) The Value Chain (Porter[1985])
  • Need for integration Need for integration
  • Tactical Problems Tactical Problems
  • Methodology Methodology

Logistics Management

Dr. Jagathy Raj V. P. Associate Professor School of Management Studies Cochin University of Science and Technology Kochi - 22

Every company dreams of achieving the Seven R¶s

Delivering 
      The right product, in The right quantity, and The right condition, at The right place, at The right time, for The right customer, at The right cost

The turbulent business environment 
High Uncertainty  Rapid changes  The demand for better quality products at lower cost at a shorter supply lead time  Short product life cycle  Globalization of markets  Formation of trade blocks  Shifting of Manufacturing bases to lower labour cost areas  Global sourcing supplies

Logistics Management Effective logistics Management alone can make this possible .

environment. . received  Corporations are using logistics as a competitive weapon to meet the challenges of global competition and turbulent business environment. Logistics has increased management attention. attention.Logistics  In recent years.

The focus of modern business  Maximizing the ROI with service-cost service- performance as good as (or perhaps better than) the competitor¶s is the primary objective of any company manufacturing and selling goods to meet customer needs  Satisfying the needs of the customer at least cost  Maximize the ROI .

two wheelers etc .Introduction  Previously we have to wait for long time for getting premium goods  Twentieth Century ± Due to Metamorphic environmental transformation in the business world which results ± Lot of growth opportunities as well more complicated business problems threatening even survival on the other. ± Ex: Numerous cars.

this is the outcome of Reasons± Heavy industrialization ± Liberalization policy ± Rapid innovation in the field of Science and Technology followed by their easy transfer ± Globalization of world market .Introduction  Reasons.

 Distributors/retailers are also very conscious about their ROI due to the availability of huge attractive trade opportunities .Introduction  As a result consumers are becoming very selective and conscious about their purchase decisions. especially value for money and convenience.

firms need to put their best effort towards formulating market oriented and customer focused strategies . it is important for every firm to generate the highest level of customer satisfaction while delivering the highest value to the shareholders.Introduction  So in the competitive environment.  So in such an erratic market place.

. on-theEagerness to sort out problems and complaints ± in order to satisfy their consumers with a difference than competitors.Introduction      They are increasing their product portfolio Quick information sharing Prominent display. read and intact delivery 24 hours on-the-spot after sales service.

Introduction  Additionally to generate the highest value to shareholders. avoiding idle time for any of them . firms need to have cost-effective costbest market offering  For this they need to have an improvement of productivity and profitability by means of optimum utilization of resources.

firms have to offer best quality product at a reasonably least price as and when required. avoiding a stock-out situation stockwhich has given impetus to the concept of Logistics Management  It has ability to ensure a consistency in the quality.Introduction  To attain all of the above goals. tremendous cost saving potential and making goods at the place of requirements in time .

movement. operation. storage.  Acquisition or furnishing of services  Act as a supportive system which reflects the practical art of moving armies and materials engaged in combat to achieve the desires results .Logistics  US Air force Technical report(1981) defines this term as the science of planning and carrying out the movement and maintenance of forces ± deals with  Design and development. maintenance. evacuation and disposition of materials  Movement. maintenance. disposition of facilities.  Acquisition or contruction. evacuation and hospitalization of personnel. acquisition. distribution.

. and subsequent distribution of finished goods from there to the ultimate users. Logistics has a acquired wider meaning  It covers activities for the material flow from the source to the processing facilities.Logistics  In the Industrial and commercial world.

. process.8 percent of the other firms 75. include logistics in their strategic planning process. leading edge firms and  More than 75.Logistics  A survey conducted by Fawcett and Clinton shows that more than 80.2 percent of the 80.

Independent Business Function Manufacturing Inventory Control Sales Procurement Objective Maximization of Profit by Sales volume Distribution Out Come Aggressive preaching Skill .

Limited Integrated Business Manufacturing Management Material Management Physical Distribution and Sales Managemt Objective Cost Control Output Price ± based competition .

Profitability and Market Shares .Internal Integrated Business Function (Logistics Management Manufacturing Management Material Management Marketing and Distribution Management Objective Maximization of profitable Sales Values and Cost Reduction OUTPUT Increased Productivity.

External Integrated Business Function (SCM) L O G I S T I C S C U S T M E R S Objective Core Competency V E N D E R S Output Customer Values and Harmonics Relations Relationships .

Logistics 
Logistics is responsible for managing the acquisition, movement and storage of materials, parts and finished goods (together with related information flows) through an organization and its marketing channels to meet customer expectations and the company¶s profit objective. objective.

Logistics 
Logistics has been recognized not only as a group of

important functions, but as function that have important strategic impacts as well 
In the United States, annual expenditure on non-military non-

logistics are estimated as 11 percent of the Gross National Product. Product. 
With logistics cost of 30 percent of goods sold, not

uncommon for US manufacturing firms potential saving in logistics coordination cannot be ignored. ignored. 
Logistics strategy must be integrated with corporate

strategy because corporate strategy

Logistics Management
The Council of Logistics Management defines

Logistics Management as:
The process of planning, implementing and controlling the efficient, cost ± effective flow and storage of raw materials, in-process ininventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements

A Process view of Logistics Management Requirements information flow Industrial Enterprise Suppliers Purchasing Manufacturing Physical Distribution Customer Value added material flow .

Flows in a Logistics System  Flow of Materials  Merchandise flow  Money flow  Information flow .

Logistics Management  Logistics Management is an integrating function which coordinates and optimizes all logistics as well as integrates logistics activities with other functions including marketing. work-in-process work-inand finished inventory to support business unit strategy . manufacturing. sales. finance and IT  It Includes the design and administration of system to control the flow of materials.

Visual Representation of Integrated Logistics Management IN B O U N D L O G IS T IC S T ran s p o rt T ran s p o rt S u p p lie r R a w M a te r ia ls S o u r c e M a te r ia l H a n d lin g C o n s o lid a tio n W areh o u s e T ran s p o rt S u p p lie r R a w M a te r ia ls S o u r c e R a w m a te r ia ls o r P a rts S to ra g e M a te r ia l H a n d lin g IN T E R N A L L O G IS T IC S M a n u fa c tu r in g S ta g e I M a n u fa c tu r in g S t a g e II M a n u fc a tu r in g N S ta g e s M a n u fa c tu r in g S ta g e N F in is h e d G o o d s O U T B O U N D L O G IS T IC S M a te r ia l H a n d lin g R e ta ile r L o c a l d e liv e r y W areh o u s e D e liv e r y T ran s p o rt C u s to m e rs L o c a l d e liv e r y W h o le s a le r D e liv e r y F in is h e d G o o d s S to ra g e R e ta ile r N o te : M a te r ia l F lo w In f o r m a t i o n F l o w .

Components  Inbound Logistics  Internal Logistics  Outbound Logistics .

Inbound Logistics  Sourcing and vendor selection for supply of raw materials and manufacturing parts  Inbound transportation and procurement planning  Raw materials warehousing including consolidation warehousing  Management of Inventory  Information system for effective support strategic alliances with the supplies and transporters .

Internal Logistics  Capacity Planning Operational planning Production planning  Materials Requirement planning  Shop floor control  Management of in-process inventory in Supporting material handling facilities planning and their deployment etc .

Out bound Logistics  Outbound logistics system is concerned with the flow of finished products from factory warehouse to the customers through a distribution network comprising:  The wholesalers  Distributors  Retailers  Regional warehouses  Transporters  The inventory at all levels  Sales order processing  Sales return processing  Accounts receivable realization and  Counter flow of information from the customers to the factory .

Logistics Management 
Logistics is the process of strategically managing the procurement, Movement and storage of materials, parts and finished inventory (and the related information) through the organization and its marketing channels in such a way that current ans future profitability are maximized through the cost ± effective fulfillment of order.

Logistics Management 
Logistics Management refers to designing, developing, producing and operating an integrated system which is responds to customer expectations by making available the required quantity of required quality products as and when required to offer best customer service at the least costs

Logistics Management 
For Service Industry ± Defined as the process of coordinating non martial activities necessary to the fulfillment of the service in a cost and customer service effective manner  It is an internal integration of interrelated managerial function to ensure a smoth flow of raw materials from the point of inception to the first product point, semi-finished semigoods within production process and finished goods from the last point the point of consumption

Integrated Logistics Management  Defined as the process of anticipating customer needs and wants acquiring the capital. people. and utilizing the network request in a timely way . goodsproducing network to fulfill customer requirements. optimizing the goods-or services. Technologies and information necessary to meet those needs and wants. material.

. ‡ Maximize Profits. Not Sales.Goals of Logistics system ‡ Provide a Targeted Level of Customer Service at the Least Cost.

The Value Chain (Porter[1985]) Firm Infrastructure Support activities Human resource management Technology development Procurement M a r g i n M Inbound logistics Operations Outbound logistics Marketing and sales Service g i n Primary activities a r .

Major features of For Logistics Management  Smooth flow of all types of goods such as raw mareials. work-inwork-in-process and finished goods  Meeting customer expectations about product and related information requirements  Real time flow of information about products¶ demand and availability  Delivery of quality product in required quantity without excessive safety stock  Best possible customer service at the least possible cost  Integration of various managerial functions for optimization of resources  Movement and storage of goods in appropriate quantity  Enhancement of productivity and profitability .

Integrated Logistics Management  Integrated Logistics is viewed as a method to create a sustainable competitive advantage over the company's competition  Logistics strategy must be integarted with corporate strategy because corporate strategy sets the basic requirement to the Logistics system of a strategy .

Integrated Logistics Management  The logics process is becoming more demanding and complex. so is the business environment in which the logistics has to operate  Highlights seven critical factors including that are contributing to the complexity of logistics system operations        Escalating customer demand Cycle time reduction Globalization Restructuring Supply Chain Partnerships Productivity pressures and Environmental awareness .

Integrated Logistics Management  Revolution in Communication and Information Technologies have opened new avenues for integrating raw material supply. Manufacturing support and Physical distribution of logistics .

Relative Importance Depends on  Raw materials Sources and Volume  Capital Investment  Distribution Volume and Territory .

Competitiveness depends on  Reducing raw materials input costs through sourcing and inbound logistics optimization  Increasing throughput from the plant  Choice of cost ± effective Technology  Reducing outbound Logistics cost .

The following objectives are realized  Increased velocity of flow  Quick response  Reduced cost  JIT Supply  JIT Distribution .

Need for integration Through effective Management  Infrastructure  Machines  Process  Technology and  People .

Gaining Competitive Advantage through Logistics Value advantage Logistics leverage opportunities y Tailored service y Distribution Channel Strategy y Customer relations etc. y Reliability y Responsiveness y Information y Flexibility The Goal: Sustainable competitive advantage Productivity advantage Logistics leverage opportunities y Capacity utilization y Asset turn y Co-makership/schedule integration etc y Low inventory y Low waste .

Important Logistics Activities and Their Relations to Key Business Goals K e y B u s in e s s G o a ls .

G r o w t h .

M ark et Sh are .

but as functions that have important strategic impacts as well .  H ig h le v e l o f s e rv ic e R etu rn o n C a p ita l E m p lo y e d M a jo r V a ria b le s S a le s V o lu m e O th er C o s ts W o rk in g C a p ita l F ix e d A sset C u s to m er S e rv ic e P u rc h a s in g C o s ts P ro d u c tio n C o s ts L o g is tic s C o s ts In v e n t o r y F a c ilitie s Im p o r ta n t L o g is tic s A c tiv itie s S tr u c tu r e a n d F u n c tio n s of L o g is tic s Logistics has been recognized not only as a group of important functions.

Inventory positioning. sourcing. order management and Infromation systems planning etc . mode and carrier selection. equipment and facilities planning. inventory planning. number and location of warehouses. sub contracting of services.Strategic Logistics Planning  Strategic logistics planning is essentially concerned with the deployment and management of logistics resources to met the desired cost effective service performance of the system  This may involve.

balancing facilities to maximize throughput and flexibility and introduction of system to help. acqusition or long term hiring of carriers like ships barges. acquisition of matrial handling system and facilities. transport mode. strategic alliance with both suppliers and customers also form parts of these strategic logistics planning process. .Strategic Logistics Planning  This is also includes such decisions as location and capacities of company owned plants and warehouses. reductions in response time and in process inventory  Choice of supply. trucks etc.

. orders. finished goods inventory. parts. movement and storage of materials. and related information flows through the organization and its marketing channel in such a way that current and future profitability is maximized through the costcosteffective fulfillment of orders.Strategic Logistics Planning The process of strategically managing the acquisition.

Main objectives of logistics planning are:  Cost reduction: . reduction:  Capital reduction: .This strategy is directed towards minimizing the reduction: variable costs associated with the movement and storage. system.This strategy recognizes that the revenue is a function of the logistics service provided and develops an effective service strategy that is different from the one provided by competitors. competitors. ± Logistics has significant impact on these important corporate performance objectives . mind. The best storage.This strategy is directed towards minimizing the level of investment in the logistics system. strategy is to evaluate the alternative courses of action and select the optimum one keeping profit maximization as the prime goal in mind. improvements:  Service improvements: .

Strategic Logistics Planning  Maximizing the ROI with service-cost serviceperformance as good as(or perhaps better than) the competitor¶s is the primary objective of any company manufacturing and selling goods to meet customer needs .

  . considerable. price.The logistics planning is particularly crucial to those industries  Volume of raw materials and finished goods handled is very high and freight including handling cost constitutes a significant portion of the sales price. Capital intensive manufacturing technology that requires high capacity utilization to spread capital cost over larger volume Asset deployment in raw materials procurement and finished goods distribution is considerable.

Logistics planning includes      Supply Chain Planning Shipment Planning Transport System Planning Vehicle Routing and Scheduling Warehousing .

A sound strategic logistics plan for a manufacturing company must aim at:  Minimizing the landed cost of inputs through strategic sourcing.  Increasing the productivity of the manufacturing unit through appropriate choice of technology. consolidation warehousing and carrier selection  Minimizing the procurement lead time and raw materials inventory through better information and procurement systems. systems. balancing of facilities and optimization of internal logistics support including material handling facilities Contd«« .

A sound strategic logistics plan for a manufacturing company must aim at:  Decreasing the finished goods inventory through reduced manufacturing response time. . quick response logistics and customer specific support services. services.  Minimizing the assets including inventory deployed in the distribution channel  Minimizing the delivery lead-time through leadefficient customer response. time.

Logistics Management Decisions The level of investment and the periods over which the benefits from an investment in logistics system is realized  Strategic logistics decisions  Tactical logistics decision  Operational logistics decisions .

Logistics Management Decisions Strategic ySupply chain design yResource acquisition yBroad scope. highly aggregated data yLong-term planning horizons(1year+1) yProduction/distribution planning yResource allocation yMedium-term planning horizons (monthly. real-time) Tactical Operational . quarterly) yShipment routing and scheduling yResource routing and scheduling yNarrow scope. detailed data yShort-term planning horizons (daily.

ERP l shipment dispatching vehicle dispatching .Logistics Application Areas by Modeling Views Planning Horizons Supply chain planning Transportation planning Shipment planning Vehicle routing Warehousing Strategic Site location Capacity sizing sourcing site location fleet sizing outsourcing bid analysis fleet sizing fleet sizing service day balancing frequency analysis routing strategy zone alignment warehouse layout material handling design storage allocation order picking strategies order picking Tactical production planning sourcing routing strategy network alignment load matching consolidation strategy mode strategy Operationa MRP. DRP.

Logistics Modeling Real World Relevant Features Management Doubt Symbolic Representation Data Result Management Action Model .

Logistics Models Analytical Models  Distribution network Optimization Venroy[1989]  Berth Planning at Naval station Brown et. al [1997]  Heuristics  Distribution and Materials Management Mentzer and Schuster [1982]  Material Flow on a site-by-site basis site-byLee and Billington[1993]  Modeling buyer-supplier relation Christy and Grout[1994] buyer- . al [1994]  Transportation Speranza and Vkovich[1994]  Supply chain of fine chemicals Voudouris[1996]  Facility location formulation Camm et.

al[1993] Horne and Irony[1994] Gambardella[1998]  Throughput from transportation system  Intermodal container Operation .Logistics Models  Simulation  Production distribution analysis  Assembly line operations  Marketing logistics  Complex rail network  Transportation Dorairaj[1989] Sayer[1989] Horrington et. al [1992] Dessosky and Leachman[1995] Chang[1997]  Composite  Selection of location  Ship Cargo Operation Copacino and Rosenfield[1987] Allen et.

Limitations of Available Models Analytical Models      Distribution Focus Linear or Integer Programming Models Deterministic Static Too complex to establish and solve Heuristics Models     Intuitive Deterministic Optimality not ensured Distribution Focus .

Limitations of Available Models  Simulation Do not ensure Optimality Scenario Evaluation Simple Systems No focus on Technology Option Selection  No focus on Parameter Optimization     .

ignore most of the feedback effects to minimize complexity. the optimization models are large.Limitations . From the viewpoint of the model user. Many optimization models are static. cumbersome and complex.     . Many optimization problems require use of integer or mixed integer programming models that are difficult to use for large problems. management is faced with a vector of objectives. Although it is possible to incorporate feedback in optimization models. Most of the optimization models have single objective function. In real life. yet optimization model.Optimization Models   Many optimization models assume that relationships in the system are linear.

   . best. Causal relationships between model variables and feedback are not considered. estimation techniques reveal only the degree of past correlation between the variables. Econometric models ignore soft variables and immeasurable quantities. At quantities. future. They ignore such complexities of real economy. Such correlation cannot accurately represent the dynamic variables. Models use the historical data to find the parameter values. influences. considered. future. world as: dynamic processes. disequilibrium and the physical delays as: between action and results. variables. Such values. social demographic factors are usually as important as economic influences.Limitations . The feedback relationships between environmental. these variables are handled with proxy variables.Econometric Models  Econometric models assume availability of perfect information and equilibrium in the market economy. results.

alternatives. model.Limitations . In general. It takes considerable time and effort to generate and to evaluate large number of alternatives. optimality.systems. It is generally not easy to modify the model to allow the inclusion of a new phenomenon without completely restructuring the model. rigid structural requirements of the simulation models prove to be restrictive in the analysis of real-life systems.    . real. as opposed to optimization model. is that they do not ensure optimality.Simulation Models  The major weakness in the simulation models.

 Freight consolidation  Just-in-Time movements  Continuous move routing  Warehouse consolidation Logistics Strategies  Inbound/outbound integration  Fixed/master/variable/dynamic routing  Mode selection  Single sourcing Logistics Objects  Supply chain infrastructure  Movements requirements  Transportation infrastructure Object-oriented data Logistics Composite Model Decision Support Architecture  Geographical information systems  Modeling languages  Spreadsheets  Client/server architecture Generate Alternative  Interactive optimization  Heuristics  Network flow/linear programs  Mixed-integer programs Evaluate Alternative  Benchmarking and rationalization  Activity-based costing  Aggregation/hierarchical models  Simulation The Major Elements of Logistics Composite Modeling Analysis .

.Characteristics of a Complex system  Presence of several manufacturing stages in series and parallel  Manufacturing stages having variable (probabilistic) operation times  Breakdown and repairs for different stages  The operating parameter of each stage affecting the output of that stage and other stages linked with it  Linking of different manufacturing stages by material handling equipment  Absence of buffers in process  Presence of common facilities used by more than one process having their own operation cycle failure and maintenance.

 The model should have the ability to incorporate linear and nonlinear relationship amongst the variables.The Logistics Models must consider:  The temporal dimensions must be included. and customer service are time-dependent. inventories. as are the mode performance and demand rates in a timelogistics system.  The model should have a multiple product capability. Contd«. Information.  Multiple echelons should be included. .  The model should have capability to explicitly incorporate spatial dimensions of logistics.

 The model should have the ability to incorporate the stochastic nature of logistics activities. materials handling equipment capacities etc.  Linkage between stages  Breakdown of stages  Dynamic effects of weather and handling capacities . transport mode.The Logistics Models must consider:  The model should explicitly consider production. warehouse.

require temporal integration that covers planning horizons of several years to a day and spatial integration that covers the entire supply chain from suppliers to the ultimate customers .Logistics decisions for complex systems  Logistics decisions for complex systems.

Characteristics of Complex systems  Presence of several manufacturing stages in series and parallel  Manufacturing stages having variable probabilistic) operation times  Breakdown and repairs for different stages  The operating parameter of each stage affecting the output of that stage and other stages linked with it  Linking of different manufacturing stages by matrial handing equipment  Absence of buffers in process  Presence of common facilities used by more that one process having their own operation more than one process having their own operation cycle failure and maintenanace .

cost accounts for 20 to 25 percent of the cost per ton of saleable steel. Contd«« . plants. steel plants are capital intensive.Steel Plant Logistics Planning  First. steel. ton. it involves global sourcing of about 2. small improvements in logistics result in large savings due to high volume of materials handled in steel plants.  Fourth.  Third.  Second. steel. Fixed capital intensive.5 tons of raw materials for the production of a ton of finished steel. the inbound and the outbound logistics cost in a steel plant is significant and it accounts for 15 to 25 percent of the sales price per ton.

 Sixth.Steel Plant Logistics Planning  Fifth.  Seven. the system involves temporal integration over a time range of one shift to several years. therefore. the cost of a ton of steel produced . the system involves spatial integration that covers the entire supply chain from suppliers to the ultimate customers. the performance of logistics (specially the internal logistics) system significantly influences the energy requirements and utilization of costly and coupled manufacturing stages. customers. years.

travel. patterns. only.Modeling of Steel Plant Logistics  An integrated steel plant is a closely coupled system of many units (plants)/stages in series and parallel. each with its own stochastic processing times and breakdown/repair patterns. The stages are linked by specialized material handling system which may have its own stochastic loading. it. The operating parameter of each stage affecting the output of that stage and other stages linked with it. times. These units (plants) are installed by different agencies and most of them are available in a few different capacities step only. unloading. stages.     . failure and repair times. There may be finite or zero buffers between the stages. Contd«.

difficult. These methods use deterministic values of processing time. . cycles. failure and maintenance cycles. etc. failure rates etc. procedures.  A plant can be theoretically viewed as a complex queuing network whose analytical solution is difficult. proposition.Modeling of Steel Plant Logistics  Presence of common facilities used by more than one process having their own operation.  Conducting experiments with different combinations of many parameters leads to combinatorial explosion.  There are better methods for evaluating individual pieces of equipment. equipment.  Models for analyzing and evaluating the performance of complex system with variability are difficult to formulate using exact mathematical procedures. explosion. associated rejects. product quality.  Experimenting with a large real system is a difficult and expensive proposition.

Routings and Product mix Optimization  Mathematical Programming for Tactical Procurement Planning  Economic Evaluation for Facilities hiring .Modeling Approaches  The modeling Focus: Composite  Simulation Approach for internal Logistics and Throughput Optimization  Design of Experiment for Parameters.

Area Showing the Plant Site, Waterways and Lightering and HRC loading Points

The Problem 

Making the different types of raw materials available in the right quality and right quantity, and in the right time at the least possible cost to the Integrated Steel Plant and ensuring the back-to-back supply of back-tothe finished products through sea route for export is the logistics problem of the plant that we have taken for study. study.

Problem 
Optimization of Raw Materials Logistics and ³Back- to-Back´ ³Back- toSupply of Finished Goods for a Coastal Integrated Steel Plant.  The important objective of the study is to optimize the raw materials procurements and HR Coil export considering two alternative options:  Independent barge-mixes for the raw materials lightering and export of bargeHR coils and  Use of same barge-mix for lightering of raw materials and loading of bargeexport HR coils through ³back-to-back´ integration. ³back-tointegration.

 Making an optimum procurement plan for raw materials. the problem deals with:  Deciding capacity mix of ships to use for transportation of raw materials from different sources. material Deciding the barge mix to hire for the lightering and HRC loading operations.  Scheduling the ships from each Load Port for a given month. .More specifically. and  Preparing a daily schedule for the barges used for lightering and export of HRC. source-wise sourceand material-wise.  Finding the economy and feasibility of back-to-back supply of HRC for back-toexport.

 Restrictions on movement of 1000 ton and 700 ton barges to BFL. season for lightering. creek. . periods. Ports.  Anchorage location depend on such variables as capacity of ship that can be handled. 700 ton barges are not operated during monsoon BFL. 2800 ton and 2000 ton barges are allowed for lightering and HRC loading at BFL.  Scheduled maintenance of barges and other equipment in use. availability of anchorage. etc. therefore. lighterage and HRC loading dues payable to port etc. lightering.The important constraints are:  Availability of ships of different category at Load Ports. Contd«.  Tide dependent water level in the creek that constraints the smooth movement of barges in the creek. their unavailability at certain periods. Only BFL.

The important constraints are:  The poor condition of sea during the monsoon season and consequential ship movement.  Movement restrictions of barges through the creek during night.  Use of only 2800 ton and 2000 ton barges for the HRC export due to safety requirements. .  Crossing and parallel barge movement restrictions in the creek due to sharp turnings. barge movement and unloading restrictions. ship unloading.  Long term leasing of barges.  Pilot requirement for barges and their availability. availability of anchorages.

problems. tactical and operational logistics problems. The Objectives . The methodology for solving hierarchical decision making problems is applied to solve the following strategic.

options. Having a Floating crane at BFL with a Storage Vessel. from amongst available options. years]. [Once in few years] import. and Having a dedicated anchorage at JNPT. decision]. [Once in few years]. Saving in cost per ton with dredging of the creek. The options including use of only 2800 ton barges or both 2800 and 2000 ton barges for export and import.  To evaluate the economics of the following options [Once in few years]: years]:     Having a floating crane at BFL.  To analyze the impact of locating the plant jetty at different distance from the sea on average annual lighterage HRC loading cost per ton[One time decision].  To choose the best strategy for lightering and HRC loading.Strategic Problems  To analyze the impact of dredging the river to different depths on the average annual lighterage and HRC loading cost per ton. ton. JNPT. .

. [Decision once a year] ton). carrying cost and handling constraints in monsoon and fair weather. price of raw materials. goods.[Decision once a month as hire charges of cost.  To decide the best ship size to hire from each of the load ports that minimizes the total relevant cost.Tactical Problems  To decide the optimum (minimum annual total cost) quantity of raw materials to bring to the plant in each month of the year taking into account the production requirement. inventory levels at the site.  To decide the optimum barge mix to hire for lightering and HRC loading operations with or without back-to-back supply of raw material and finished back-togoods. and 2000 ton) barges and eight months for smaller barges of 700 ton and 1000 ton). handling cost.[Decision once a year] weather. These barges have to be hired for long term (one year for larger (2880 ton. ships change] Contd«.

 Develop a model to evaluate each set of ship hiring alternatives for the month and their laycan schedules to help select the best set of ships for the month taking care of the possible shortage of ships of most economic size from a load port.Tactical Problems  To generate a schedule for movement of the material from a load port to the destination anchorage by ships of the most economic size. port. decision] .[Monthly decision]. [Monthly decision] port. for known monthly supply of raw materials from the load port.

activity] . ships.Operational Problems  To optimally schedule the barges for lightering of ships at sea and loading of HRC to export ships. [Daily activity].

Important Hierarchical Decisions Problems of Inbound Raw Material Logistics Level Nature of Decision Time Horizon Frequency of Revision Problems Source selection for raw materials Vessel size selection I Strategic Several Years Annual Jetty Location Dredging of creek Barge mix selection Models Economic evaluation Simulation and economic evaluation Simulation and economic evaluation Simulation and economic evaluation Simulation and economic evaluation Middle Management Decision Maker Top Management .

Important Hierarchical Decisions Problems of Inbound Raw Material Logistics Procurement Planning Ship scheduling Daily Barge scheduling Linear programming Scheduling Simulation and Scheduling Middle Manageme nt Logistics Manager Barge Master II Tactical One year Monthly III Operational One month y Simulation models have been used to evaluate the operational level performance of a strategic/tactical alternative .

Develop and validate an appropriate model or a set of models to support decisions on that problem. . Additional available information and the constraints imposed by the longlong-range decisions are explicitly considered in model (or DSS) development.  Group the decisions. find out the frequency at which decision regarding them have to be taken.  Take the longest-range (lowest frequency) decision problem first. sub Identify the decision variables involved in each sub problems. study the decision longestvariables involved. examine the spatial and temporal dimensions of the sub problems. Specially.  The models may be connected (integrated) by input/output amongst themselves and by input/output from the environment.  Study each of these decision variables.The composite modeling approach (CMA)  Study the problem at hand in detail and decompose into different sub-problems. and who is responsible of taking the decision at which place. Decisions with identical frequency. place and decision maker are grouped into one.  Repeat step (e) with the next lowest range decision problem for developing model(s) or decision support.

and constraints. spatial and temporal dimensions peculiar to each of the sub problems. The models simulate unloading of raw materials operations. their transport to plant jetty. Identify decision variables and its sub-problems. Decompose into appropriate sub-problems. barge unloading and loading times and draft restrictions into consideration. Develop a third model to simulate the consideration. Develop two a simulation models one for the ship lightering and the other for finished goods loading operations. movements. The models specifically takes the random variations in barges. problems. Plant.Methodology     Conduct a detailed study of the present and proposed system to understand all the details about different subsystems. transport through barges of raw materials from ships to jetty and HR coils from HR jetty to ships. constraints. unloading of materials from barges to cross country conveyors and back-to-back back-tointegrated supply of HRC for export. Collect relevant data from the existing SIP and modify them suitably to suit to the Proposed Integrated Steel Plant. and loading and unloading of barges. . export. unloading of raw materials from incoming ships. from the ships and loading of HR Coils into export ships. operations. ships lightering and HRC loading. barge movement.

season. The model for the best option obtained back-tointegration. barges.Methodology  Develop a LP model to determine the quantity of raw material to bring to the plant in each of the 12 months to minimize the annual cost of procurement. handling and storage. develop a barge mix optimization model. year. For a given barge model. The annual selected. the one that gives lowest cost per ton is selected.  Develop simulation based optimization models to evaluate the different operational strategies of using barges for both import of raw materials and export of HRC. lighterage and HRC export volume includes the total raw materials and finished goods handled by the barges.  Develop a Spread sheet based economic model to find the best ship sizes to hire from different load ports. The model considers the HRC.  For known ship arrival schedules. mix ship lightering and HRC loading simulation model is used to estimate the expected annual lighterage and HRC export volume and lightering and HRC loading cost per ton. ports. . From amongst ton. above is used to find the optimum barge mix to be hired for the year. Such an approach storage. the feasible barge mixes. is essential as the handling capacity is season dependent (less in monsoon) where as the plant requirements are independent of the season. options of with and without back-to-back integration.

model explicitly takes into account the draft restrictions in the creek. The schedule for export loading of HR Coils is also generated. available loading gears in the ship. depths. It takes into consideration the number of port.    . to help select the best schedule for every month. barges. Use the simulation model to find the effect of various jetty locations on the average lightering and HRC loading cost per ton. software is a schedule showing when a ship should report at the load port and when it would reach Bombay and when it is expected to leave Bombay after lightering with or without HRC for export. Develop a scheduling model to generate the daily schedule for movement of barges for lightering of raw materials and loading of HRC ships from and into available at different anchorage for unloading/loading. It also takes into account the barge charges. ton. Use the simulation model to evaluate the lighterage and HRC loading cost advantage in going for dredging the creek up to various depths. The model generates etc. The result from this restrictions. export. night navigation restrictions. unloading facilities available at the ships and at the jetty etc. ships that have to come from a load port and spreads their arrival at BFL/BPT/JNPT as evenly as possible during the period to avoid bunching and consequential detention charges. the schedule for each of the barges. The unloading/loading. mix available for lightering and HRC loading during the period and the tide restrictions.Methodology  Develop a model for evaluation of multiple ship schedules obtained by the shipping manager for hiring of ships from load ports for movement of raw material. This month. software tries to schedule the minimum cost ship from each port. generated.

a a t e r ia l c o s t s .b a c k s u p p ly : T o t a l n u b e r o f b a r g e s a v a ila b le fo r i p o rt a n d e x p o rt u it h o u t b a c k .Models used for Raw Material and Finished Goods Logistics System ¥ £ ¤ In p u ts to L odel o rp o ra te o n t h ly p r o d u c t io n p la n . F e e d ix p la n . e t a ils o f a c t u a l r a a t e r ia l s h ip a r r iv a l.b a c k s u p p ly : b e r o f b a r g e s a v a ila b le f o r i p o rt a n d e x p o rt a r k e t f o r c e s lik e : v a ila b ilit y o f s h ip s . axi u a v a ila b ilit y e t c . o d e o f tra n s p o rt fro e a c h s o u r c e . a n d a c t u a l b a r g e s a v a ila b le on a day s e t h e d a ily b a r g e s c h e d u lin g o d e l to a k e t h e d a ily s c h e d u le o f th e a r g e s o p e r a t in g t o lig h t e r t h e r a a t e r ia l s h ip s a n d lo a d in g e x p o r t s h ip s a t d if f e r e n t a n c h o r a g e lo c a t io n s £ a r k e t f o r c e s lik e a v a ila b ilit y o f a r g e s r e s u lt in g in : c tu a l b a rg e ix h ir e d £ £ £ £ § £ ¥ £ £ £ ¥ £ ¢¤  ©  © ¨ £ § ¡ £ o p ti s e th e b a rg e ix o p t i iz a t io n o d e l t o f in d t h e u b a rg e ix t o h ir e f o r t h e y e a r f o r s h ip lig h t e r in g a n d lo a d in g e x p o r t s h ip s s e th e o n t h ly s h ip s c h e d u lin g a n d s h ip s c h e d u le e v a lu a t io n o d e ls t o d e t e r in e t h e la y c a n s c h e d u le o f t h e s h ip s t o h ir e f r o d if f e r e n t lo a d p o r t s in a g iv e n f u t u r e o n th £ £ £ ¡ £ £ ¨ £ £  it h b a c k . £    £  £ £ ¡ § £ § £ § ¢ £ £ £  . a v a ila b ilit y o f a t e r ia l. d e t a ils o f a c t u a l e x p o r t s h ip a v a ila b le . a t e r ia l s o u r c e s . g iv in g n u b e r o f s h ip s o f e a c h s iz e t o h ir e fro a lo a d p o r t in a o n th £ £ £ D e t ils f Im p o rt m a t e r ia l a n d p o rt m a t e r ia ls £ £ § u tp u t fro L odel o p ti u o n t h ly p r o c u t e e n t p la n f r o e a c h s o u rc e £   £ £ £ £  ¡  £ £ £  ¥ £ £ s e a L in e a r th e o p ti u ro g ra in g o d e l t o a r r iv e a t o n t h ly p u r c h a s e p la n f o r t h e h o le f in a n c ia l y e a r s e th e s p re a d s h e e t o d e l t o d e t e r in e t h e le a s t c o s t s h ip t o h ir e fro e a c h lo a d p o r t £ ¥ £ ¦ ¤ £ ¡ £ ¡   a e n ts . a f e t y s t o c k r e q u ir e n lo a d in g a n d s t o r a g e c o n s t r a in t s .t o . le a s t c o s t s h ip f r o a lo a d p o r t . d e a t ils o f a n c h o r a g e lo c a t io n s .t o .

269.177.35/ton 30.000 T at Rs.000 to 35.32/ton 30.000 T at Rs.000 T at Rs.Least Cost Ship Size from each Load Port Optimum ship sizes for different load ports Load Port Goa Mangalore Vizag Orissa Bahrain South Africa Brazil Ship Size and Cost/ton MBC¶s of 2800 T at Rs.43/ton 30.349.000 to 35.000 to 35.135.60/ton 65.000 to 35.000 T at Rs.57/ ton MBC¶s of 2800 T at Rs.39/ton 30.279.000 T at Rs.281.460.33/ton .

. source Total Raw material by each route  Stock of each materials at the end of each month.  Total cost of SMS raw materials. and  Total cost of all raw materials.  Total cost of BF raw materials.  Total cost of SIP raw materials.The LP Model for Making the Annual Procurement Plan The model gives the following the optimum results  Optimum monthly procurement/arrival of each raw material source-wise and quantity.

it is necessary to build up the stock for various raw materials much before the monsoon for consumption during the period. coke.  This will decrease the total carrying cost since pellets and coke are more costly compared to lumps and therefore carrying it for a shorter duration decreases carrying cost. cost. period.  For example. monsoon.LP model  lesser amount of material can be brought in during the monsoon. first. cost. .  The unloading capacity during the monsoon could then be utilized for unloading more of pellets and coke.  The unloading capacity during monsoon could then be used for bringing in more of the expensive raw materials thus decreasing the total inventory carrying cost.InterpretationsInterpretations. it is best to build up the inventories of the less costly raw materials first. lumps inventory is to be built up during the period from January to April to cater to the needs during monsoon.  In order to reduce the carrying cost on such inventory build up.

The ship Lightering Simulation Model .

The unloaders can only unload cargo. . it can also load HRC for export into barges.  The export requirement of HRC is 75. The loader/unloader cannot only unload imported raw materials from barges.000 ton per month in both fair weather and in monsoon.  Only the MBCs (Mini Bulk Carrier) that is 2800 ton and 2000 ton barges are allowed to be used for export of HRC.The optimum barge mix selection model assumptions:  There are two barge unloaders and one barge loader/unloader available.  All barges except the 700 ton barges are hired for whole year.  700 ton and 1000 ton barges are not allowed to BFL for lightering. using grabs from barges bringing in raw materials. monsoon. The grabs have to be changed for this purpose and this takes four hours.  Enough HRC for export is available at the jetty whenever it is wanted. 700 ton barges are hired for only eight months of fair weather season.  Three barges can be berthed at the jetty for loading/ unloading at any given time.

 Option II: Some of the 2800 ton barges will be exclusively used for II: export of HRC whenever export ships are available. materials. At available.Optimum barge mix selection model Without back-to-back Integration (Independent back-toBarges for Import and Export)  Option I: All the 2800 ton barges available in the fleet will be used exclusively for export of HRC whenever export ships are available. During these times available. At times export. when no ships for export are waiting the 2800 ton MBCs are used for lightering ships with raw . a loader will be exclusively used for loading HRC for export. times when no ships for export are waiting the 2800 ton MBCs are used for lightering ships with raw materials.

At times when no available. will be used only for lightering of raw materials. The rest of the barges materials.  Option IV: Some of the 2800 ton and 2000 ton barges will IV: be exclusively used for export of HRC whenever export ships are available. materials. .Optimum barge mix selection model  Option III: All the 2800 ton and 2000 ton barges available III: in the fleet will be used exclusively for export of HRC whenever export ships are available. waiting the 2800 ton MBCs and 2000 ton ISVs are used for lightering ships with raw materials. materials. ships for export are waiting the 2800 ton MBCs and 2000 ton ISVs are used for lightering ships with raw materials. At times when no ships for export are available.

materials. will be fully loaded. jetty. have the HRC unloaded and proceed to the ships with import cargo waiting to be lightered. lightered from the import ship. These barges will carry HRC for export when sailing out from the import. They will bring back to the jetty raw material lightered. loaded. import. the import ship. ship. With Back-to-Back Integration Back-to Option V: All the 2800 ton barges available in the fleet are used for both export and import. It will bring back to the jetty raw material lightered from lightered. The rest of the barges will be engaged in lightering of raw loaded. . have the HRC unloaded and proceed to the ships with import cargo waiting to be lightered. They will reach the export ship.  Option VI: Some of the 2800 ton barges available in the fleet will be used for both VI: export and import. The barges will carry HRC for export when sailing out from the jetty. jetty. materials. they will reach the export ship. Thus the forward and return trips of these two barges ship. Thus the forward and return trips made will both be loaded.

 Option VIII: Some of the 2800 ton and 2000 ton barges available in the VIII: fleet will be used for both export and import at all times. It will bring back to the jetty raw lightered. loaded. The barges will times. made will both be loaded for these barges. made will both be loaded. they will reach the export ship. carry HRC for export when sailing out from the jetty. They will bring back to the jetty raw lightered. HRC for export when sailing out from the jetty. Thus the forward and return trips ship. The barges will carry times. material lightered from the import ship. export ship. have the HRC unloaded and proceed to the ships with import cargo waiting to be lightered.Optimum barge mix selection model  Option VII: All the 2800 ton and 2000 ton barges available in the fleet VII: will be used for both export and import at all times. barges. have the HRC unloaded and proceed to the ships with import cargo waiting to be lightered. Thus the forward and return trips ship. They will reach the jetty. material lightered from the import ship. .

The total cost for lightering and HRC loading  Ship hire cost for unloading days for the raw material ships. days.  Warfage and Stevedoring charges payable for the day. unloaded.  The daily hire charges to be paid to all the barges. . ships. barges. barges. day.  The charges for fuel etc payable per trip to barges.  Ship hire cost for the HRC export ship for loading days.  Port charges payable to the Port for the volume of cargo loaded or unloaded.

B2 ± 2000.11 605.32 245. B3 ± 1000.The Results of Experiments on Barge Mix Optimization Model for Lightering and HRC loading Operations with Various Options B1 ±2800.47 161.B4 B1 3 4 2 2 2 2 B2 4 4 4 4 2 6 B3 2 3 2 2 5 3 B4 2 4 2 2 5 4 4496012 3684012 4692012 4692012 213012 5542412 Average cost per ton (Rs/ton) 217.B3.18 Option Model Maximum Tons per Annum Feasibility (Yes/No) Yes No Yes Yes No Yes .B2. and B4 ± 700 ton Barges Barges engaged for export B1 Without backto-back supply II IV V With back-toback supply VI *VII VIII * Infeasible 2 2 All 2 All 2 B2 0 2 0 0 All 2 Barges with back-to-back integration B1 0 0 All 2 All 2 B2 0 0 0 0 All 2 Optimum Barge mix of B1.53 192.11 192.

32 167.60 177.18 161.52 163.99 174.Sensitivity Analysis Lighterage and HRC Loading Cost/ton when using Various Combination of 2800 and 2000 ton Barges (B1 ±2800. B3 ± 1000.35 .81 173.91 166. B2 ± 2000. and B4 ± 700 ton Barges) Barges with back-toback integrated B1 2 2 3 3 3 2 2 4 B2 2 3 2 3 4 4 5 4 B1 2 2 3 3 3 3 2 5 Optimum Barge mix B2 5 6 6 6 5 5 6 5 B3 4 3 2 6 2 4 3 5 B4 2 4 4 4 4 4 3 2 5542412 5651212 5719212 5726012 5427212 5623212 5328812 5747612 Tons per Annum Average cost Rs/ton 161.

Assumptions  Two of the 2800ton barges available in the fleet will be used only for export of HRC whenever export ships are available.  All the 2800 ton barges available in the fleet will be used for both export and import at all times.  All the 2800 ton and 2000 ton barges available in the fleet will be used for both export and import at all times.  Two of the 2800-ton and two of the 2000-ton barges available in the fleet will be used only for export 28002000of HRC whenever export ships are available.  Two of the 2800-ton and two of the 2000 ton barges available in the fleet will be used for both export 2800and import at all times  All the2800 ton barges available in the fleet will be used exclusively for export of HRC whenever export ships are available.  Two of the 2800 ton barges available in the fleet will be used for both export and import at all times. .  All the2800 ton and 2000 ton barges available in the fleet will be used exclusively for export of HRC whenever export ships are available.

B1-2800 ton Barge.23 163.18 162.53 169.55 165.60 154.08 165.49 150. Cost/per ton means average raw material Lightering and HRC loading cost per ton) Barges B1 2 2 3 2 3 2 3 B2 5 5 6 5 6 5 4 B3 4 5 2 6 2 6 4 B4 2 4 4 4 3 3 2 Fair Weather Ton/Mth 505901 506101 530101 509451 528801 506801 506001 Cost/ton 167.13 Annual Ton/year 5542412 5544012 5732412 5566812 5722012 5545612 5543612 Cost/ton 161.01 .94 158.Results from Model with two barges each of 2800 ton and 2000 ton in export and import circuit.60 158.37 163.B2-2000 ton Barge.02 170.B3-1000 ton Barge.03 168.45 Monsoon Weather Ton/Mth 373801 373801 372901 372801 372901 372801 373901 Cost/ton 149.81 152.55 165.29 163.13 163.81 152.B4-700 ton Barge.29 168.

11 217.18 .32 192.B3.The results from experiments of barge-lightering model with various options (B1 ±2800t.B2.11 Cost very high at Rs 605. 2800 t and 2 nos. and B4 ± 700t Barges .B4 OPTION All 2800 t Export and Import 2 nos. B3 ± 1000t. 2000 t Export and Import B1 2 3 2 2 4 2 B 2 4 4 4 2 4 6 B3 2 2 2 5 3 3 B4 2 2 2 5 4 4 Fair-weather ton (Monsoon tons) 398251 (376501) 396751 (330501) 398251 (376501) 112501 (210001) 329201 (262601) 505901 (373801)) Tons per Annum Average cost per ton Rs/ton 4692012 4496012 4692012 1740012 3684012 5542412 192.53 161. Values in µ( )¶ gives the Monsoon weather value) Opt. B2 ± 2000t. 2800 t Export TWO 2800 t Export and Import All 2800 t and 2000 t Export and Import 2 nos. 2000 t Export 2 nos. Barge mix B1. 2800 t and 2 nos.47 Ton 245.

51 126. No.23 124.32 1 2 3 4 5 6 5 KM 10 KM 15 KM 20 KM 25 KM 30 KM .B4-700T Barge Best Barge Mix Sl.B2-2000T Barge.64 225.59 185.87 162.Effect of Locating the Plant Jetty at Different Distances from the Sea B1-2800T Barge.B3-1000T Barge. Distance of Jetty from the Sea (in KM) Lighterage Cost in Rupees/Ton B1 5 4 4 3 3 3 B2 4 5 5 6 4 3 B3 0 1 1 2 4 5 B4 0 0 0 1 2 6 102.

alternative to the location may be imperative. . area. the new location of the jetty may be seriously considered.Effect of Locating the Plant Jetty at Different Distances from the Sea  If the savings due to reduced annual lighterage cost is more than the annual cost of transportation of materials from the new location to the plant. An considered. particularly when the congestion in the river increases due to higher movement of bulk materials for the proposed integrated steel plant of the company and other industrial units that are coming up in the area.

8 meters.Effect of Dredging the Creek on Lighterage Cost           The movement of the barges in the river is tide constrained. The draft required for empty barges varies from 2. The tide height in the creek varies from a high of 5 meters to a low of 0.2 meters to 0. A safety clearance of 0.8 meters to 2.5 meters from the ground is also required in addition to the minimum draft essential for sailing.6 meters above the Chart Datum at the highest of the high tides and at the lowest of low tides respectively. The actual ground level in the creek varies from 0. One way of making barge movement less restrictive is to dredge the creek. . Dredging increases the depth of the channel below the chart datum and makes additional draft available for sailing of the barges at any given time This is expected to bring down the lightering time of ships as the navigation will be less dependent on tides.8 to 9 Meters below the Chart Datum.0 meters. The draft requirement for the loaded barges varies from 3.

2 2.6 3.4. 0 0. B3 ± 1000t.52 157.B2. and B4 ± 700t Barges) Depth of Dredging in M.B4 2.3.2 3.B3.4.3.6.3.2.Effect of Dredging the Creek on Lighterage Cost (B1 ±2800t.18 157.4.0 Opt.24 .0 1. Barge mix B1.2 3.5 2.6 Fair-weather ton (Monsoon tons) 505901 (373801) 512810 (376901) 527201 (377901) 529651 (378901) 530451 (379301) Tons per Annum 5542412 5610012 5718012 5764122 5781212 Average cost per ton Rs/ton 161.5.5 1.94 157.33 157. B2 ± 2000t.3.

for which the information in Table 6.7 can be used. At that time by forming a confederation of creek user industries.Observations         The maximum reduction in lighterage cost/ton for two meters of dredging is about rupees four per ton. option. Therefore deciding the most economical depth of dredging is also of great importance. annum. however. Since. used. cost of dredging is very high compared to the saving in lightering cost. river. This could result in savings averaging around rupees twenty millions per annum.5 meter of dredging more than three rupees of savings in lighterage cost is achieved. It may be. . Another factor to be noted is that with about 0. the company alone can¶t do the dredging at present. one can seriously consider dredging option. present. matter. achieved. This information will have to be used by the management to find the payback period of any investment in dredging and take an appropriate decision in the matter. ton. considered later when the traffic volume in the creek increases due to the integrated steel plant and other units that are coming up along the banks of the Dharmatar river.

30.07 .5.5.07 08.5.07 .07 10.07 21.5.07 06.5.07 Report at Load port 25.07 15.07 17.5.07 07.16.07 28.12.5.4.5.The Monthly Ship Scheduling Model This is the plan for hiring ships for a month Load port Bahrain Vizag Mangalore Vizag Paradeep S.5.07 At Bombay 02.5.6.5.07 16.07 11.07 07.07 11.5.07 .5.4.4.07 .4.5.07 Leave Bombay 04.07 29.07 01.07 02.07 .5.5.5.07 14.07 23.5 07 03.26.5.13.07 29.12. Africa Vizag Laycan Report 20.5.5.07 .5.07 07.07 20.07 02.5.04.5.5.07 24.07 .5.4.07 24.5.07 .5.5.

34 11.07 12.5.49 21.5.07 12.07 12.49 01.5.5.5.5.57 14.29 07.07 12.5.07 12.07 11.29 09.5.09 01.59 Activity Start loading barge End of loading Full barge reaches gull Start through creek loaded Reach the jetty loaded Start unloading at brth1 End unloading at brth1 Start loading HRC at brth3 End of loading at brth3 Start through creek to gull Reach gull Reach export ship Ship Name Sagar Kanya Sagar Kanya Sagar Kanya Sagar Kanya Sagar Kanya Sagar Kanya Sagar Kanya Krishna Sagar Krishna Sagar Krishna Sagar Krishna Sagar Krishna Sagar .27 16.07 11.07 11.57 19.07 12.5.07 Time 10.5.07 11.5.07 11.Daily Barge Scheduling Model The schedule for a Barge by the name : Mastya Rani Date 11.29 03.5.44 21.

0 2.2.5.5.B 4) 2.0 1.0 1.3.0.1 0.1 0.6.B3. B2 ± 2000.3.6.4. B3 ± 1000.6.0.B2.B2.0 2. Barge Mix (B1.5. B4) 2.5.5.5 m dredged creek Opt .0.5.B2.0 1.0 0.Results from Model where only 2800 ton and 2000 ton Barges are allowed to BFL (B1 ±2800.4.5.4.5.B 4) 2.6.0 0.5.B3.6.5.2. B4) 2.0 1.0 1.5.3.B2.6.2 No Tide restriction Opt.0 Cost per ton 171 156 143 150 159 Cost per ton 176 158 145 154 162 .3.0 2.5.5.0 1.5.0. Barge Mix (B1. and B4 ± 700 ton Barges) Percent age Lighteri ng at BFL 100 75 50 25 0 Creek was not Dredged Cost per ton 186 169 156 163 170 Opt.B3.0 1 meter dredged creek Cost per ton 173 157 144 152 160 Opt.1 0.B3.Barge Mix (B1.6. Barge Mix (B1.4.0 1.6.6.0 1.3.4.5.0 0.

0.2 No Tide restriction Cost per ton 200 186 183 168 159 Opt.0 3.4.0 1 meter dredged creek Cost per ton 205 189 185 170 160 Opt.0 3.0. Barge Mix (B1.5.5. Barge Mix (B1. B2.1.0 4.3.3.0. B3. B2.0.2.0 1.2.0 3.2. B2 ± 2000.0.0 5.0 0.6. B4 ± 700 ton Barges) Creek was not dredged Percentage lightering at BFL Cost per ton Opt.0 4.2. B2. Barge Mix (B1.0. B3. B3.5.0. B4) 7.0 0.Results from Model where only 2800 ton Barges are allowed to BFL (B1.0.0 3.0.1.0 6.5.5.0 6.5.2. B4) 100 76 50 25 0 225 207 198 181 170 7.0.2800 . B4) 7.3.6.1.5.1.1.0 . B3 ± 1000.0. Barge Mix (B1.5 dredged creek Cost per ton 208 195 186 172 162 Opt. B3.0 0.1.0 4.3.0.1 0.0.0 4.1.0 6.0. B4) 6. B2.

0 221 210 7.0.5.5.0.0 2.B2.B4) Opt. B2 ± 2000.B2. Brage mix (B1.0. Brage mix (B1.0 226 215 7.0.B3.0.0.0.0.5. Brage mix (B1.0 7.B4) Cost per ton Option I Only 2800 ton and 2000t ton Barges are allowed to BFL for Lightering and HRC loading 1 barge 2 barges 198 184 2.0 180 173 3.0 3.0.B2.5.0. of barges at Ship Cost per ton No tide restriction Cost per ton 1 meter dredged creek Cost per ton Opt.0.0.0.0.0.0.0. B4) Opt.0 2.6.5.0 7.B3.0 223 212 7. B3 ± 1000.0 7.0. and B4 ± 700 ton Barges) Creek was not dredged No. B4) 0.0.0.0 182 175 2.B2.0.Results from Model with Floating Crane and 100 percent Lightering in fair weather at BFL (B1 ±2800 .B3.0.0 3.0 179 172 3.0 Option II Only 2800 ton Barges are allowed to BFL for Lightering and HRC loading 1 barge 2 barges 240 228 7.0.B3.5.0 .0. Brage mix (B1.0 7.6.5 meter dredged creek Opt.

B4) Opt.0.0.B3.0.0.0.0. B4) 0.0 249 229 7. Brage mix Cost (B1.0.0 3. Brage mix (B1.B2.0.B3.0 245 224 7.B2.B2.0. FC =Fixed charge) Creek was not dredged Fixed Charge in Rs Cost per ton No tide restriction Cost per ton 1 meter dredged creek Opt.50.0.0 7.5 meter dredged creek Opt.0.0 2.5.B2.B3.B3.0 240 220 7.0 2. Brage mix (B1.0 7.0.5.0 Option I Only 2800 ton Barges are allowed to BFL for Lightering and HRC loading FC at Rs 200 FC at Rs 100 260 237 7.5.0.5.5.0. Brage mix (B1.B4) Option I Only 2800 ton and 2000 ton Barges are allowed to BFL for Lightering and HRC loading FC at Rs 200 FC at Rs 100 213 190 2.0.5.Results from Model with Floating Crane and Storage Vessel of 1.0.6.0 7.0 7.0.0 209 182 3.0. B3 ± 1000 and B4 ± 700 ton barges.0.5.B per ton 4) Cost per ton Opt.0.0.0 199 175 3.0 3. B2 ± 2000.0.0 202 177 3.0.0 .000 ton Capacity and 100 percent Lightering in fair weather at BFL (B1 ± 2800 .0.

. Models for  solving such strategic problems as choice of source for each material. cost. and  solving such operational problems as ship scheduling. ideal ship size from each load port and the desirability of dredging the waterways  solving such tactical problems as annual procurement and inventory planning. and barge mix optimization and optimal ship size determination. and simulation models to optimize the raw material logistics system of the integrated steel plant. alternate ship schedule evaluation and daily barge scheduling.Conclusions  We have used a combination of mathematical.

case. .  The approach of breaking complex logistics problems into sub-problems suband using separate models to solve each sub-problem proved to be an subeffective problem solving strategy in this case. in collection of relevant data. plant.Conclusions  The models described in this paper offer a complete package for the solution of the inbound raw material and µback ±to back¶ finished goods logistics problem of the integrated steel plant.  Involvement of the operating personnel and managers in development of models. system. explicit enumeration of operating logic and in validation of models proved very useful for the acceptance and implementation of the system.

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