ISyE 3103: Introduction to Supply Chain Modeling: Logistics Instructor: Spyros Reveliotis Spring 2004 o!

e"or# $% &ue &ate: Monday' 4(1)(04 Reading *ssign!ent: Chapter 14 from your textbook, primarily Sections 1-4 From Prof. Erreras notes that ha e been poste! at the course "eb site, pa#es $-14, 4%4$, &1-&%, $'-$(, ('-() *he Po+erPoint presentation on *ransportation poste! at the course "eb site. http,--+++.isye.#atech.e!u-.spyros-courses-/E%1'%-course0materials.html &iscussion +uestions: 1, ) , % an! & at the en! of Chapter 14. 1. 1o!es like rail an! +ater are best suite! for lar#e - bulky an! lo+- alue shipments. 2oth of these mo!es are better utili3e! +hile shippin# lar#e capacities 4full containers5 an! are char#in# some of the lo+est rates. *he security an! 4time-relate!5 performance - responsi eness of these mo!es is not as #oo! as that pro i!e! by some other mo!es like air or e en truck, but this mi#ht not be a si#nificant concern for lo+- alue frei#ht. ). /n or!er to han!le small an! fre6uent shipments from the 7C to retail outlets, "al-1art can use a combination of cross-!ockin# 4+hich re!uces in entory costs at 7C5 an! milk-runs 4+hich re!uce transportation cost throu#h consoli!ation of many small shipments5. 8otice, ho+e er, that the effecti e !eployment of a cross-!ock operation typically implies a substantial increase in cost an! effort +ith respect to coor!ination an! mana#ement of the supply chain. %. 9ome 7epot has to !eal +ith the transportation cost of replenishin# all its retail stores, +hich is spare! by an e-business like :ma3on. ;n the other han!, pro!ucts relate! to home impro ement ten! to #et lar#e an! hea y. *herefore an e-business like :ma3on.com +ill ha e 6uite lar#e transportation costs because it uses packa#e carriers like <PS an! Fe!Ex. *he e entual iability of such a mo!el +ill si#nificantly !epen! to the companys ability to pass 4part of5 this cost to the customer. /n #eneral, 9ome 7epot shoul! be more cost effecti e +hile supplyin# such material. &. /n entory a##re#ation can help companies like 7ell an! :ma3on by re!ucin# the ariability an! hence the safety stock re6uire!. *his lea!s to lo+er in entory costs, as compare! to companies that nee! to maintain in entory at many !ifferent locations 4an! hence re6uire hi#her safety stock5. *he impact of this in entory a##re#ation on the transportation costs experience! by these t+o companies +ill !epen! on the +ay in +hich they are char#e! for their arious shipments +ith respect to the !istance tra ele!. /n #eneral, it is expecte! that the smaller si3e of the :ma3on shipments +ill result in flatter rates +ith respect to !istance, compare! to the correspon!in# rates experience! by 7ell, since most of the cost for these small shipments is !ue mainly to han!lin# rather than to the physical transport of the material.

,ro-le! set: &iscussion +uestions at the end o. Chapter 14: 1, ), %, &. 4Solutions are at the en! of the !ocument5 ,ro-le!s 1. <se one of the al#orithms presente! in class in or!er to fin! the shortest path from no!e 1 to no!e & in the follo+in# net+ork.

8ext, +e !emonstrate the application of 7i=kstras al#orithm on this problem. 8otice that a necessary con!ition for the application of this al#orithm is that all arc costs are non-ne#ati e. Perm4'5 > empty 8o!e 1 <4=5 ' Pre!4=5 1 Pick 1? Perm415 > @1A 8o!e 1 <4=5 ' Pre!4=5 1 Pick )? Perm4)5 > @1, )A 8o!e 1 <4=5 ' Pre!4=5 1 Pick 4? Perm4%5 > @1, ), 4A 8o!e 1 <4=5 ' Pre!4=5 1 Pick %? Perm445 > @1, ), 4, %A 8o!e 1 <4=5 ' Pre!4=5 1 ) inf nill ) ) nill ) ) 1 ) ) 1 % inf nill % B nill % ( ) % ( ) 4 inf nill 4 inf nill 4 $ ) 4 $ ) & /nf 8ill & /nf 8ill & 14 ) & 14 )

) ) 1

% ( )

4 $ ) 4 $ )

& 14 ) & 14 )

Pick & 4the only one left to pick5? Perm4&5 > @1, ), 4, %, &A 8o!e 1 ) % <4=5 ' ) ( Pre!4=5 1 1 )

). :pply both 7i=kstras an! the 2ellman-For! al#orithm in or!er to fin! the shortest path from no!e 1 to no!e 4 in the follo+in# net+ork. :re the results pro i!e! by these t+o al#orithms consistent +ith each otherC /f not, +hyC

7/DES*F:S :GH;F/*91, Perm4'5 > empty 8o!e 1 <4=5 ' Pre!4=5 1 Pick 1? Perm415 > @1A 8o!e 1 <4=5 ' Pre!4=5 1 Pick %? Perm4)5 > @1, %A 8o!e 1 <4=5 ' Pre!4=5 1 Pick )? Perm4%5 > @1, %, )A 8o!e 1 <4=5 ' Pre!4=5 1

) /nf nill ) ) 1 ) -1 % ) -1 %

% inf nill % 1 1 % 1 1 % 1 1

4 inf nill 4 inf nill 4 ) % 4 ' ) 4 ' )

Pick 4 4only one left to pick5? Perm445 > @1, %, ), 4A 8o!e 1 ) % <4=5 ' -1 1 Pre!4=5 1 % 1

*his #i es the shortest path as 1-%-)-4 +ith len#th '. /his is a "rong ans"er as sho"n ne0t' during the application o. 1ell!an23ord algorith!4 2EGG1:8-F;F7 :GH;F/*91 4+ith ,ape5s Modi.ication, re#ar!in# the insertion of ne+ no!es in the Gist5, Gist4'5 > I1J 8o!e <4=5 1 ' ) /nf % inf 4 inf

Pre!4=5

nill ) ) 1 ) ) 1 ) -) % ) -) %

nill % 1 1 % ' ) % ' ) % -4 )

nill 4 inf nill 4 % ) 4 1 % 4 -1 )

Pop 1, Gist415 > I), %J 8o!e 1 <4=5 ' Pre!4=5 1 Pop ), Gist4)5 > I%, 4J 8o!e 1 <4=5 ' Pre!4=5 1 Pop %, Gist4%5 > I), 4J 8o!e 1 <4=5 ' Pre!4=5 1 Pop ), Gist445 > I%,4J 8o!e 1 <4=5 ' Pre!4=5 1

:s you can see the al#orithm has starte! to cycle bet+een no!es ) an! %. *his is because #oin# from no!e ) to no!e % an! back creates a cycle of ne#ati e cost, an! therefore, by cyclin# bet+een these t+o no!es +e can !ri e the cost of the correspon!in# path arbitrarily lo+. /n other +or!s, the presence of the un!irecte! e!#e +ith a ne#ati e cost bet+een no!es ) an! % implies that the shortest path bet+een no!es 1 an! 4 +ill ha e a total cost of - K *his sho+s that the solution pro!uce! by 7i=kstras al#orithm +as +ron#. *he 2ellman-For! al#orithm reali3es this complication an! it reacts to it by failin# to terminate 4loopin# in!efinitely as in!icate! abo e, each time !ri in# the labels of no!es ), % an! 4 to lo+er an! lo+er alues5. Finally, notice that thin#s +oul! ha e been !ifferent, an! the 2ellman-For! al#orithm +oul! ha e terminate! successfully in finite time, if the e!#e bet+een no!es ) an! % +as !irecte! 4i.e., it coul! be tra erse! only in one !irection5. %. *he !istances 4in miles5 bet+een fi e cities :, 2, C, 7 an! E are as follo+s,
A B C D B 132 C 217 290 D 164 201 113 E 58 79 303 196

/t is necessary to buil! a roa! system that connects all these cities. :ssume that for certain reasons, no roa! can connect !irectly cities : an! 2, or cities C an! E. "hat is the minimum len#th of roa! re6uire!C *his problem can be sol e! usin# any al#orithm to buil! the minimum spannin# tree 41S*5, +hich +ill be the net+ork of roa!s +ith least cost. *he constraints can be incorporate! !irectly in the al#orithm by assumin# that e!#es :-2 an! C-E !o not

exist. 9ence, usin# Eruskals al#orithm, +e can list the remainin# e!#es in non!ecreasin# or!er +ith respect to their len#th, as follo+s, :E4&B5, 2E4(L5, C7411%5, :741$45, 7E41L$5, 274)'15, :C4)1(5, 2C4)L'5. *he first four e!#es from this list that !o not contain any cycle are, :E, 2E, C7 an! :7, an! they constitute the re6uire! 1S* 4you can check the lack of cycles by plottin# the correspon!in# sub-#raph5. 4. : cyclist is #oin# to cycle bet+een cities : an! E of problem %. She coul! cycle on the ne+ly built roa! system that you su##este! in problem %, but, since she ri!es a mountain bike, she !oes not min! ri!in# 4maybe part of the route5 throu#h unpa e! territory. 9o+e er, she +oul! like to plan her route so that she minimi3es the !istance tra ele! bet+een any t+o consecuti e cities that she +ill be isitin# on her +ay. Su##est the best route for her. *his is suppose! to be a !in2!a0 path problem, the cyclist +oul! like to #o from : to E in a +ay that minimi3es the lon#est !istance bet+een any t+o cities she tra els. *his problem can be sol e! by, 4i5 constructin# a minimum spannin# tree 41S*5 for the consi!ere! #raph, an! 4ii5 tracin# the path form : to E on this 1S*. Performin# these t+o steps you can sho+ that the cyclist shoul! simply #o !irectly from : to E. 4Re!: 8otice that, since in this problem the cyclist can use also unpa e! territory, the construction of the 1S* in step 4i5 shoul! consi!er also the e!#es :2 an! CE that +ere i#nore! in the solution of problem %.5 &. : so!a !eli ery truck starts at location 1 an! must !eli er so!a to locations ), %, 4 an! & before returnin# to location 1. *he !istances of the roa! se#ments connectin# any pair of these locations are as follo+s,
Location 1 Location 2 Location 3 Location 4 2 20 3 17 15 4 10 20 16 5 25 10 16 20

a. 7oes the roa! system !escribe! abo e correspon! to a C<87/ net+orkC b. Pro i!e a lo+er boun! for the len#th of the shortest possible tour that can be taken by the aforementione! truck. c. <se the 1S* heuristic for computin# a route for this truck, an! pro i!e an upper boun! for the sub-optimality of the obtaine! route +ith respect to the optimal route. !. Fepeat step c usin# the cheapest insertion heuristic. a. *he net+ork satisfies the trian#le ine6uality. *his can be erifie! by simply checkin# all the %-combinations of the locations. For the pro i!e! numbers, you can simply notice that the only pair of numbers that has a total sum less than the len#th of any sin#le e!#e is the len#ths of e!#es 41,45 an! 4),&5, 1'M1' > )' I )& +hich is the len#th of e!#e 41,&5. 2ut this !oes not iolate the re6uirements of the 7elta ine6uality. :nother +ay to erify the satisfaction of the 7elta ine6uality is to obser e that the arc-len#th bet+een any t+o locations is same as the shortest path bet+een those t+o locations. "hen this con!ition is met, the trian#le ine6uality is al+ays satisfie!.

b. : lo+er boun! can be obtaine! by constructin# the minimum spannin# tree an! =oinin# the any t+o closest no!es on it. *he len#th of such a net+ork +ill be the lo+er boun!. /n this case, the minimum spannin# tree is constructe! by selectin# the e!#es 1-4, )-&, )-%, %-4. *he len#th of this 1S* is &1. *he lo+er boun! on tour can be obtaine! by a!!in# the len#th of %-& 4i.e., the minimum-len#th e!#e not on the compute! 1S*5. *hus lo+er boun! is $(. c. <n!er the 1S* heuristic, +e first nee! to #enerate an Eulerian +alk. <sin# the 1S* !e elope! in part 4b5, the most ob ious +alk is to start at location 1, isit all the locations alon# the 1S* till +e reach location & an! then retrace our steps. *hus the +alk is 1-4-%-)-&-)-%-4-1. "hen +e tra el alon# this +alk, an! +e hit location & for the first time, +e fin! that +e ha e to tra el alon# pre iously tra erse! arcs. So +e try to construct a shortcut by isitin# the next un isite! location. 2ut there are no un isite! locations left. *hus +e return to location 1. *hus, our tour is 1-4-%-)-&-1. *he total len#th of this tour is ($. Since, accor!in# to part 4b5, $( is a lo+er boun! for the len#th of the optimal tour * N, an upper boun! for the !ifference C4* 1S*5-C4*N5 is ($-$(>L. !. "e start +ith an arbitrary partial tour by takin# the lon#est arc. *hus the partial tour is 1-&-1. /teration 1, Gocation ), C1) M C)& O C1& > )' M 1' O )& > & Gocation %, C1% M C&% O C1& > 1( M 1$ O )& > B Gocation 4, C14 M C4& O C1& > 1' M )' O )& > & 2ase! on the abo e, +e can select either location ) or location 4? lets select location ) arbitrarily. 8e+ tour is 1-)-&-1. /teration ), /nsert % bet+een 1 an! ), C1% M C)% O C1) > 1( M 1& O )' > 1) /nsert % bet+een ) an! &, C)% M C%& O C)& > 1& M 1$ O 1' > )1 /nsert % bet+een & an! 1, C1% M C&% O C1& > 1( M 1$ O )& > B /nsert 4 bet+een 1 an! ), C 14 M C)4 O C1) > 1' M )' O )' > 1' /nsert 4 bet+een ) an! &, C )4 M C4& O C)& > )' M )' O 1' > %' /nsert 4 bet+een & an! 1, C14 M C4& O C1& > 1' M )' O )& > & /nsert location 4 bet+een & an! 1. 8e+ tour is 1-)-&-4-1. /teration %, /nsert % bet+een 1 an! ), C1% M C)% O C1) > 1( M 1& O )' > 1) /nsert % bet+een ) an! &, C)% M C%& O C)& > 1& M 1$ O 1' > )1 /nsert % bet+een & an! 4, C%4 M C%& O C4& > 1$ M 1$ O )' > 1) /nsert % bet+een 4 an! 1, C1% M C4% O C14 > 1( M 1$ O 1' > )% Gocation % can be inserte! either bet+een 1 an! ), or bet+een & an! 4. "e arbitrarily select 1 an! ). *herefore the ne+ tour is 1-%-)-&-4-1. *he tour len#th is (). *he suboptimality upper boun! is ()-$(>&. E0tra Credit 62078

: company has =ust purchase! a ne+ !eli ery truck for P1),'''. *he cost of maintainin# the ehicle !urin# a year !epen!s on the a#e of the ehicle at the be#innin# of the year, accor!in# to the follo+in# plan,
Vehicle Age (Years) 0 1 2 3 4 Annual Maintenance Cost $2,000 $4,000 $5,000 $9,000 $12,000

*o a oi! the hi#h maintenance cost associate! +ith an ol!er ehicle, the company may tra!e in the ehicle an! purchase a ne+ one. *he price recei e! in the tra!e-in !epen!s on the a#e of the ehicle at the time of the tra!e-in, accor!in# to the follo+in# *able,
Vehicle Age (Years) 1 2 3 4 5 Tra e!in "rice $7,000 $6,000 $2,000 $1,000 $0.00

:ssumin# that the price of a ne+ ehicle +ill be stable o er the next fi e years, !e elop a shortest-path formulation for i!entifyin# a ehicle replacement plan that minimi3es the total cost 4i.e., total purchasin# cost M total maintenance cost O total money recei e! from any tra!e-ins5 for the company. *his problem can be mo!ele! as a shortest path problem by ima#inin# each year as a no!e on the net+ork. *he net+ork +ill ha e $ no!es 41,),%,4,&, an! $5. 8o!e i is the be#innin# of year i. For i < j, there +ill be a directed arc (i,j) correspon!in# to purchasin# a ne+ car at the be#innin# of the year i an! sellin# it at the be#innin# of the year j. *he cost Ci= associate! +ith this arc +ill be the maintenance cost !urin# years i, i+1,,j-1, plus the cost of purchasin# the car at the be#innin# of year i, minus the tra!e-in alue of the car at the be#innin# of year j. 4/n the more #eneral case, one coul! consi!er 8et Present Qalues rather than nominal alues, by appropriately !iscountin# the rele ant costs an! sal a#e alues +ith the applyin# interest-!iscount rate5. *hus, the arc-len#ths +ill be as follo+s 4in thousan!s5, C1) > ) M 1) O ( > ( C1% > ) M 4 M 1) O $ > 1) C14 > ) M 4 M & M 1) O ) > )1 C1& > ) M 4 M & M L M 1) O 1 > %1 C1$ > ) M 4 M & M L M 1) M 1) O 1 > %1 C)% > ) M 1) O ( > ( C)4 > ) M 4 M 1) O $ > 1) C)& > ) M 4 M & M 1) O ) > )1 C)$ > ) M 4 M & M L M 1) O 1 > %1 C%4 > ) M 1) O ( > ( C%& > ) M 4 M 1) O $ > 1) C%$ > ) M 4 M & M 1) O ) > )1

C4& > ) M 1) O ( > ( C4$ > ) M 4 M 1) O $ > 1) C&$ > ) M 1) O ( > ( *he actual net+ork is 6uite !ense +ith 6uite a fe+ arcs 41& to be exact5 an! is not !ra+n for sake of bre ity. :ny !irecte! path from no!e 1 to no!e $ !efines a potential plan. E.#., the path 1-%-&-$ in!icates a plan +here the ehicle is replace! at the be#innin# of the 1st, %r! an! &th year. *he correspon!in# cost is 1)M1)M(>%1. *he 6uest is for the plan +it the minimum possible cost, +hich correspon!s to a shortest path on this #raph.