Input Data

Number of suppliers = 4
Change demand in Cell B4 to 960,000 or 120,000 for d
Number of retail stores = 8
Demand per store from each supplier = 120,000
Cost per large trailer = $ 1,000
Cost per small truck = $ 400
Large trailer capacity = 40,000
Small truck capacity = 10,000
Holding cost per unit per year = $ 0.20
Cost / large truck stop = $ 100
Cost / small truck stop = $ 50

Direct Shipping Using Large Trucks (Full)

Batch size = 40,000
Average inventory at store = 20,000
Number of shipments / year = 3 demand/batch size
Truck cost / retail store / supplier = $ 3,300 1 stop
Total truck cost = $ 105,600 truck cost*supp*retailer
Holding cost / retail store / supplier = 4000 average inv*holding cost
Total holding cost = 128000
Total holding and truck cost = $ 233,600

Direct Shipping Using Small Trucks (Full)

Batch size = 10,000 batch size comes down - num of shipments inc
Average inventory at store = 5,000
Number of shipments / year = 12
Truck cost / retail store / supplier = $ 5,400
Total truck cost = $ 172,800
Holding cost / retail store / supplier = 1000 inv cost decreases
Total holding cost = 32000
Total holding and truck cost = $ 204,800 total cost increases
e demand in Cell B4 to 960,000 or 120,000 for detailed analysis

Direct Shipping Using Large Trucks (optimal when D=960000)

Batch size = 40,000
Average inventory at store = 20,000
Number of shipments / year = 3
Truck cost / retail store / supplier = $ 3,300
Total truck cost = $ 105,600
Holding cost / retail store / supplier = 4000
Total holding cost = 128000
Total holding and truck cost = $ 233,600

s down - num of shipments inc

Input Data
Number of suppliers = 4
Number of retail stores = 8
Demand per store from each supplier = 960000
Cost per large trailer = $ 1,000 DS
Cost per small truck = $ 400 Milk Run
Large trailer capacity = 40000 2 stops
Small truck capacity = 10000 4 stops
Holding cost per unit per year = $ 0.20 small truck
Cost / large truck stop = $ 100 large truck
Cost / small truck stop = $ 50
Change number of stops in Cells B14 and B25
Milk Run Using Large Trucks (Full)
Number of stops / truck 2 2 retailers 2 stops per truck
Batch size = 20,000 going to two stores - load halved
Average inventory at store = 10,000
Number of shipments / year = 48
Truck cost / retail store / supplier = $ 28,800 carrying 2 stocks
Total truck cost = $ 921,600
Holding cost / retail store / supplier = 2000
Total holding cost = 64000
Total holding and truck cost = $ 985,600

Milk Run Using Small Trucks (Full)

Number of stops / truck 2
Batch size = 5,000 batch size decreases
Average inventory at store = 2,500
Number of shipments / year = 192 increases
Truck cost / retail store / supplier = $ 48,000 increases
Total truck cost = $ 1,536,000
Holding cost / retail store / supplier = 500 decreases
Total holding cost = 16000
Total holding and truck cost = $ 1,552,000
 960000 120000

such a table can be created

small truck
large truck

can do for 4 stops

wo stores - load halved

Input Data
Number of suppliers = 4
Number of retail stores = 8
Demand per store from each supplier = 960000
Cost per large trailer = $ 500 divided to inbound cost and an outbound cost
Cost per small truck = $ 200
Large trailer capacity = 40000
Small truck capacity = 10000
Holding cost per unit per year = $ 0.20
Cost / Unit at Intermediate facility = $ 0.02
Cost / large truck stop = $ 100
Cost / small truck stop = $ 50

Intermediate Facility Using Large In Large Out (Full) Large Trailer

Number of stops / truck on outbound 1
Inbound batch size = 80,000 to all retailers 10000 from each supplier to each
Outbound batch size = 10,000 from each supplier
Average inventory/product / store = 5,000

Number of outbound shipments / year / store = 96

Number of inbound shipments / year / supplier 192

Total truck cost = $ 921,600
Holding cost / retail store / supplier = 1000
Total holding cost = 32000
Intermediate processing cost = $ 614,400 for all 4 suppliers
Total holding and truck cost = $ 1,568,000

Intermediate Facility Using Small In Small Out (Full)

Number of stops / truck on outbound 1
Inbound batch size = 20,000
Outbound batch size = 2,500
Average inventory/product / store = 1,250

Number of outbound shipments / year / store = 384

Number of inbound shipments / year / supplier 768

Total truck cost = $ 1,536,000
Holding cost / retail store / supplier = 250
Total holding cost = 8,000
Intermediate processing cost = $ 614,400
Total holding and truck cost = $ 2,158,400
ost and an outbound cost

10000 from each supplier to each retailer - for 8 retailers = 10000*8= 80000

total demand per supplier for 8 stores 7680000

trailer capacity 40000

Large in large out better for high demand

Example 14-2 (Eastern Electric)
Annual quantity = 120000
Holding cost = $ 30.00
Transportation proposals for eastern Electric

Quantity Shipping
Shipped Quantity shipped Shipping cost cost Transit time
Carrier (cwt) (motors) ($/cwt) ($/motor) (days)
AM Railroad 200+ 2000+ $ 6.50 $ 0.65 5
Northeast trucking 100+ 1000+ $ 7.50 $ 0.75 3
Golden Freightways 50-150 500-1500 $ 8.00 $ 0.80 3
Golden Freightways 150-250 1500-2500 $ 6.00 $ 0.60 3
Golden Freightways 250+ 2500+ $ 4.00 $ 0.40 3
Golden Freightways
(new proposal) 250+ 2500+ $ 3.00 $ 0.30 3

Analysis of Transportation Options for Eastern Electric

Lot Size Transportation Cycle Safety in-Transit Inventory
Alternative (Motors) Cost Inventory inventory Inventory Cost
AM Rail
Northeast Trucking
Golden Freightways
Golden Freightways
Golden Freightways
Golden Freightways
Golden Freightways
(old proposal)
Golden Freightways
(new proposal)
Total Cost
Tradeoffs when Aggregating Inventory

Current Scenario Option A

Number of stocking locations
Reorder interval
HighVal cycle inventory
HighVal Safety inventory
HighVal inventory
LowVal cycle inventory
LowVal safety inventory
LowVal Inventory
Annual inventory cost
Shipment type
Shipment size
Shipment weight
Annual transport cost
Total annual cost
Option B
Trade-off between Transportation Cost and Responsiveness
Two-Day Response Three-Day Response Four-Day Response

Day Demand Oty Shipped Cost Qty Shipped Cost Qty Shipped Cost
1 19,970
2 17,470
3 11,316
4 26,192
5 20,263
6 8,381
7 25,377
8 39,171
9 2,158
10 20,633
11 23,370
12 24,100
13 19,603
14 18,442
Table 14-6 (HighMed)
Highval
Weight 0.1 Impact of transportation cost on options
Cost 200 - Change transportation cost multiplier in Cell B15
Mean weekly demand / territory = 2 Impact of SD of demand on options
SD of demand = 5 - Change SD of HighVal demand in Cell B6
Lowval
Impact of customer order size on options
Weight 0.04 - Change customer order size multiplier in Cell B16
Cost 30
Impact of holding cost on options
Mean weekly demand / territory = 20
- Change holding cost multiplier in Cell B17
SD of demand = 5

Cycle service level = 0.997

Holding cost = 0.25
Transportation cost multiplier 1
Customer order size multipler 1
Holding cost multiplier 1

Current Scenario Option A Option B

Number of stocking locations
Reorder interval
HighVal Cylce inventory
HighVal safety inventory
HighVal inventory
LowVal cycle inventory
LowVal safety inventory
LowVal inventory
Annual inventory cost
Shipment type
Shipment size
Highval
LowVal
Shipment weight
Number of shipments / year
Annual transport cost
Total Annual Cost
 on options
multiplier in Cell B15
ptions
d in Cell B6

on options
multiplier in Cell B16

tions
er in Cell B17