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Supply Chain Analytics Example: Order Picking I

Term VI, 2023 You are managing an e‐commerce fulfillment center where a team
of pickers assemble an order to be ready for shipping.

Lecture 14 On average, your teams can pick and assemble 4 orders with a
standard deviation of 5 orders within a minute. There are always
orders in the queue waiting to be picked.

• What is the approximate probability that they will pick at

Prof. Abhishek Srivastava
least 260 orders within an hour?

Indian Institute of Management Kashipur

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Dice Central Limit Theorem

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Example: Order Picking I

You are managing an e‐commerce fulfillment center where a team
of pickers assemble an order to be ready for shipping.

On average, your teams can pick and assemble 4 orders with a

standard deviation of 5 orders within a minute. There are always
orders in the queue waiting to be picked.
Applying Central Limit Theorem
• What is the approximate probability that they will pick at
least 260 orders within an hour?

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Order Picking II
Order Picking I Same situation where expected orders picked in an hour
are distributed Normally with mean of 240 and standard
deviation of 38.7.
• What is the approximate probability that they will pick
between 220 and 260 orders within an hour?

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Warehouse Delivery Problem

Warehouse Delivery Problem
An Amazon delivery warehouse has a consumer delivery unit in NDR. They
distribute product from a downtown location to all residences and offices
in the nearby city. The deliveries are made on scooters and each customer
is delivered to directly. They found that the distance to each customer 2. What is the probability that distance >5 km?
location is ~U(2.75,6.50) kilometers.
F(t) = P[X≤t], since we want to find P[X>t], we need to find 1-F(t) = 1 – (t-
1. What is the average distance, median distance, and CV? a)/(b-a) = 1 – (5-2.75) / (6.5 – 2.75) = 1 – 0.6 = 0.40 or 40%.

We know that mean = (a+b)/2 = (2.75 + 6.50)/2 = 4.625 km which is also

the median!
3. What is the probability that distance is +/- 1σ of the μ?
CV= σ/μ= √[(1/12)(b-a)2] / (a+b)/2 = √[(1/12)(6.5 – 2.75)2] / 4.625 =
1.0825 / 4.625 = 0.23
We know that σ = 1.0825 and that μ =4.625. So, we want to find, the
probability that X is between (4.625 – 1.0825) and (4.625 + 1.0825) or
[3.5425, 5.7075].

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Uniform Distribution Uniform Distribution

We would say,
“X is uniformly distributed over the range a to b, or
• Cumulative Density Function (cdf)
X~U(a,b)”
• F(t) = P(X≤t) or the probability that X does not exceed t
• 0.0 ≤ F(t) ≤ 1.0
• F(b) ≥ F(a) if b>a – it is increasing

✓ Cumulative Density Function (cdf)

✓ F(t) = P(X≤t) or the probability that X does
not exceed t
✓ 0.0 ≤ F(t) ≤ 1.0
✓ F(b) ≥ F(a) if b>a – it is increasing

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Warehouse Delivery Problem

Warehouse Delivery Problem
An Amazon delivery warehouse has a consumer delivery unit in NDR. They
distribute product from a downtown location to all residences and offices
in the nearby city. The deliveries are made on scooters and each customer
is delivered to directly. They found that the distance to each customer 2. What is the probability that distance >5 km?
location is ~U(2.75,6.50) kilometers.
F(t) = P[X≤t], since we want to find P[X>t], we need to find 1-F(t) = 1 – (t-
1. What is the average distance, median distance, and CV? a)/(b-a) = 1 – (5-2.75) / (6.5 – 2.75) = 1 – 0.6 = 0.40 or 40%.

We know that mean = (a+b)/2 = (2.75 + 6.50)/2 = 4.625 km which is also

the median!
3. What is the probability that distance is +/- 1σ of the μ?
CV= σ/μ= √[(1/12)(b-a)2] / (a+b)/2 = √[(1/12)(6.5 – 2.75)2] / 4.625 =
1.0825 / 4.625 = 0.23
We know that σ = 1.0825 and that μ =4.625. So, we want to find, the
probability that X is between (4.625 – 1.0825) and (4.625 + 1.0825) or
[3.5425, 5.7075].

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Warehouse Delivery Problem

Warehouse Delivery Problem
An Amazon delivery warehouse has a consumer delivery unit in NDR. They
distribute product from a downtown location to all residences and offices
in the nearby city. The deliveries are made on scooters and each customer
is delivered to directly. They found that the distance to each customer 2. What is the probability that distance >5 km?
location is ~N(4.6, 1.10) kilometers.
We want to find P[X>5] = 1- P[X≤5] = 1 - NORM.DIST(5, 4.6, 1.1, 1) = 1-
1. What is the average distance, median distance, and CV? 0.643 = 0.36 or 36%.

This is trivial since they are all given!
CV=σ/μ=1.1/4.6 = 0.24
Average = median = 4.6 km. 3. What is the probability that distance is +/- 1σ of the μ?
By definition, 68.3%. But we could also use the cdf functions.
P[X≤5.7] – P[X≤3.5] = NORM.DIST(5.7, 4.6, 1.1, 1) NORM.DIST(3.5, 4.6, 1.1,
1) = 0.841 - 0.158 = 0.683 or 68.3%.

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Normal Distribution Unit or Standard Normal Distribution

• Z~N(0,1) where Z=(X-μ)/σ
• X is normally distributed with mean µ and • Z score gives the number of standard fu(u0)
standard deviation σ, or X~N(µ, σ)”. deviations away from the mean Area =
• Note: mean=median=mode =μ fx(x0) • Allows for use of standard tables P[u<z]
Area =
Area = Area = • Used extensively in inventory theory for P[u≥z]=
P[x<μ+kσx] P[x≥μ+kσx] setting safety stock =1-P[u<z]
=1-P[x<μ+kσx] • Area under the curve is 1
• Able to assess the probability of an event
• A z score can be positive or negative 0 z u0
• Most commonly used distribution – many x0 Function Microsoft Excel Google Sheets LibreOffice->Calc
analyses assume ~ N μ μ+kσx
cdf of Normal =NORM.DIST(X, μ, σ, 1) =NORMDIST (X, μ, σ, 1) =NORM.DIST (X, μ, σ, 1)
• High point in ‘bell curve’ occurs at mean Distribution
• Symmetric about the mean pdf of Normal =NORM.DIST(X, μ, σ, 0) =NORMDIST (X, μ, σ, 0) =NORM.DIST (X, , μ, σ, 0)
• The mean ‘shifts’ the distribution – but not Distribution
Inverse of =NORM.INV(Probability, μ, σ) =NORMINV (Probability, μ, =NORM.INV (Probability, μ,
the ‘shape’ Normal cdf σ) σ)
• The standard deviation changes the ‘shape’ Standard Normal =NORM.S.DIST(z,1) =NORMSDIST (z) =NORM.S.DIST (z,1)
cdf
but doesn’t ‘shift’ it Inverse Standard =NORM.S.INV(Probability) =NORMSINV (Probability) =NORM.S.INV (Probability)
Normal cdf

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Uniform Distribution
We would say,
“X is uniformly distributed over the range a to b, or
X~U(a,b)”

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