# Supply Chain Modelling e

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ASSIGNMENT 2- SUPPLY CHAIN MODELLING EXERCISE 1.   A company manufacturing a product is considering the trucking and inventory norms that is to be followed at the plant and at various warehouses. The product exist in 4 SKUs. The production involves 4 stages and the SKUs are differentiated at the third stage. (For analysis you can take the production as a two stage process). The SKU wise demand at four Distribution Centres along with trucking cost is given in the attached tables. The Plant is having a maximum capacity 1200 units per week. The last stage has an additional capacity for 200 units. The company follows batch mode at stage 4, even though it can make two SKUs at the same time. However the yield will reduce to 80% (divided equally) if two SKUs are made simultaneously. Assume the production rate is uniform. For every change of setup, the capacity to the tune of 1 days production will be lost. Company maintain labour to operate only at 90% of its full capacity. Any additional labour cost Rs 1000/- per 50 units produced and retrenchment cost Rs 2000/- per 50 units reduced. The company can produce in lots of 100 and changes can be in the steps of 100 only. Using DRP develop, production and dispatch schedules for weeks under consideration. Make any relevant assumptions. The storage capacity at the plant and DCs (total cartons in terms of SKU1) is given in Table 4. However additional capacity can be hired at Rs 10,00 per 100 units per week (in terms of SKU1). The inventory cost is 24% per annum. The unit cost of SKU's (at Plant) is given Table 6. The time taken for travel between plant and warehouses (DC) is given in Table 7. State your assumptions clearly. 2.   Refer to the problem above. A detailed study of the company revealed that the actual demand varies as per exponential distribution with mean equal to 5 week average. Using simulation find how your solution earlier will reflect on firm's performance over an year (52 weeks average). Develop strategies (both functional and strategic) to minimise wastage. If round trips (multi drops) are to be used, develop an algorithm for the same. Do you think inter DC transfers are going to improve the performance. If SKU's have substitution effect up to 10%, how will your answer change. Do you think it is wise to avert stock out by providing another SKU at same/competitive rates. If you have to fix the price of products,  how will you approach the same? Assume any other data you feel relevant in solving problem 1 &2  Table 1 Trucking Cost from the Source to Destinations Trucking Cost DC1 DC2 DC3 DC4 FULL 2000 1800 1500 2600 HALF 1300 1200 900 1800 (The Cost is in Rupees) Table 2 Truck Capacity & SKU packing pattern SKU1 SKU2 SKU3 SKU4 FULL 500 400 300 250 HALF 200 175 125 100 (UNITS ARE CARTONS : Combinations are possible in the same ratio) Table 3 Lead time for procurement (including transportation time) SKU1 SKU2 SKU3 SKU4 DC1 1 2 2 1 DC2 2 2 1 2 DC3 1 2 2 2 DC4 2 2 3 2 The figures are in Week  Table 4 Storage capacity (in cartons of SKU1) SKU1 PLANT 1500 DC1 1000 DC2 900 DC3 800 DC4 700 For conversion please use the table 2 Table 5 SKU Wise demand, Safety stock, Order quantity at DCs (a) SKU1 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 On Hand Safety Order Qty DC 1 100 90 90 100 90 95 120 90 200 DC 2 80 70 75 65 70 65 90 70 100 DC 3 70 75 60 80 65 70 100 50 100 DC 4 70 80 95 90 95 100 85 70 125 (b) SKU 2 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 On Hand Safety Order Qty DC 1 75 80 80 75 80 70 100 70 125 DC 2 60 50 55 45 50 45 70 50 80 DC 3 50 55 40 55 45 45 90 35 75 DC 4 70 60 75 70 75 80 65 50 100 (c) SKU3 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 On Hand Safety Order Qty DC 1 50 70 80 55 60 65 100 60 100 DC 2 40 40 50 35 30 35 50 40 50 DC 3 30 25 20 30 35 30 50 30 50 DC 4 50 65 60 55 45 50 55 55 100  (d) SKU 4 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 On Hand Safety Order Qty DC 1 100 60 70 100 70 75 100 100 150 DC 2 125 100 120 125 80 75 70 60 100 DC 3 75 55 80 70 70 95 90 100 150 DC 4 80 90 100 90 80 70 65 50 150 Demand is in Cartons On hand refers to the amount stock in hand at the beginning of week 3 Table 6 Unit Price of SKUs (per Carton) Unit Cost Demerage Charge SKU1 2000 5000 SKU2 1000 3000 SKU3 500 3000 SKU4 3000 2000 Demerage Charges are per carton per week delayed Table 7 DC1 DC2 DC3 DC4 PLANT 3 2 3 2 DC1 -- 5 2 2 DC2 5 -- 3 3 DC3 4 3 -- 4 DC4 2 3 3 -- Units are in days. Assume same time for smaller and bigger trucks. Assume week has 7 days for transportation and 6 days for sales

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