1. Logistics Systems Analysis Mid-Term Review
John H. Vande Vate
Spring, 2001 1

2. Subjects Covered Supply Chain Costs EOQ Holding Moving
Waiting
Rent
Moving
Handling
Transport
EOQ
Trade off Holding and Moving Costs
cQ + d/Q minimized with Q = d/c 2

3. Subjects Covered Project Inventory Analysis Modeling At the Plant
Shipments of size Q to DC
Inventory at plant per shipment: (Q/2)*(Q/P)
Shipments per year: D/Q
Total Inventory: (Q/2)*(D/P) + Q/2
EOQ: minimize fD/Q + h(Q/2)*(1+D/P)
Q* = (2fD/h)P/(P+D) 3

4. Project Inventory Analysis Plant to Warehouse
Inventory at plant per shipment: (Q/2)(Q/P)
Shipments per year: unknown
Shipments generated by DC served through warehouse: D/Q
Total Plant inventory per DC served through warehouse: (Q/2)(D/P)
EOQ to warehouse:
Q* = (2fDw/h)P/(P+Dw) but what’s Dw? 4

5. Warehouse Inventory Inbound Outbound
Q/2 from each plant that serves it
Outbound
“Option” or mix of items shipped together
Total Demand at warehouse for Assembly: DO
“Production Rate” of Option at Warehouse: DO
Inventory per shipment to DC: (Q/2)(Q/DO)
Shipments per year: D/Q
EOQ: min fD/Q + h(Q/2)(1 + D/DO)
Q* = (2fD/h)DO/(DO +D) but what’s DO? 5

6. Outbound Inventory to DC
Inventory per shipment to DC: (Q/2)(Q/DO)
Shipments per year: D/Q
Inventory per year: (Q/2)(D/DO) if served with this option
DO= Sum of Demands at DC’s served with this option
If Shipment size Q for this option is relatively constant across the DC’s
Total Outbound Inventory Cost for the Option is (average Q/2)*[Do we serve any DC with this option?] 6

7. Modeling “Rules” Use meaningful (helpful) names Comment extensively
Keep data and model separate
Keep model general where possible 7

8. “Finance” Capital Utilization influences financial performance
Total Capital influences Capital Utilization
Inventory Levels contribute to Capital
Cash-to-Cash Cycle influences Capital
Value of Inventory Savings 8

9. H(t) = (2Fixed/cD’(t))
1-1 Distribution
Extension of EOQ to variable demand
Simple formula for headways:
H(t) = (2Fixed/cD’(t))
Estimate of Total Cost
Reconstructing implementable headways 9

10. Models for Variable Demand
Correct Models
Relate decision whether or not to ship with volume shipped
Q[t]  Ship[t]*Remaining Demand
Better Models
Do not aggregate constraints
Q[s, t]  Ship[s]*Demand in Period t 10

11. Location Different Objectives Two varieties of models Item-miles miles
max distance …
Two varieties of models
Do we locate here or not?
What is the position of the facility? 11

12. Location Measures of Distance
Rectilinear
Euclidean
Iterative scheme for locating a single facility using Euclidean Distances
Extension to locating several facilities
Locate
Allocate 12