lect15_18

lect15_18 - Introduction to Transportation Systems...

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SPEAKER: Joseph M. Sussman MIT Introduction to Transportation Systems 1.201J/11.545J/ESD.210J Fall 2006 LECTURE 15 ( and forward ) FREIGHT DISPLAYS October 31 (and forward) , 2006
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2 5 4 3 2 1 0 BA Another 40 containers/dayAssembly Production Plant Process
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3 INVENTORY AT B 40 Containers/day are “consumed” at B Inventory at B 40 Time (Days) 01 2 3
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4 PIPELINE INVENTORY Inventory 200 1 2 3 4 Time
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5 WHAT CAN GO WRONG? Delays along the way -- service reliability goods don’t arrive ISSUE: Stock-outs 80 40 1 2 3 Time Inventory at B
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6 WHAT CAN GO WRONG? (CONTINUED) So, perhaps the customer at B keeps a day’s worth of inventory Problems: Bigger Inventory Warehousing Costs Insurance Costs 80 1 2 3 4 Time (days) Inventory
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7 A BIG ISSUE -- STOCK-OUTS ± WHAT DOES A STOCK-OUT COST? ± Examples ± GM Assembly Plant ± Retail Store ± Blood Bank
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8 Another approach: Order less often -- only every 5th day Average Inventory at B = 100, rather than 20 200 5 Time Inventory at B
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9 PIPELINE INVENTORY Inventory 200 1 2 3 4 Time
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10 LEVEL-OF-SERVICE VARIABLES ± Travel Time -- Because of Pipeline ± Reliability -- Because of stock-outs
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11 AIR FORCE SUSTAINMENT SYSTEM Planes Spare Parts Supply ±±±± Line ² Planes fly missions ² Parts fail ² If spares not available, plane cannot fly Let’s discuss from an inventory viewpoint? ² Why not keep a lot of spare parts around? ² What is the inventory we really care about? ² How do you value a stock-out?
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12 SOME OTHER ISSUES ± Probabilistic use rate of spare parts ± Size of orders ± Dual use of parts for different airplanes ± Wartime - Peacetime
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13 INVENTORY MINIMIZATION ± If one needs a greater amount of inventory because of unreliability in the transportation system or probabilistic use rate, you generate costs as a result of needing larger inventory to avoid stock-outs. ± We try to balance the costs of additional inventory with the costs of stock-outs.
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14 JUST-IN-TIME SYSTEMS ± The fundamental idea is to keep very low inventories, so as to not generate high inventory costs, by receiving goods “exactly” when they are needed -- JIT -- to keep the assembly process going, or to have goods to sell to your customers, etc. ± Now if one is going to operate just-in-time systems and keep costs lower by having smaller inventories (and smaller rather than larger warehouses), it requires a very reliable transportation mode .
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15 SHIFTING THE COSTS OF INVENTORY ± Suppose you have Toyota receiving goods from a supplier on a JIT basis. Imagine that Toyota is this supplier’s best customer. ± So from the supplier’s main warehouse, he ships goods to Toyota several times per day because Toyota insists on just-in-time delivery. ± But, the supplier keeps some additional inventory in a warehouse close to Toyota in which he is carrying safety stock “just-in-case” .
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16 TRIGGER POINT INVENTORY SYSTEM Time S Q Inventory Figure 12.13 The operating rule is: When the inventory reaches ‘S’, reorder ‘Q’ items, where ‘Q’ is the reorder quantity .
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17 TOTAL LOGISTICS COSTS (TLC) Total Logistics Costs (TLC) = f (travel time distribution, inventory costs, stock-out costs, ordering costs, value of commodity, transportation rate, etc.)
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This note was uploaded on 12/04/2011 for the course ESD 1.210j taught by Professor Mosheben-akiva during the Fall '08 term at MIT.

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lect15_18 - Introduction to Transportation Systems...

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