MITESD_273JF09_lec04

MITESD_273JF09_lec04 - 1.270J/ESD.273J 270J/ESD Logistics and Distribution Systems Dynamic Economic Lot Sizing Model 1 Outline cfw The Need for

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270J/ESD 273J 1.270J/ESD.273J Logistics and Distribution Systems Dynamic Economic Lot Sizing Model 1
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Outline { The Need for DELS { DELS without capacity constraints: z ZIO policy; z Shortest path algorithm. { DELS with capacity constraints: z Capacity constrained production sequences; z Shortest path algorithm. 2
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Strategic Sourcing Inputs Transportation costs, rules for shipping out of territory overflow Supplier WH cost, capacity, safety stock targets, and current on hand territory overflow facilities constraints, costs, fixed orders, etc and current on-hand position Mfg constraints, costs, run rules, fixed production schedules set ups tooling etc Current demand forecast by forecast Product info and BOM 3 schedules, set-ups, tooling, etc. by time period y location by time period
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Key Drivers in Sourcing Decisions ± Freight costs for existing and potential lanes ± Availability at different times of the year Freight Production Raw Materials ± p ± Duties for different customer countries g & Duties Capabilities ± Locations Mfg osts Sourcing Decisions ± Suppliers ± Plants ± Warehouses Costs ± Customers Products Demand ± Demand by product by customer ± Product attributes OM information ± Purchase prices What can be made where, tooling, etc. Mfg speeds & capacities ± Setups, batches, yield loss, etc. ± Production costs ± llocation of fixed & Allocation of fixed & variable overheads ± Economies of scale ± BOM information ± Special rules and ± Monthly or weekly forecasts constraints 4
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Strategic Sourcing Outputs Total volume and cost on each lane in each time period Amount purchased from each supplier Throughput by WH by product by time period, ending inventory by from each supplier, where and when it should be shipped ending inventory by period, costs by period What products should be made where, made when, Total landed cost by time period by Strategic sourcing minimizes total supply chain costs 5 ,, and shipped to where py customer/product subject to all constraints
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ICI LOCATIONS Dase Study: Strategic Sourcing PR 6 Gulf of Mexico Atlantic Ocean Pacific Ocean 0 0 800 km 500 km CA 2 CA 1 TX 2 TX 1 GA OH PA PR Mexico Canada Image by MIT OpenCourseWare.
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Background ± Sold product throughout US to variety of customers irect to customers/distributors z Direct to customers/distributors z Through their own stores z Through retailers ± Wide variety of product z 4,000 different SKU’s z 1500 different base products (could be labeled differently) z Many low-volume products ± Batch Manufacturing z Manufacturing done in batch, so there significant economies of scale if a single product is made in one location ± fg Capability Mfg Capability z Each plant had many different processes z Many plants can produce the same problem 7
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Business Problems ± Are products being made in the right location?
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This note was uploaded on 12/06/2011 for the course ESD 15.763j taught by Professor Davidsimchi-levi during the Spring '05 term at MIT.

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MITESD_273JF09_lec04 - 1.270J/ESD.273J 270J/ESD Logistics and Distribution Systems Dynamic Economic Lot Sizing Model 1 Outline cfw The Need for

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