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Logistics HW 3 - Logistics and SC Management Homework 3 1 a...

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Logistics and SC Management Homework 3 1. a. Appendix A depicts a network consisting of 3 plants, 2 central distribution centers (CDCs) and 6 local distribution centers (LDCs). We chose to use the nearest neighbor heuristic described in class that selects the lowest cost associated with each node. This heuristic yields a total transportation cost of $275.09 million; the values associated with the calculations are found in the chart below. To L3 L4 L1 L2 L4 L5 L6 C2 C1 C1 C1 Total From C2 C2 C1 C1 C1 C1 C1 P2 P2 P1 P3 Demand (thousands) 43 57 15 130 123 5.3 2 100 112 150 34.3 Cost (millions) 4.3 28.5 7.5 91 102.09 1.59 5.75 5 0 22.5 6.86 275.0 9 b. Solving the linear programming problem using Excel, the minimal supply chain transportation cost is $273,090,000. The optimization as well as the optimal distribution table can be seen in Appendix A (attached). 2.1 Q t is the actual orders placed in period t. (y t – y t-1 ) is the difference in inventory levels between periods t and t-1 D t-1 is just the demand in period t-1 2.2.1 The term is the sum of all the lead time from the initial period all the way through a period “k”. Consequently, as k increases, then the right term will also increase. The means that the variance of Q can go up or the variance of D can go down. L i is in units of time. So, as the summation term increases, the variance of Q will increase. This is the bullwhip effect, where orders placed downstream are in a bigger range.
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