1、Managing Transportation in a SupplyChain10/6/2018S. Chopra / Transportation11OutlineKey modes of transport and major issues Transportation System DesignTradeoffs in transportation designTransportation and inventory: Choice of mode Transportation and inventory: ConsolidationTransportation and service

2、: Transit points at Merloni10/6/2018S. Chopra / Transportation22Transportation ModesTrucks TL LTLRail Carload IntermodalAirPackage Carriers WaterPipeline10/6/2018S. Chopra / Transportation33Truckload (TL)Average revenue per ton mile (1996) = 9.13 centsAverage haul = 274 milesAverage Capacity = 42,00

3、0 - 50,000 lb. Low fixed and variable costsMajor IssuesUtilizationConsistent service Backhauls10/6/2018S. Chopra / Transportation44Less Than Truckload (LTL)Average revenue centsper ton-mile (1996) = 25.08Average haul = 646 milesHigher fixed costs (terminals) and low variable costsMajor IssuesLocatio

4、n of consolidation facilities UtilizationVehicle routing Customer serviceS. Chopra / Transportation10/6/201855RailAverage revenue / ton-mile (1996) = 2.5 cents Average haul = 720 milesAverage load = 80 tonsKey IssuesScheduling to minimize delays / improve service Off track delays (at pick up and del

5、ivery end) Yard operationsVariability of delivery times10/6/2018S. Chopra / Transportation66AirKey IssuesLocation/Number of hubs Location of fleet bases / crew bases Schedule optimizationFleet assignment Crew schedulingYield management10/6/2018S. Chopra / Transportation77Transportation System Design

6、AC Delco: Very high value low volume parts Three plants: Milwaukee, Kokomo, Matamoros 21 assembly plants (customers for above plants)What are the distribution options? Which one to select? On what basis?10/6/2018S. Chopra / Transportation88All Shipments DirectMilwaukeeKokomoMatamoros10/6/2018S. Chop

7、ra / Transportation99TransportInventoryFull Load$2.0 Million$17.5 MillionOptimal$4.0 Million$5.6 MillionAll Shipments Via Kokomo (with orwithout cross dock)MilwaukeeKokomoMatamoros10/6/2018S. Chopra / Transportation1010TransportInventoryFull Load$2.1 Million$9.7 MillionOptimal$3.0 Million$7.2 Millio

8、nSome Shipments Direct, Others ViaKokomoMilwaukeeKokomoMatamoros10/6/2018S. Chopra / Transportation1111TransportInventoryOptimal$3.7 Million$5.8 MillionMilk Runs From KokomoMilwaukeeKokomoMatamoros10/6/2018S. Chopra / Transportation1212TransportInventoryOptimal$2.4Million$7.2 MillionMilk Runs From P

9、lantsMilwaukeeKokomoMatamoros10/6/2018S. Chopra / Transportation1313TransportInventoryOptimal$3.5 Million$4.6 MillionLine Haul and Cross DockThis approach is useful if deliveries are time sensitive and there are several dropoffs in proximity, not all of which can be delivered on a single truck.Milwa

10、ukeeKokomoMatamoros10/6/2018S. Chopra / Transportation1414Total Costs10/6/2018S. Chopra / Transportation1515RoutesTransportInventoryTotalDirect, Full Load2.017.519.5Direct,Optimal Load4.05.69.6Via Kokomo, Full Load2.19.711.8Via Kokomo, Optimal Load3.07.210.2Direct + KokomoMilk run from Koko

11、moMilk run from PlantsTradeoffs in Transportation DesignTransportation, facility, and inventory cost tradeoff Choice of transportation mode Inventory aggregationTransportation cost and responsiveness tradeoff10/6/2018S. Chopra / Transportation1616Choice of Mode: Eastern ElectricCor

12、porationAnnual demand = 120,000 motorsCost per motor = $120Current order size = 3,000 motorsSafety stock carried = 50% of demand during delivery lead timeHolding cost = 25%10/6/2018S. Chopra / Transportation1717Eastern Electric Corporation10/6/2018S. Chopra / Transportation1818AlternativeTransport C

13、ostCycle InventorySafety InventoryTransit InventoryInventory CostTotal CostAM Rail (2,000)$78,0001,0009861,644$108,900$186,900Northeast Trucking (1,000)$90,000500658986$64,320$154,320Golden (500)$96,000250658986$56,820$152,820Golden (2,500)$86,4001,250658986$86,820$173,220Golden (3,000)$78,0001,5006

14、58986$94,320$172,320Golden (4,000)$67,5002,000658986$109,320$176,820Physical Inventory Aggregation:Inventory vs. Transportation costAs a result of physical aggregationInventory costs decreaseInbound transportation cost decreases Outbound transportation cost increases10/6/2018S. Chopra / Transportati

15、on1919Inventory Aggregation at HighMedHighval ($200, .1 lbs/unit) demand in each of 24 territoriesmH = 2, sH = 5Lowval ($30/unit, 0.04 lbs/unit) demand in each territorymL = 20, sL = 5UPS rate: $0.66 + 0.26xfor replenishmentsFedEx rate: $5.53 + 0.53x for customer shipping10/6/2018S. Chopra / Transpo

16、rtation2020Inventory Aggregation at HighMed10/6/2018S. Chopra / Transportation2121If shipment size to customer is 0.5H + 5L, total cost of option 2 increases to $36,729.Current ScenarioOption 1Option 2# Locations24241Reorder Interval4 weeks1 week1 weekInventory Cost$54,366$29,795$8,474Shipment Size8

17、 H + 80 L2 H + 20 L1 H + 10 LTransport Cost$530$1,148$14,464Total Cost$54,896$30,943$22,938Temporal Demand Aggregation:Transit Points at MerloniFACTORIESTL ShipmentsTL ShipmentsLTL ShipmentsRETAILERS10/6/2018S. Chopra / Transportation2222RDCRDCRDCRDCCDCMerloni ElettrodomesticiService guarantee: 24 h

18、oursStocking policy at RDCA items: 2 weeks B items: 4 weeksC items: NoneTruck CapacityTractor trailer: 120 unitsSmall truck: 45 units10/6/2018S. Chopra / Transportation2323Merloni Elettrodomestici10/6/2018S. Chopra / Transportation2424RegionAvg. Daily demand%served from RDCAvg. Daily demand served f

19、rom RDC# of tractor trailer loads / day# of small truck loads / day# of days between full tractor trailer shipments# of days between full small truck shipmentsRoma164.794%0.80.3Catanz.65.290%2.00.8Total1686.670%1180.69.725.9Merloni Elettrodomestici (Roma RDC,24 hour delivery)Ope

20、rating Costs Current: 3,605 lire/piece/month Transit Point: 721 lire/piece/month current costsInventory Costs Current: 1,035 lire/piece/month Transit Point: 0 lire/piece/monthShort Haul Transport CostExhibit 10at 20% ofExhibit 10No inventoryCurrent: 4,300 lire/piece/monthExhibit 10Transit Point: 4,3

21、00 lire/piece/month No change10/6/2018S. Chopra / Transportation2525Merloni Elettrodomestici (Roma RDC,24 hour delivery)Long Haul Transport Costs Current: 3,167 lire/piece/monthRome is 175 km. This translates to tractor trailer cost of 380,000 lire or 380,000/120 = 3,167 lire/piece Transit Point: 3,

22、806 lire/piece/monthWith 24 hour turnaround, we need 1 tractor trailer and 1 small truck each day. This gives a daily cost of 380,000 + 210,000 = 590,000 lire or 590,000/155 = 3,806 lire/pieceTotal Cost for Roma RDC (24 hour delivery) Current: 12,107 lire/piece/month Transit Point: 8,827 lire/piece/

23、month10/6/2018S. Chopra / Transportation2626Merloni Elettrodomestici (Roma RDC,48 hour delivery)Long Haul Transport Costs Current: 3,167 lire/piece/monthRome is 175 km. This translates to tractor trailer cost of 380,000 lire or 380,000/120 = 3,167 lire/piece Transit Point: 3,677 lire/piece/monthWith

24、 48 hour turnaround, we need 3 tractor trailers every two days. This gives an average daily cost of 380,000 + 190,000 = 570,000 lire or 570,000/155 = 3,677 lire/pieceTotal Cost for Roma RDC (48 hour delivery) Current: 12,107 lire/piece/month Transit Point: 8,698 lire/piece/month10/6/2018S. Chopra /

25、Transportation2727Merloni Elettrodomestici (CatanzaroRDC)Operating Costs Current: 3,324 lire/piece/month Transit Point: 665 lire/piece/month current costsInventory Costs Current: 1,721 lire/piece/month Transit Point: 0 lire/piece/monthShort Haul Transport CostExhibit 10at 20% ofExhibit 10No inventor

26、yCurrent: 4,700 lire/piece/monthExhibit 10Transit Point: 4,700 lire/piece/month No change10/6/2018S. Chopra / Transportation2828Merloni Elettrodomestici (CatanzaroRDC, 24 hour delivery)Long Haul Transport Costs Current: 7,500 lire/piece/monthCatanzaro is 600 km. This translates to tractor trailer co

27、st of 900,000 lire or 380,000/120 = 7,500 lire/piece Transit Point: 15,332 lire/piece/monthWith 24 hour turnaround, we need 1 tractor trailer each day.This gives a daily cost of 900,000 lire or 900,000/58.7 = 15,332 lire/pieceTotal Cost for Catanzaro RDC (24 hour delivery) Current: 17,245 lire/piece

28、/month Transit Point: 20,697 lire/piece/month10/6/2018S. Chopra / Transportation2929Merloni Elettrodomestici (CatanzaroRDC, 48 hour delivery)Long Haul Transport Costs Current: 7,500 lire/piece/monthSame as 24 hour delivery Transit Point: 9,199 lire/piece/monthWith 48 hour turnaround, we need 3 tract

29、or trailers a week (5 days). This gives an average daily cost of 540,000 lire or 540,000/58.7 = 9,199 lire/pieceTotal Cost for Catanzaro RDC (48 hour delivery) Current: 17,245 lire/piece/month Transit Point: 14,981 lire/piece/month10/6/2018S. Chopra / Transportation303010/6/2018S. Chopra / Transport

30、ation3131Tailored TransportationFactors affecting tailoringCustomer distance and density Customer sizeProduct demand and value10/6/2018S. Chopra / Transportation3232Summary of Learning ObjectivesStrengths and weaknesses of transport modes Choices of transportation networksTradeoffs in transportation network designTailored transportation networks10/6/2018S. Chopra / Transportation3333Vehicle Routing10/6/2018S. Chopra / Transportation3434X-CoordinateY-CoordinateDemandW