Access over 20 million homework & study documents

SUPPLY-CHAIN MODELLING:-

Content type
User Generated
Type
Study Guide
Rating
Showing Page:
1/24
-:SUPPLY-CHAIN MODELLING:-
The traditional objective of supply chain management is to minimize total
supply chain cost to meet fixed and given demand. The total cost may be
composed of:
Raw materials and other acquisition costs.
Inbound transportation costs.
Facility investment costs.
Direct and indirect manufacturing costs.
Direct and indirect distribution centre cost.
Inventory holding costs.
Interfacility transportation costs.
Outbound transportation costs.
Total supply chain costs minimization may boil down to maximization of net
revenues, which is defined as follows:
Net Revenues = Gross Revenues Total Cost
Optimization models can be developed which can assist management in
evaluating the trade-offs among objectives. A typical trade-off analysis may
be depicted as below:
Between customers services, measured in days of delivery time, and supply
chain costs.
Our analysis considers the trade-off of supply chain cost versus delivery
times in the range of 1 to 4 days, which are the limits of interest to the
management. The curved line containing point ‘A’ is called the efficient
frontier. Any supply chain strategy on the efficient modeling system by
reversing these disaggregations. The schedules reflect short-term
commitments that the higher-level system teats as fixed and given.
Strategic and Tactical Optimization Modeling System:
The strategic optimization modeling system assists senior management in
determining the most effective long-term configuration of the company’s
supply chain network. Its models analyze decision about major resource
acquisitions and divestments and the manufacture and distribution of new
and existing products over the coming years. The implications of these
decision to next year’s tactical plans are passed to the tactical optimization
modeling system, as depicted in fig. 2.7.

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/24
Frontier is undominated in the sense that no achievable strategy exists that is
at least as good as it is with respect to customer service and cost, and strictly
better on one criteria. The efficient frontier can be generated by iteratively
solving an optimization model that minimizes the supply chain costs subject
to constraints on the maximum delivery time. Strategy ‘A’ corresponds to a
least-cost strategy with a maximum delivery time of 2 days.
Suppose that the company currently has a customer service policy
guaranteeing delivery within 3 days and that the current supply chain cost
corresponds to that of strategy B, which is off the efficient frontier. By
using an optimization model, management has the opportunity to identify
and implement strategy B2 on the efficient frontier that lowers cost while
maintaining the same customer service policy. Alternatively, the company
could consider spending the same amount of money on supply chain
management but using it more effectively to improve customer service by
implementing the undominated strategy B1. A third choice would be to
reduce delivery time to 2 days and reduce cost to that of strategy A.
The selection of a specific strategy on the efficient frontier is left to
managerial judgment, perhaps with the assistance of tools that help
individual managers, or, group of managers, assess their preferences. Our
assumption in promoting the use of models is that the company’s supply
chain is not grossly inefficient, and therefore, global analysis is needed to
make improvements. The strategy corresponding to B represents such a
situation in that we assume an optimization model is needed to identify the
superior strategies corresponding to B1, A and B2. by contrast, the strategy
corresponding to C is so distant from the efficient frontier that significant
improvements can be realized by obvious modifications of inefficient supply
chain procedures.
For example, suppose that, due to sloppy management, cross-docking and
dispatching at the company’s distribution centers take much longer than
industry norms. Suppose, further that, tightening these practices will
eliminate the inefficiencies and allow max. Delivery time to be reduced to 4
days at little, or, no increase in cost. Such improvements are clearly
important, but they can be identified without recourse to a supply chain
model.

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/24

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 24 pages?
Access Now
Unformatted Attachment Preview
-:SUPPLY-CHAIN MODELLING:- The traditional objective of supply chain management is to minimize total supply chain cost to meet fixed and given demand. The total cost may be composed of: Raw materials and other acquisition costs. Inbound transportation costs. Facility investment costs. Direct and indirect manufacturing costs. Direct and indirect distribution centre cost. Inventory holding costs. Interfacility transportation costs. Outbound transportation costs. Total supply chain costs minimization may boil down to maximization of net revenues, which is defined as follows: Net Revenues = Gross Revenues – Total Cost Optimization models can be developed which can assist management in evaluating the trade-offs among objectives. A typical trade-off analysis may be depicted as below: Between customers services, measured in days of delivery time, and supply chain costs. Our analysis considers the trade-off of supply chain cost versus delivery times in the range of 1 to 4 days, which are the limits of interest to the management. The curved line containing point ‘A’ is called the efficient frontier. Any supply chain strategy on the efficient modeling system by reversing these disaggregations. The schedules reflect short-term commitments that the higher-level system teats as fixed and given. Strategic and Tactical Optimization Modeling System: The strategic optimization modeling system assists senior management in determining the most effective long-term configur ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
This is great! Exactly what I wanted.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4