1 tech supply chain associates isye 6203 – transportation and supply chain systems, prof. vande...

1Project Presentation April 18 2006

Tech Supply Chain AssociatesISyE 6203 – Transportation and Supply Chain Systems, Prof. Vande Vate Confidential

Final PresentationMilliken Asia Group II

Rakshita Agrawal, Vishal Agrawal

Aditya Dhanrajani, Michael Liebmann

Uttam Malani, Jenny Zhang

April 25 2006

Tech Supply Chain Associates



Outline

A Project Overview

B The Model

C Results



Project Overview

Demand Supply

Ho Chin Minh

Auckland

Osaka

Bangkok

Taipei

Shanghai

Beijing

Jakarta

ManilaChennai

Kolkata

MelbourneSydney

Tokyo

Hong KongMumbai

Seoul

Spartanburg

Kuala Lumpur



Problem Definition

LocationDecision

Collect Data

Inventory Analysis

Determine Locations by minimizing overall costs

Decision Based on Safety Stock and Service Level



Demand Data Overview

E2010A2005

Red 5 5 10

Red & black 5 105

Total number of cases 20

Σ

2 Periods x 2 Product sets x 5 Scenarios = 20 Cases



Demand distribution and forecast

Estimated change in product demand

1m

2m

3m

4m

2005

RedRed

& B

lack

2010

RedRed

& B

lack

Strong growth projection more impact on profits



Outline

A Project Overview

B The Model

C Results



Assumptions

List of Assumptions

Local demand consolidated in demand cities and ports1

No warehouses in India3

Leasing rather than building warehouses ( no capacity constraint)

2



The Model

Pipeline inventory cost

Demand at point iai

Pipeline cost at jcj

Decision variablexij

Min [ Σi Σj e ai Dij xij + ΣiΣj ai bj xij + Σi Σj ai cj xij ]

Transportation cost

Est. transport coste

Demand at point iai

Distance bn. i and jDij

Set of demand centersi

Set of warehousesj


WH leasing cost

Est. leasing cost at jbj

Demand at point iai




Port Accessibility Factor

Routing example #1



Port Accessibility Factor

Routing example #2



Outline

A Project Overview

B The Model

C Results



Location MappingScenario: Red & Black 2005

Scenario #1: I WH

Auckland

MelbourneSydney

Ho Chin Minh

Osaka

Bangkok

Shanghai

Beijing

Jakarta

ManilaChennai

Kolkata

Tokyo

Hong KongMumbai

Seoul

Kuala Lumpur

Taipei




Scenario #2: II WHs

Auckland

MelbourneSydney

Osaka

Bangkok

Shanghai

Beijing

Jakarta

ManilaChennai

Kolkata

Tokyo

Hong KongMumbai

Kuala Lumpur

Taipei

Ho Chin Minh

Seoul




Scenario #3: III WHs

Ho Chin Minh

OsakaShanghai

Beijing

Jakarta

ManilaChennai

Kolkata

Tokyo

Hong KongMumbai

Seoul

Kuala Lumpur

Taipei

Auckland

MelbourneSydney

Bangkok




Scenario #4: IV WHs

Auckland

Ho Chin Minh

OsakaShanghai

Beijing

Jakarta

ManilaChennai

Kolkata

Tokyo

Hong KongMumbai

Seoul

Kuala Lumpur

Taipei

Sydney

Bangkok

Melbourne




Scenario #5: V WHs

Ho Chin Minh

Shanghai

Beijing

Jakarta

ManilaChennai

Kolkata

Tokyo

Hong KongMumbai

Seoul

Kuala Lumpur

Taipei

Bangkok

Auckland

MelbourneSydney

Osaka



Location Matrix for All Five CasesScenario: Red & Black 2005 & 2010

2005 2010

1 Taipei Taipei

2 Ho Chin Minh City, Seoul Bangkok, Shanghai

3 Bangkok, Sydney,

Seoul Bangkok, Sydney,

Shanghai

4 Taipei, Seoul, Bangkok,

MelbourneTaipei, Seoul, Bangkok,

Sydney

5 Bangkok, Seoul, Taipei, Sydney,

Osaka

Bangkok, Seoul , Taipei, Sydney

Osaka

# DCs



Service Level

2005 Coverage Radii for 3 WHs

Ho Chin Minh

Osaka

Chennai

Tokyo

Seoul

0-2 days

2-4 days

4-7days

Kuala Lumpur

Auckland

Taipei

Shanghai

Beijing

Jakarta

Manila

Kolkata

MelbourneSydney

Hong KongMumbai

Bangkok



Red & Black 2005

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Demand

1 2 3 4 5

# of Warehouses

7+ Day

4-7 Day

2-4 Day

0-2 Day

Demand Coverage 2005



Red & Black 2010

Demand Coverage 2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Demand

1 2 3 4 5

# of Warehouses

7+ Day

4-7 Day

2-4 Day

0-2 Day



Safety Stock Red & Black 2005

Safety Stock Considerations

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1 2 3 4 5

# Of Warehouses

Saf

ety

Sto

ck

Service Level 97%

Lead time 5 weeks

Lead time variability0.5 week



Conclusions

Summary

Recommendations for location of warehouses & associated inventory levels1

Evaluation of scenarios based on projected demand data for 20102

Optimization tool for Milliken to accommodate changing needs and customer base

3

Further Considerations

Special Economic Zones (SEZ’s) and Free Trade Areas1

Frequency of shipping from Spartanburg to Asia2

Effect of transshipment hubs like Singapore on lead times3



Thank you

Tech Supply Chain Associates

Q&A



Thank you

Backup



Safety Stock & Service LevelRed 2005

0

5000

10000

15000

20000

25000

1 2 3 4 5

# Of Warehouses

Sa

fety

Sto

ck

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dem

and

1 2 3 4 5

# of Warehouses

0-2 Day 2-4 Day 4-7 Day 7+ Day

Safety Stock Red 2005 Service Level Red 2005



Safety Stock & Service LevelRed & Black 2005

0

5000

10000

15000

20000

25000

30000

35000

1 2 3 4 5

# Of Warehouses

Sa

fety

Sto

ck

Safety Stock Red & Black 2005 Service Level Red & Black 2005

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dem

and

1 2 3 4 5

# of Warehouses




Safety Stock & Service LevelRed 2010

0

100000

200000

300000

400000

500000

600000

700000

800000

1 2 3 4 5

# Of Warehouses

Sa

fety

Sto

ck

Safety Stock Red 2010 Service Level Red 2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dem

and

1 2 3 4 5

# of Warehouses




Safety Stock & Service LevelRed & Black 2010

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

1 2 3 4 5

# Of Warehouses

Sa

fety

Sto

ck

Safety Stock Red & Black 2010 Service Level Red & Black 2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dem

and

1 2 3 4 5

# of Warehouses




Backup slidesSafety stock calculation

Number of WHs Total Safety Stock

SafetyStock Obj. Value Total

1 21185 $55,929.66 4470054.037 $4,525,983.70

2 25181 $66,477.18 3380286.145 $3,446,763.32

3 25599 $67,582.33 3043079.86 $3,110,662.19

4 29989 $79,171.65 2732418.653 $2,811,590.30

5 33237 $87,744.90 2542283.782 $2,630,028.68

Variables

Service level 0.97

Lead time 5 weeks

Std Dev in Lead time 0.5 weeks

1 tech supply chain associates isye 6203 – transportation and supply chain systems, prof. vande...

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supply chain systems

i c j x ij transportation

i d ij x ij

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i b j x ij

jbjbj demand

demand cities

demand distribution