management_of_networks_and_flows-1.pdf

8/10/2019 management_of_networks_and_flows-1.pdf

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Management of supply networks & flows

Everything you need to knowSession 1 : Introduction

Supply chain management is all about having the right product in the right place, at the right

price, at the right time and in the right condition. Blackweel (199!

The supply chain perspective takes into account different internal functions

and external partners.

Internal Supply Chain Management(SCM) = your company (purchasing manufacturing

maketing customer service)

External SCM= !nternal SCM " your supplier " your customer

#eatures of SCM $

Global visionof the production

Starts from the very beginning of a process

Cares a%out the final customerCom%ines sourcing manufacturing inventory management order handling distri%ution

egards place time priceand qualityof a product delivery

Supply chain networks = comple' systems %etween suppliers manufacturers arehouses

! distribution centersand customers"

lmost every company must $ Source(=%uy) materials Ma#e(=produce) a product

$eliverit to the customer

SC manager has to consider the donstream(supplier " your company " customer) floofproducts =physical flows(raw materials components products)

%ut also the upstream flos(customer " your company " supplier) = information flows

(customer orders demand forecasts product re*uirements) andfinancial flows(payments)

SCM needs to cope with a high degree of uncertainty $

market uncertainty

long time lags

glo%ali+ation

,ne of the most fundamental decisionsis to decide whether to Ma#e%to%order(e'$ -urger

ing) or to Ma#e%to%stoc#(e' Mc/onald0s).

1 conflicting goals $ improvement of customer responsivenessand cost reduction.

Impact of supply chain levers on financial performance &' connaitre(:

Sales 2 ,perating cost = )perating income

#i'ed assets " 3orking capital = Capital employed

,perating income 4 Capital employed = *)CE

#orking capital $ inventories% accounts receivable % accounts payable


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Session + : Manufacturing ,ootprint Strategy

Choosing the location of production sites means finding a compromise %etween netor# costand

customer response time.

Strategic priorities$ 3hat are the tradeoffs %etween time cost and distance 5

Role in network: 3hat role should each facility play5 3hat processes are performed in each

location 5

1( - he $emand .llocation Model &$.M( (production sites are fi'ed(

Input

/production &acilities Mdemand points

$0='nnual demand o& demand point i =)a*imum capacity o& &acility i

ci0=+roduction and transportation cost o& 1 unit produced in &acility i, shipped to demand point0

Output

-C= otal cost xi0= -nits produced in &acilityiand shipped to demand point0

Minimi+e TC = su%6ect to and

Solution with Excel solver(optimisation sous contrainte) linear model.

+( - he Capacitated 2lant 3ocation 2roblem &C23M( &several production sites can %e

opened or closed(

#hat plants to open

/ow much to produce in each &acility &or each demand point

Input

/ M $0 i ci0 fi='nnual &i*ed cost o& keeping &acility i open

Output

xi0= 7nits produced in facility ! and shipped to demand point 6

yi= 1if facility i is open and 0if it is closed

Minimi+e TC = su%6ect to and

Solution with Excel solver(optimisation sous contrainte) 8o linear model (%ecause of fi'ed costs).

4( -he Center of Gravity Model &CGM( &,ne single supply facility has to %e %uilt)

Input

0ne &acility located at point (x5y) Mdemand points at points(a!")

$0='nnual uantity to be shipped c = 2ost o& shipping one unit &or one km

&rom &acility to demand point &rom &acility to a demand point

Minimi+e

# non$linear optimi%ation pro"lem&


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Session 4 : 6eteen the ,los

1( 2roduct platforms

platform where different productsare made.

Mi' %etween differentiationand standardi7ation$

/ifferentiation in featuresvisi%le to the customer

Standardi+ation in bac#ground architecture

+( -he Experience curve

3earning curve

The num%er of direct la%or hours re*uired to produce one unit of a product declines as

the cumulative num%er of products produced increases

Experience curve

Marginal production cost declines as the cumulative num%er of products (services) produced

increases

3earning curve

c82ost o& producing the &irst unit

c&x(-nit cost o& the *th unit

a3ate at which cost declines (not learning rate!

'earning rate '

The cost of unit 1' is 9 times the cost of unit '

s the cumulative productiondou%les unit cost decreases %y : 2 9

4( Inventory Management

4nventory is at the heart o& supply chain management and has a signi&icant impact on the success o&

a business.

The different types of inventory (and their drivers) $

(ransit stock(transportation time)

)ycle stock(production lot si+e or purchase order si+e)

Safety stock(demand varia%ility)

Excess stock

Costsin inventory management $

Storagecosts

Stoc#outcosts

;aria%le or fi'ed orderingcosts


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9( Economic order quantity (focus on cycle stock)


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Session 9 : Inventory Management

1( $emand forecasts(focus on time series%ased forecasting)

ll %usiness planning is %ased on forecasts.

-he moving average method &M.(

-he Exponential Smoothing Method &ES(

Measuring forecast performance

Should %e around for good forecast.

Mean Squared Error &MSE(

*elative ,orecast Error

+( Safety stoc# planning (focus on the,ewsvendor model)

7emand -is uncertain

7istribution .o& the demand -is known)ean demand is/, standard deviation o& demand is(8ormal distri%ution)

he newsvendor"uysthe newspapers at a cost o& cper unit

8ewspapers are sold to the end customerat a price o& rper unit

nsold newspaperscan be salvaged(sold after sales season) at a price o&vper unit

S= 0rder uantity

The order *uantity has to %e determined priorto the selling period

,%6ective is to determine the order *uantity that maximi7es expected profit.

= >rofit function


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-he optimal order quantity S=

-ecause of the characteristics of the 8ormal /istri%ution you only need values for 8(:) to

calculate the optimal *uantity for any ? and @1.

Aou can use the ta%le of,ormal 2istri"utionto find the 7%value.

-he service level for the optimal quantity S=

-he optimal expected profit

Safety stock=

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management_of_networks_and_flows-1.pdf