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  • Logistics Practice in China

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    Logistics Practice in Chinaใ To perform a rigorous analysis, you have identified a typical product, Product A. Table 1 provides historical data and includes weekly demand for this product for the last 12 weeks in each of the market areas. An order (placed by a warehouse to the factory) cost RMB5,550 (per order), and holding inventory costs RMB1.25 per unit per week. In the current distribution system, the cost of transporting a product from the manufacturing facility to a warehouse is given in Table 2 (see the column “Inbound”). Table 2 also provides information about transportation cost per unit from each warehouse to the stores in its market area (see the column “Outbound”). Finally, Table 3 provides information about transportation costs per unit from each existing regional warehouse to all other market areas, assuming this regional warehouse becomes the central warehouse. Suppose you are to compare the two systems for Product A only; what is your recommendation? To answer this question, you should compare costs and average inventory levels for the two strategies assuming demands occur according to the historical data. Also, you should determine which regional warehouse will be used as the centralized warehouse.

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    Logistics Practice in Chinaใ To perform a rigorous analysis, you have identified a typical product, Product A. Table 1 provides historical data and includes weekly demand for this product for the last 12 weeks in each of the market areas. An order (placed by a warehouse to the factory) cost RMB5,550 (per order), and holding inventory costs RMB1.25 per unit per week. In the current distribution system, the cost of transporting a product from the manufacturing facility to a warehouse is given in Table 2 (see the column “Inbound”). Table 2 also provides information about transportation cost per unit from each warehouse to the stores in its market area (see the column “Outbound”). Finally, Table 3 provides information about transportation costs per unit from each existing regional warehouse to all other market areas, assuming this regional warehouse becomes the central warehouse. Suppose you are to compare the two systems for Product A only; what is your recommendation? To answer this question, you should compare costs and average inventory levels for the two strategies assuming demands occur according to the historical data. Also, you should determine which regional warehouse will be used as the centralized warehouse.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    105 views15 pages

    Logistics Practice in China

    Uploaded by

    punipatt
    Logistics Practice in Chinaใ To perform a rigorous analysis, you have identified a typical product, Product A. Table 1 provides historical data and includes weekly demand for this product for the last 12 weeks in each of the market areas. An order (placed by a warehouse to the factory) cost RMB5,550 (per order), and holding inventory costs RMB1.25 per unit per week. In the current distribution system, the cost of transporting a product from the manufacturing facility to a warehouse is given in Table 2 (see the column “Inbound”). Table 2 also provides information about transportation cost per unit from each warehouse to the stores in its market area (see the column “Outbound”). Finally, Table 3 provides information about transportation costs per unit from each existing regional warehouse to all other market areas, assuming this regional warehouse becomes the central warehouse. Suppose you are to compare the two systems for Product A only; what is your recommendation? To answer this question, you should compare costs and average inventory levels for the two strategies assuming demands occur according to the historical data. Also, you should determine which regional warehouse will be used as the centralized warehouse.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 15

    Demand of each warehouses

    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang
    Total

    1
    33
    26
    44
    27
    32
    162

    2
    45
    35
    34
    42
    43
    199

    3
    37
    41
    22
    35
    54
    189

    4
    38
    40
    55
    40
    40
    213

    transportation cost
    total
    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang
    Total

    inbound outbound
    12
    13
    11.5
    13
    11
    13
    9
    13
    7
    13

    total cost of 12 week


    Order processing
    27,750
    Inventory carrying
    19,009
    Transportation costs
    26,634
    - Inbound to whse
    - Outbound from whse
    34,593
    Total Transportation cost
    61,227
    total cost 107,986

    units
    476
    490
    567
    577
    551

    inbound
    5,712
    5,635
    6,237
    5,193
    3,857
    26,634
    Number of order
    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang

    5
    55
    46
    48
    51
    46
    246

    6
    30
    48
    72
    64
    74
    288

    7
    18
    55
    62
    70
    40
    245

    8
    58
    18
    28
    65
    35
    204

    9
    47
    62
    27
    55
    45
    236

    10
    37
    44
    95
    43
    38
    257

    Holding Cost
    total
    outbound
    6,188
    6,370
    7,371
    7,501
    7,163
    34,593

    total
    11,900
    12,005
    13,608
    12,694
    11,020
    61,227

    r of order
    Q*
    593.50
    602.16
    647.75
    653.44
    638.55

    N*
    0.8
    0.8
    0.9
    0.9
    0.9
    5.0 orders

    Ql

    week
    0
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12
    Avg inventory

    Chongqing
    476
    443
    398
    361
    323
    268
    238
    220
    162
    115
    78
    55
    0
    238

    Hefei
    490
    464
    429
    388
    348
    302
    254
    199
    181
    119
    75
    45
    0
    245

    11
    23
    30
    35
    38
    48
    174

    12
    55
    45
    45
    47
    56
    248

    476
    490
    567
    577
    551
    2661

    Q left
    Zhengzhou
    567
    523
    489
    467
    412
    364
    292
    230
    202
    175
    80
    45
    0
    283.5

    Wuhan
    577
    550
    508
    473
    433
    382
    318
    248
    183
    128
    85
    47
    0
    288.5

    Shijiazhuang
    total
    551
    519
    2,499.00
    476
    2,300.00
    422
    2,111.00
    382
    1,898.00
    336
    1,652.00
    262
    1,364.00
    222
    1,119.00
    187
    915.00
    142
    679.00
    104
    422.00
    56
    248.00
    0
    275.5

    1,330.50

    holding cost
    3,123.75
    2,875.00
    2,638.75
    2,372.50
    2,065.00
    1,705.00
    1,398.75
    1,143.75
    848.75
    527.50
    310.00
    19,008.75

    Many warehouses
    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang
    Total

    1
    33
    26
    44
    27
    32
    162

    2
    45
    35
    34
    42
    43
    199

    3
    37
    41
    22
    35
    54
    189

    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang

    cost per unit


    12
    11.5
    11
    9
    7

    units
    2661
    2661
    2661
    2661
    2661

    total
    31932
    30601.5
    29271
    23949
    18627
    134380.5

    week
    0
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12

    Q left
    1331
    1169
    970
    781
    568
    322
    34
    1119
    915
    679
    422
    248
    0

    holding cost

    inbound

    1st order

    2nd order

    total cost/ 12wk


    Order processing
    5550*2
    Inventory carrying
    Transportation costs
    Chongqing
    - Inbound to whse
    31,932
    - Outbound from whse
    Chongqing
    6,188
    Hefei
    6,860
    Zhengzhou
    7,938
    Wuhan
    8,655

    1461.25
    1212.5
    976.25
    710
    402.5
    42.5
    1398.75
    1143.75
    848.75
    527.5
    310
    0
    9033.75

    11100
    9033.75
    Hefei
    30,602
    6,664
    6,370
    4,536
    8,655

    Zhengzhou
    29,271
    6,664
    3,920
    7,371
    8,655

    Shijiazhuang
    Total outbound
    Total Transportation cost
    total cost

    9,367
    39,008
    70,940
    91,074

    9,367
    35,592
    66,194
    86,327

    8,816
    35,426
    64,697
    84,831

    4
    38
    40
    55
    40
    40
    213

    5
    55
    46
    48
    51
    46
    246

    6
    30
    48
    72
    64
    74
    288

    7
    18
    55
    62
    70
    40
    245

    8
    58
    18
    28
    65
    35
    204

    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang

    units
    476
    490
    567
    577
    551

    Chongqing
    13
    14
    14
    15
    17

    Hefei
    14
    13
    8
    15
    17

    avg inv

    1st order
    648.5

    2nd order
    559.5

    604

    outbound

    Wuhan
    23,949

    Shijiazhuang
    18,627

    7,140
    7,350
    8,505
    7,501

    8,092
    8,330
    9,072
    4,616

    4,408
    34,904
    58,853
    78,987

    7,163
    37,273
    55,900
    76,034

    9
    47
    62
    27
    55
    45
    236

    10
    37
    44
    95
    43
    38
    257

    11
    23
    30
    35
    38
    48
    174

    Zhengzhou
    14
    8
    13
    15
    16

    Wuhan
    15
    15
    15
    13
    8

    Shijiazhuang
    17
    17
    16
    8
    13

    12
    55
    45
    45
    47
    56
    248

    476
    490
    567
    577
    551
    2661

    Many warehouses
    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang
    Total

    1
    33
    26
    44
    27
    32
    162

    2
    45
    35
    34
    42
    43
    199

    cost per unit


    18
    17.25
    16.5
    13.5
    10.5

    units
    2661
    2661
    2661
    2661
    2661

    week
    0
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12

    Q left
    1331
    1169
    970
    781
    568
    322
    34
    1119
    915
    679
    422
    248
    0

    3
    37
    41
    22
    35
    54
    189

    inbound
    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang

    1st order

    2nd order

    total cost/ 12wk


    Order processing
    5550*2
    Inventory carrying
    Transportation costs
    Chongqing
    - Inbound to whse
    47,898
    - Outbound from whse
    Chongqing
    6,188
    Hefei
    6,860
    Zhengzhou
    7,938
    Wuhan
    8,655

    total
    47,898.00
    45,902.25
    43,906.50
    35,923.50
    27,940.50
    201,570.75
    holding cost
    1461.25
    1212.5
    976.25
    710
    402.5
    42.5
    1398.75
    1143.75
    848.75
    527.5
    310
    0
    9033.75

    11100
    9033.75
    Hefei
    45,902
    6,664
    6,370
    4,536
    8,655

    Zhengzhou
    43,907
    6,664
    3,920
    7,371
    8,655

    Shijiazhuang
    Total outbound
    Total Transportation cost
    total cost

    9,367
    39,008
    86,906
    107,040

    9,367
    35,592
    81,494
    101,628

    8,816
    35,426
    79,333
    99,466

    4
    38
    40
    55
    40
    40
    213

    5
    55
    46
    48
    51
    46
    246

    6
    30
    48
    72
    64
    74
    288

    7
    18
    55
    62
    70
    40
    245

    8
    58
    18
    28
    65
    35
    204

    Chongqing
    Hefei
    Zhengzhou
    Wuhan
    Shijiazhuang

    units
    476
    490
    567
    577
    551

    Chongqing
    13
    14
    14
    15
    17

    Hefei
    14
    13
    8
    15
    17

    avg inv

    1st order
    648.5

    2nd order
    559.5

    604

    outbound

    Wuhan
    35,924

    Shijiazhuang
    27,941

    7,140
    7,350
    8,505
    7,501

    8,092
    8,330
    9,072
    4,616

    Compare between new and new w/ 3pl


    Chongqing
    new
    65,401.25
    C
    68,257.25
    dif
    2,856.00

    4,408
    34,904
    70,828
    90,961

    7,163
    37,273
    65,214
    85,347

    9
    47
    62
    27
    55
    45
    236

    10
    37
    44
    95
    43
    38
    257

    11
    23
    30
    35
    38
    48
    174

    Zhengzhou
    14
    8
    13
    15
    16

    Wuhan
    15
    15
    15
    13
    8

    Shijiazhuang
    17
    17
    16
    8
    13

    ew and new w/ 3pl


    Hefei
    61,908.25
    64,725.75
    2,817.50

    Zhengzhou
    62,344.25
    65,462.75
    3,118.50

    Wuhan
    60,778.25
    63,374.75
    2,596.50

    12
    55
    45
    45
    47
    56
    248

    Shijiazhuang
    61,811.25
    63,739.75
    1,928.50

    476
    490
    567
    577
    551
    2661

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