Global Shipping at Erken Apparel

International

GROUP NO: 9, SECTION: B

Submitted by,
Abhishek Kumar – 9061
Mallikarjun Hosakoti – 9084
Sandeep S Prasad – 9102
Santhosh K S – 9103
Sonali Basu – 9110
 Agenda
• Overview of Global Shipping at Erken Apparel International
• Statement of the Problem:
• Decision Criteria and Solutions:
• Variable definition and Objective function
• Constraints
• Problem Formulation and solution
 Erken Apparel International
• Erken manufactures clothing items around the world
• Erken has contracted with a US retail clothing wholesale distributor
for men’s goatskin and lambskin leather jackets for the next
Christmas season.
• The distributor has distribution centers in Indiana, North Carolina
and Pennsylvania
• The jackets arrive at the distribution center unfinished, where the
finishing touches are added and then supplied to retail chains, malls,
boutiques etc.
• Erken has a two stage manufacturing process for the jackets
1. the tanned leather is shipped from the tanning factories to the
production plants in Europe and South America.
2. The manufactured products then move from the ports in Europe / South
America to the US ports and finally to the Distribution centres.
 Statement of the Problem

Erken Apparel International wants to determine the least expensive

shipments of material and Jackets that will meet the demand at the US
distribution centers. In order to do so we have developed a
transhipment model for Erken that will result in a minimum cost
solution.
Decision Criteria and Solutions
The distributor has contracted with Erken to deliver the
following number of leather jackets to its distribution centers:

Distribution Goatskin Lambskin

Center Jackets Jackets
Indiana 1000 780
North Carolina 1400 950
Pennsylvania 1600 1150

Erken has tanning factories plants in

South
Europe America
Mende Feira
Forgia El Tigre
Saragosa  
They have clothing manufacturing plants in:

South
Europe America
Limoges Sao Paulo
Naples Caracas
Madrid  

Following are the supplies of available leather from each tanning

facility
Tanning Goatskin Lambskin
Factory Supply (lb.) Supply (lb.)
Mende 4000 4400
Foggia 3700 5300
Saragosa 6500 4650
Feira 5100 6850
El Tigre 3600 5700
The processing capacity at each plant is

Production
Plant Capacity (lb.)
Madrid 7800
Naples 5700
Limoges 8200
Sao Paulo 7600
Caracas 6800

In the production of jackets, 37.5% of the goatskin leather

and 50% of the lambskin leather is waste. After production,
lambskin jackets weighs approximately 3 pounds, and a
lambskin jacket weighs around 2.5 pounds
The following are the costs per pound, in U.S. dollars, for tanning
the uncut leather, shipping it and producing the leather jackets at
each plant.

  PLANT ($/lb.)
TANNING Madri Sao
FACTORY d Naples Limoges Paulo Carcas
Mende 24 22 16 21 23
Foggia 31 17 22 19 22
Saragosa 18 25 28 23 25
Feira       16 18
El Tigre       14 15
• Once the leather jackets are produced at the plants in Europe
and South America, Erken transports them to ports in Lisbon,
Marseilles and Caracas. The capacity at each port and
transportation costs are as follows:

  Port ($/lb.)
Lisbo
Plant n Marseilles Caracas
Madrid 0.75 1.05  
Naples 3.45 1.35  
Limoges 2.25 0.6  
Sao Paulo     1.15
Caracas     0.2
Capacity (lb.) 8000 5500 9000
The jackets are then moved to the US ports in New Orleans,
Jacksonville and Savannah The capacity at each port and
transportation costs are as follows:

  U.S. Port ($/lb.)

New Jacksonvill Savanna
Port Orleans e h
Lisbon 2.35 1.9 1.8
Marseilles 3.1 2.4 2
Caracas 1.95 2.15 2.4
capacity
(lb.) 8000 5200 7500
The transportation costs ($/lb.) from the U.S. ports to the three
distribution centers are as follows:

  Distribution Center ($/lb.)

Indian North
US Port a Carolina Pennsylvania
New
Orleans 0.65 0.52 0.87
Jacksonvill
e 0.43 0.41 0.65
Savannah 0.38 0.34 0.5
LPP Formulation for the problem:
Let,
Xmm= Quantity moved from Mende to Madrid
Xmn= Quantity moved from Mende to Naples
Xml= Quantity moved from Mende to Limoges
Xms= Quantity moved from Mende to Sao Paulo
Xmc= Quantity moved from Mende to Caracas
Xfm= Quantity moved from Foggia to Madrid
Xfn= Quantity moved from Foggia to Naples
Xfl= Quantity moved from Foggia to Limoges
Xfs= Quantity moved from Foggia to Sao Paulo
Xfc= Quantity moved from Foggia to Caracas
Xsm= Quantity moved from Saragosa to Madrid
Xsn= Quantity moved from Saragosa to Naples
Xsl= Quantity moved from Saragosa to Limoges
Xss= Quantity moved from Saragosa to Sao Paulo
Xsc= Quantity moved from Saragosa to Caracas
XFeS= Quantity moved from Feira to Sao Paulo
XFeC= Quantity moved from Feira to Caracas
Xes= Quantity moved from El Tigre to Sao Paulo
Xec= Quantity moved from El Tigre to Caracas
Objective function for Goatskin Jackets

Minimize: Z = 24Xmm + 22Xmn + 16Xml + 21Xms + 23Xmc +

31Xfm + 17Xfn + 22Xfl + 19Xfs + 22Xfc + 18Xsm + 25Xsn +
28Xsl + 23Xss + 25Xsc + 16XFeS + 18XFeC + 14Xes + 15Xec
Constraints:

•Xmm + Xmn + Xml + Xms + Xmc <= 4000

•Xfm + Xfn + Xfl + Xfs + Xfc <= 3700
•Xsm + Xsn + Xsl + Xss + Xsc <= 6500
•XFeS + XFeC <= 5100
•Xes + Xec <= 3600
•Xmm + Xfm + Xsm <= 7800
•Xmn + Xfn + Xsn <= 5700
•Xml + Xfl + Xsl <= 8200
•Xms + Xfs + Xss + XFeS + Xes <= 7600
•Xmc + Xfc + Xsc + XFeC + Xec <= 6800
•Xmm + Xmn + Xml + Xms + Xmc + Xfm + Xfn + Xfl + Xfs +
Xfc + Xsm + Xsn + Xsl + Xss + Xsc + XFeS + XFeC + Xes +
Xec = 19200
 Solution (from QM tool):
Constraints

Minimize 1 2 3 4 5 6 7 8 9 10 11 Solution->
Xmm 24 1 0 0 0 0 1 0 0 0 0 1 0
Xmn 22 1 0 0 0 0 0 1 0 0 0 1 0
Xml 16 1 0 0 0 0 0 0 1 0 0 1 4000
Xms 21 1 0 0 0 0 0 0 0 1 0 1 0
Xmc 23 1 0 0 0 0 0 0 0 0 1 1 0
Xfm 31 0 1 0 0 0 1 0 0 0 0 1 0
Xfn 17 0 1 0 0 0 0 1 0 0 0 1 3700
Xfl 22 0 1 0 0 0 0 0 1 0 0 1 0
Xfs 19 0 1 0 0 0 0 0 0 1 0 1 0
Xfc 22 0 1 0 0 0 0 0 0 0 1 1 0
Xsm 18 0 0 1 0 0 1 0 0 0 0 1 2800
Xsn 25 0 0 1 0 0 0 1 0 0 0 1 0
Xsl 28 0 0 1 0 0 0 0 1 0 0 1 0
Xss 23 0 0 1 0 0 0 0 0 1 0 1 0
Xsc 25 0 0 1 0 0 0 0 0 0 1 1 0
XFeS 16 0 0 0 1 0 0 0 0 1 0 1 5100
XFeC 18 0 0 0 1 0 0 0 0 0 1 1 0
Xes 14 0 0 0 0 1 0 0 0 1 0 1 2500
Xec 15 0 0 0 0 1 0 0 0 0 1 1 1100
<= <= <= <= <= <= <= <= <= <= = Optimal Z->
RHS 4000 3700 6500 5100 3600 7800 5700 8200 7600 6800 19200 310400
 Objective function for Lambskin jackets

Minimize: Z = 24Xmm + 22Xmn + 16Xml + 21Xms +

23Xmc + 31Xfm + 17Xfn + 22Xfl + 19Xfs + 22Xfc +
18Xsm + 25Xsn + 28Xsl + 23Xss + 25Xsc + 16XFeS +
18XFeC + 14Xes + 15Xec
 Constraints:

• Max 24Xmm + 22Xmn + 16Xml + 21Xms + 23Xmc + 31Xfm + 17Xfn + 22Xfl +

19Xfs + 22Xfc + 18Xsm + 25Xsn + 28Xsl + 23Xss + 25Xsc + 16XFeS + 18XFeC +
14Xes + 15Xec
• Xmm + Xmn + Xml + Xms + Xmc <= 4400
• Xfm + Xfn + Xfl + Xfs + Xfc <= 5300
• Xsm + Xsn + Xsl + Xss + Xsc <= 4650
• XFeS + XFeC <= 6850
• Xes + Xec <= 5700
• Xmm + Xfm + Xsm <= 5000
• Xmn + Xfn + Xsn <= 2000
• Xml + Xfl + Xsl <= 4200
• Xms + Xfs + Xss + XFeS + Xes <= 0
• Xmc + Xfc + Xsc + XFeC + Xec <= 5700
• Xmm + Xmn + Xml + Xms + Xmc + Xfm + Xfn + Xfl + Xfs + Xfc + Xsm + Xsn + Xsl +
Xss + Xsc + XFeS + XFeC + Xes + Xec = 10800
 Solution (from QM tool):
Constraints
Minimize 1 2 3 4 5 6 7 8 9 10 11 Solution->
Xmm 24 1 0 0 0 0 1 0 0 0 0 1 0
Xmn 22 1 0 0 0 0 0 1 0 0 0 1 0
Xml 16 1 0 0 0 0 0 0 1 0 0 1 0
Xms 21 1 0 0 0 0 0 0 0 1 0 1 0
Xmc 23 1 0 0 0 0 0 0 0 0 1 1 1150
Xfm 31 0 1 0 0 0 1 0 0 0 0 1 5000
Xfn 17 0 1 0 0 0 0 1 0 0 0 1 0
Xfl 22 0 1 0 0 0 0 0 1 0 0 1 0
Xfs 19 0 1 0 0 0 0 0 0 1 0 1 0
Xfc 22 0 1 0 0 0 0 0 0 0 1 1 0
Xsm 18 0 0 1 0 0 1 0 0 0 0 1 0
Xsn 25 0 0 1 0 0 0 1 0 0 0 1 450
Xsl 28 0 0 1 0 0 0 0 1 0 0 1 4200
Xss 23 0 0 1 0 0 0 0 0 1 0 1 0
Xsc 25 0 0 1 0 0 0 0 0 0 1 1 0
XFeS 16 0 0 0 1 0 0 0 0 1 0 1 0
XFeC 18 0 0 0 1 0 0 0 0 0 1 1 0
Xes 14 0 0 0 0 1 0 0 0 1 0 1 0
Xec 15 0 0 0 0 1 0 0 0 0 1 1 0
<= <= <= <= <= <= <= <= <= <= = Optimal Z->
RHS 4400 5300 4650 6850 5700 5000 2000 4200 0 5700 10800 310300
The total quantity produced from each of the production locations is (taken from both tables
above)

Production Location Quantity Produced

Madrid 7800
Naples 4150
Limoges 8200
Sao Paulo 7600
Caracas 2250

The total cost of transportation of tanned leather =

310400 (Goat skin) + 310300 (Lamb skin)

= $ 620,700
With the QM tool, the following solution has been obtained for the
optimal quantity of shipment and minimisation of cost.
From To Shipmen Cost per unit Shipment
t (in lb.) (in $/lb) cost (in $)
Madrid Lisbon 5000 0.75 3750
Naples Marseille 450 1.35 607.5
s
Limoges Marseille 4200 0.6 2520
s
Sao Paulo Caracas 7600 1.15 8740
Caracas Caracas 1100 0.2 220
Dummy Lisbon 3000 0 0
Dummy Marseille 850 0 0
s
Dummy Caracas 300 0 0

The total cost of shipment = 3750 + 607.5 + 2520 + 8740 + 220 = $

15837.5
 Using the transportation cost matrix from the case, the minimum cost
of transhipment is calculated from QM as follows using the
transportation model:
Shipme Cost per
nt (in unit (in Shipment
From To lb.) $/lb) cost (in $)
Jacksonvi
Lisbon le 2150 1.9 4085
Lisbon Savannah 2850 1.8 5130
Marseill
es Savannah 4650 2 9300
New
Caracas Orleans 8000 1.95 15600
Jacksonvi
Caracas le 700 2.13 1491
Jacksonvi
Dummy le 2350 0 0

The total cost of shipment = 4085 + 5130 + 9300 + 15600 + 1491 = $ 35606
using the transportation model, we calculate the cost of
transportation using QM as given below:
Shipmen
Shipmen Cost per unit t cost (in
From To t (in lb.) (in $/lb) $)
New
Orleans Dummy 8000 0 0
Jacksonvile Dummy 2850 0 0
Savannah Indiana 1780 0.38 676.4
North
Savannah Carolina 2350 0.34 799
Savannah Pennsylvania 2750 0.5 1375
Savannah Dummy 620 0 0
The total cost of transportation in this case = 676.4 + 799 + 1375 = $ 2850.4

The total cost of shipment right from the tanning factory to the
Distribution Centers = $674,993.9