CHAPTER 5:

TECHNICAL TOOLS IN

SUPPLY CHAIN DESIGN

Ye a r 2 0 2 4
Email: [email protected]
CHAPTER OBJECTIVES

After learning this chapter, you are able to:

Give an explanation of optimization in

supply chain problems.

Discuss methods of solving vehicle

routing and scheduling problems.

Compute the NNA and CLA when designing

the supply chain network.
CONTENT 1. Introduction to optimisation
2. Vehicle routing and scheduling
3. Travelling salesman problem (TSP)
❖ Nearest-Neighbor Algorithm (NNA)
❖ Cheapest-Link Algorithm (CLA)
Seafreight routes from Vietnam

• Route through Suez canal

• Length of route: 11,600

nautical miles

• Better take this route

between Nov and Mar
Seafreight routes from Vietnam

• Route through cape of

Good Hope

• Length of route: 12,850

nautical miles
Seafreight routes from Vietnam

• Route through Panama canal

• Length of route: 10,850

nautical miles
 INTRODUCTION TO OPTIMISATION

Many problems in practice consist of the search

Optimisation:
for a “best” solution of a set of variables to
Solving problems in which one seeks to
achieve some goals: optimization problems.
minimise or maximise an objective function by
Service type Objective
systematically choosing the values of the
decision variables from within an allowed set.
School bus Minimize student-minutes
Scheduling or routing objectives of on the bus.
different types of services. Logistics Minimize the distance
travelled to pick up and/or to
deliver parcels following
optimum routes.
Emergency (ambulance, Minimize response time.
police, fire)
 TRAVELLING SALESMAN PROBLEM (TSP)

The simplest case, a classic combinatorial

optimisation problem.

• nodes have no precedence relationship

• travel costs between two nodes are the same

regardless of the direction traveled

• no delivery time restrictions

• vehicle capacity is not considered

TSP:

Given n cities, find the shortest route that visits all

the cities once, and starts and ends at the same city.
 Travelling salesman problem (TSP)

• Given n cities, total possible routes:

½ (n-1)!

• The number of routes grow exponentially with growth in the size

of the problem: combinatorial explosion.

• Do for all the cities:

1. select a city as current city.

2. find out the shortest edge connecting the current city and
an unvisited city.
An optimal TSP tour through
3. set the new city as current city.
Germany’s 15 largest cities. It
4. mark the previous current city as visited.
is the shortest among
5. if all the cities are visited, then terminate.
43,589,145,600 possible tours
6. go to step 2.
visiting each city exactly once.
This map shows how to take an epic
road trip across Europe

 45 European cities

 50 must-see places in Europe

 14 days of driving

 Several months of sightseeing

 VEHICLE ROUTING AND SCHEDULING

Consider a milk van delivering milk to 4 distribution centers (DC) everyday morning as shown below

DC a
2

3 DC b

DEPOT 1 7 miles

10 miles DC c
4

5
DC d
 VEHICLE ROUTING AND SCHEDULING

• Nodes: 1 2 3 4 5

DC a • Arcs:
2 • Tour:

DC b 1→2→3→4→5→1
3
1→5→4→3→2→1
DEPOT
1 7 miles • Feasibility: Minimum-cost solution or any other
criterion like time or distance traveled is subject to

10 miles DC c the tour being feasible

4
(i) A tour must include all nodes
5
DC d (ii) A node must be visited only once

(iii) A tour must begin and end at a depot

 SOLUTION 1: NEAREST-NEIGHBOR ALGORITHM (NNA)

DC a
To node (distances in miles)
2 From
node
3 DC b
1 2 3 4 5

DEPOT
1 7 miles 1 - 12 3 12 10

2 12 - 8 10 4
10 miles 4 DC c

3 3 8 - 7 6
5
DC d
4 12 10 7 - 16

5 10 4 6 16 -
 Nearest-Neighbor Algorithm (NNA)

Practice 1:

• Using NNA to find out the shortest

route which goes through 4 points,
then see which result is optimal.

• Do for all 4 points, then choose the

starting point (which also is the
ending point) which establish the
shortest route.
 SOLUTION 2: CHEAPEST-LINK ALGORITHM (CLA)

To node (distances in miles)

From node
1 2 3 4 5

1 - 12 3 12 10

2 12 - 8 10 4

3 3 8 - 7 6

4 12 10 7 - 16

5 10 4 6 16 -

1→3→5→2→4→1
➔ The length of the tour is 35 miles
 Cheapest-Link Algorithm (CLA)

Practice 2:

• Using CLA to find out the shortest

route which goes through 4 points,
then see which result is optimal.

• Do for all 4 points, then choose the

starting point (which also is the
ending point) which establish the
shortest route.
 TRAVELLING SALESMAN PROBLEM (TSP)

Practice 3:

• Using NNA and CLA to find out the

shortest route which goes through 5 points,
then see which result is optimal.

• Do for all 5 points, then choose the starting

point (which also is the ending point) which
establish the shortest route.
 TRAVELLING SALESMAN PROBLEM (TSP)

Practice 4:

• Using NNA and CLA to find out the shortest

route which goes through 5 points, then see
which result is optimal.

• Do for all 5 points, then choose the starting

point (which also is the ending point) which
establish the shortest route.
 TRAVELLING SALESMAN PROBLEM (TSP)

Practice 5:

• Using NNA and CLA to find out the

shortest route which goes through 5 points,
then see which result is optimal.

• Do for all 5 points, then choose the starting

point (which also is the ending point) which
establish the shortest route.
 TRAVELLING SALESMAN PROBLEM (TSP)

Practice 6:

• Using NNA and CLA to find out the shortest

route which goes through 6 points, then see
which result is optimal.

• Do for all 6 points, then choose the starting

point (which also is the ending point) which
establish the shortest route.
 Practice 7:
• A traveling salesman’s territory consists of the 5 cities shown on the following mileage chart. The
salesman must organize a round trip that starts and ends at Minneapolis (his hometown) and will pass
through each of the other four cities exactly once.

• Using NNA, CLA to find out the shortest route which goes through 5 cities, then see which result is
optimal.

Chicago Des Moines Fargo Minneapolis Indianapolis

Chicago - 333 643 409 94

Des Moines 333 - 477 244 375

Fargo 643 477 - 235 571

Minneapolis 409 244 235 - 337

Indianapolis 94 375 571 337 -

 TRAVELLING SALESMAN PROBLEM (TSP)

Practice 8: Plan the US concert tour for Taylor Swift

Expected tour summary

• Time: May 17th through May 25th 2025.

• Starting point: Kansas City, MO

• Average national gas prices in the US as of May 7th 2024: $2.35/mile

• Assuming they take a tour bus and the group can only perform each site once.

• You are the manager of this boy group, given on hand a chart which indicates miles between places. You plan to
use the NNA method to find the shortest concert tour for the group. And then calculate the gas cost they have to
spend on this concert tour.
 TRAVELLING SALESMAN PROBLEM (TSP)
Practice 8: Plan the US concert tour for Taylor Swift

Kansas Tinley
Bethlehem Camden Detroit Lincoln Milwaukee Pittsburgh Rochester St. Paul
city Park

Bethlehem - 73 562 1109 1241 827 289 287 1136 732

Camden 73 - 589 1129 1268 854 309 345 1163 759

Detroit 562 589 - 764 786 382 289 325 690 277

Kansas city 1109 1129 764 - 195 567 841 1051 441 489

Lincoln 1241 1268 786 195 - 562 969 1110 434 513

Milwaukee 827 854 382 567 562 - 552 693 329 119

Pittsburgh 289 309 289 841 969 552 - 284 861 457

Rochester 287 345 325 1051 1110 693 284 - 1001 597
St. Paul 1136 1163 690 441 434 329 861 1001 - 423

Tinley Park 732 759 277 489 513 119 457 597 423 -
 TRAVELLING SALESMAN PROBLEM (TSP)

Practice 9: Plan the US tour for a manufacturing company

Expected tour summary

• Time: July 29th through August 2nd 2025.

• Starting point: Kansas City, MO

• Average national gas prices in the US as of May 7th 2024: $2.35

• Assuming they take a tour bus and can only perform each site once.

• They outsource you to do this task, given on hand a chart which includes all the stops they have made
with their tour bus. The mileage between each city is listed in the chart. You want to use the CLA method
to find the optimal tour route. And then calculate the gas cost they have to spend on this tour.
 TRAVELLING SALESMAN PROBLEM (TSP)
Practice 9: Plan the US tour for a manufacturing company

Des Kansas Philadel

Buffalo Oakland Portland Sacramento St. Paul Tacoma Uncasville
Moines City phia
Buffalo - 850 980 2642 375 2637 2562 932 2608 438

Des Moines 850 - 194 1793 1078 1788 1713 248 1770 1235

Kansas City 980 194 - 1801 1125 1795 1720 441 1850 1319

Oakland 2642 1793 1801 - 2872 629 87 1969 772 3028

Philadelphia 375 1078 1125 2872 - 2863 2788 1159 2835 223

Portland 2637 1788 1795 629 2863 - 581 1737 143 3022

Sacramento 2562 1713 1720 87 2788 581 - 1888 722 2948

St. Paul 932 248 441 1969 1159 1737 1888 - 1681 1312
Tacoma 2608 1770 1850 772 2835 143 722 1681 - 2991

Uncasville 438 1235 1319 3028 223 3022 2948 1312 2991 -
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