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Exercise 3 Solution

The document outlines a lot sizing strategy for delivering products to multiple customers, detailing annual demands, delivery costs, and optimal solutions for large, medium, and small customers. It compares total costs from guessed estimates versus optimized solutions, highlighting significant savings from optimization. The analysis includes calculations for transport costs, holding costs, and inventory days for each customer category.

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11 views7 pages

Exercise 3 Solution

The document outlines a lot sizing strategy for delivering products to multiple customers, detailing annual demands, delivery costs, and optimal solutions for large, medium, and small customers. It compares total costs from guessed estimates versus optimized solutions, highlighting significant savings from optimization. The analysis includes calculations for transport costs, holding costs, and inventory days for each customer category.

Uploaded by

adin27352
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Lot Sizing with Multiple Customers Delivered Truckloads Seperately

Annual demand for Large customer, RL = 60


Annual demand for Medium customer, RM = 24
Annual demand for Small customer, RS = 8
Customer specific delivery cost, sL =$ 250
Customer specific delivery cost, sM =$ 250
Customer specific delivery cost, sS =$ 250
Unit Cost, CL = $ 10,000.00
Unit Cost, CM = $ 10,000.00
Unit Cost, CS = $ 10,000.00
Common delivery cost, S = $ 800
Holding cost, h = 25%
Truck capacity = 12.00

Ship Full Truckloads independently


#
Deliveries Delivery Transport Holding Days of
/year Quantity Cost Cost Total cost Inventory
Large 5.0 12 $ 5,250 $ 15,000 $ 20,250 36.5
Medium 2.0 12 $ 2,100 $ 15,000 $ 17,100 91.25
Small 0.7 12 $ 700 $ 15,000 $ 15,700 273.75
$ 53,050
Your Guess Total Cos $ 155,140
Optimal Solution Cos $ 53,050
Savings from Optimiz $ 102,090
Lot Sizing with Multiple Customers Delivered Optimal Quantities Seperately
Annual demand for Large customer, RL =
Annual demand for Medium customer, RM =
Annual demand for Small customer, RS =
Customer specific delivery cost, sL =
Customer specific delivery cost, sM =
Customer specific delivery cost, sS =
Unit Cost, CL =
Unit Cost, CM =
Unit Cost, CS =
Common delivery cost, S =
Holding cost, h =
Truck capacity =

Ship Optimal Quantities independently


# Deliveries

√((2×60×(800+250))/(0.25×10000))=
/year Delivery Quantity

60/7.10= 8.5×1050=
Large 8.5 7.10

√((2×24×(800+250))/(0.25×10000))=
24/4.49=
Medium 5.3 4.49 5.3×1050=

√((2×8×(800+250))/(0.25×10000))=
8/2.59=
Small 3.1 2.59 3.1×1050=

Your Guess Total Cost $ 155,140


Optimal Solution Cost $ 35,454
Savings from Optimization $ 119,686
60
24
8
250
250
250
10,000
10,000
10,000
800
25%
12.00

Transport Days of
Cost Holding Cost Total cost Inventory

7.10/2×0.25×10000= 21.6
$ 8,874 $ 8,874 $ 17,748

4.49/2×0.25×10000=
$ 5,612 $ 5,612 $ 11,225 34.1

2.59/2×0.25×10000=
$ 3,240 $ 3,240 $ 6,481 59.1

$ 35,454
`
Annual demand for Large customer, RL =
Annual demand for Medium customer, RM =
Annual demand for Small customer, RS =
Customer specific delivery cost, sL =
Customer specific delivery cost, sM =
Customer specific delivery cost, sS =
Unit Cost, CL =
Unit Cost, CM =
Unit Cost, CS =
Common delivery cost, S =
Holding cost, h =

Deliver all customers simultaneously


# Deliveries Delivery

√((2500×(60+24+8))/(2×(800+3×250)))=
/year Quantity

60/8.6=
Large 8.6 6.97

24/8.6=
Medium 8.6 2.79

8/8.6=
Small 8.6 0.93

Your Guess Total Cost $ 136,558


Optimal Solution Total Cost $ 26,702
Savings from Optimization $ 109,856
60
24
8
$ 250
$ 250
$ 250
$ 10,000
$ 10,000
$ 10,000
$ 800
25%

Transport
Cost Holding Cost Total cost

$ 9,044.25 6.97/2×2500= $ 8,707 $ 17,751

8.6×(800+3×250)= 2.79/2×2500=
$ 2,153.39 $ 3,483 $ 5,636

0.93/2×2500=
$ 2,153 $ 1,161 $ 3,314

$ 13,351 $ 26,702
Days of
Inventory

21.2

21.2

21.2
Tailored Deliveries to Customers
Annual demand for Litepro, RL = 60
Annual demand for Medpro, RM = 24
Annual demand for Heavypro, RH = 8
Product specific ordering cost, sL = $ 250
Product specific ordering cost, sM = $ 250
Product specific ordering cost, sH = $ 250
Unit Cost, CL = $ 10,000
Unit Cost, CM = $ 10,000
Unit Cost, CH = $ 10,000
Common order cost, S = $ 800
Holding cost, h = 25%

Deliver to selected subset of customers in each delivery


Step 1: Calculate relative frequency
Step 1 Step 2 Step 3 Step 4
ni ni mi n
Large 8.5 17.3 1 9.37
Medium 5.3 11 1 9.37
Small 3.1 6.3 2 4.68

Calculate costs
Frequency # orders
Optimal multiple /year Order Size Holding
Solution 1/mi n Q Order Cost Cost Total cost
Large 9.37 6.41 $ 9,834.15 $ 8,007.81 $ 17,842
Medium 1.00 9.37 2.56 $ 2,341.46 $ 3,203 $ 5,545
Small 0.50 4.68 1.71 $ 1,171 $ 2,135 $ 3,306
$ 26,693

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