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1、OMGT2201SUPPLY CHAIN ANALYSIS AND DESIGNASSIGNMENT TWORESEARCH PROJECT OF A TRANSPORTATION PROBLEMTUTOR: Jingpu SongTable of Contents1.Executive Summary32.Introduction31)Company description32)Project description43.Research Objective54.Discussion on the chosen topic65.Discussion on current situation
2、on the chosen topic in the context of a real company76.Model selection and assumption77.Process of analysis81)Data collection92)Math model113)Solution Procedures138.Conclusion149.Suggestions: the suggested areas for improvement, discussion on our solution for improvement.1410.Reference List1511.Appe
3、ndix151. Executive SummaryWe have interviewed the vice president of Shanghai Zhongshi Chemical Logistics Company and decided to help them in completing the project with Diversey in transporting car wishing liquid with minimum transportation cost.In this project, Diversey is hoping to transport its c
4、ar washing liquid, which is manufactured in Zhongshan and Shenzhen via two distribution centers in Shanghai, Lianyungang to several processing plants in four major cities, which are Nanjing, Hangzhou, Hefei and Tianjin. The core of the problem is a transship problem, which is a branch of linear prog
5、ramming model. It is supposed to be applied in terms of its features and feasibility. Meanwhile, Excel is a useful tool, which helps us find the optimal solution by its function of linear programming. It is clear, practical and not difficult to use the computer to acquire the outcome.2. Introduction
6、1) Company descriptionShanghai Zhongshi Chemical Logistics Company is an integrated chemical logistics business, which is specialized in various kinds of hazardous chemical products and general cargo transportation, truck transportation, warehouse management and third party logistics management, con
7、sulting, planning, training and testing as a whole. With the total area of 160,000 square meters, the company has more than 400 vehicles in all kinds of dangerous chemical tank cars, trucks and others, with a total transport capacity of more than 8400 tons, nearly 400 million tons every year. It has
8、 an area of 30,000 square meters of warehousing and more than 1280 employees in various types, including more than 50 senior professional and technical personnel more than 50, and more than 100 for other types of professional and technical staff. (http:/ accessed 22/11/13)Relying on its outstanding
9、marketing team and business outlets, together with the platform of modern logistics information management, Shanghai Zhongshi Chemical Logistics Company has built an operation mode of one-stop fast delivery, which sets highway transportation, railway transportation and water transportation as a whol
10、e in one of the door to door intermodal logistics services during the professional distribution of hazardous chemical products. The company has its own large-scale fleet, standardized operating procedures, systematic information technology, professional project management and skilled operations team
11、. It provides distribution management services which tie the management of inventory, filling, packaging, palletizing, transporting, warehousing and distribution of raw materials, intermediate materials and finished goods to each other. The control of the management process and the application of lo
12、gistics information technology such as bar code, radio frequency identification, have been greatly improved, together with the satisfaction of the growing personalized customer demand.2) Project descriptionDiversey is one of the most influential international brands in the field of chemical products
13、. As a field leader, the Asian regional headquarters is located in Shanghai, with many manufacturing factories in Zhongshan, Shenzhen, Nanjing, Hangzhou, Tianjin, Hefei, Jinan and so on. With the rapid development of economy in China these years as well as an annual growth rate of more than 30%, Div
14、ersey is expecting to develop integrated logistics service which is responsible for the safely, timely and efficiently distribution and delivery of its products. In this project, Diversey is hoping to transport its car washing liquid, which is manufactured in Zhongshan and Shenzhen via two distribut
15、ion centers in Shanghai, Lianyungang to several processing plants in four major cities, which are Nanjing, Hangzhou, Hefei and Tianjin. And Diversey is expecting that Shanghai Zhongshi Chemical Logistics Company would provide such an integrated supply chain service mode. The logistics company is sup
16、posed to come up with a reasonable solution of this distribution program, including the best choice of transport routes and the model of transportation, which would benefit both sides of the business. In addition, it is a great opportunity but also a big challenge that Shanghai Zhongshi Chemical Log
17、istics Company owns in their step forward of improving the integrated service capabilities in the optimization of chemical industries supply chain, and also in their expansion of logistics network from regional to national. 3. Research ObjectiveThis is a newly designed project with lots of uncertain
18、ty. Diversey has designated the two factories, two distribution centers and four destinations. The initial planning of Shanghai Zhongshi Chemical Logistics Company is to apply road transportation to ensure door-to-door delivery. Diversey wants to exploit the market owing to the fact that this is a n
19、ew product to China. Door-to-door delivery can help maintain a high customer satisfaction level.However, from a broader view, transportation cost is crucial in the operation of supply chain. Transportation is full of uncertainty in supply chain. Chances are that the company may be faced with externa
20、l factors that are not under the control of the supply chain management, including unplanned road congestion, volatility of fuel prices, vehicle breakdown or insufficient drivers and muddy during rainy days. In many cases, congestion results in less predictable travel times and hence a less reliable
21、 service. However, when a lorry is running at low speed because of high levels of traffic congestion, its fuel efficiency can be negatively affected.(Andrew et al 2010) More seriously, accidents may occur. In this sense, delivery is not timely reached and goods may not be in sufficient supply.After
22、the heated discussion between our group and Shanghai Zhongshi Chemical Logistics Company, we have found an optimizing strategy, endeavoring to reduce the uncertainty. As far as this case is concerned, we decided to combine water transportation with motor transportation to realize the objective of mi
23、nimum transportation cost. To be specific, the transportation of car washing liquid from Zhongshan and Shenzhen to the distribution centers in Shanghai and Lianyungang will be realized through water transportation since the freight is cheap and the product is not in urgent demand. On the other hand,
24、 the delivery of the product to processing plants in the four major cities will take the use of motor transportation, mainly due to the fact that the logistics company aims to provide door-to-door service and some of these cities are not very far from the factories.4. Discussion on the chosen topic
25、Linear programming is a crucial branch of operational research with the perfect theory support and widely application in the practice which is mainly used in how to utilize the limited resource to distribute efficiently getting the maximum revenue. It is effective to use linear programming model in
26、some enterprises having single raw materials and stable production process, such as oil chemical plant.Transportation problem is a kind of linear programming model that is practically used in the case that aims at how to optimize the distribution amount with given routes between the origin and the d
27、estinations so that the company could obtain the minimum cost. The transshipment problem is another special kind of transportation problem, where there are some transfer stations like distribution centers coming up. In that case, the cargo is not directly delivered from producers to final customers
28、but transshipped in order to reduce transportation cost.There exists a basic mathematical model of different types of transportation problems. The objective function usually stands for the minimum transportation cost, which uses the distances between any group of the origin and the destinations mult
29、iplies the freight rates and transportation volumes in that certain route to demonstrate it. The constraint is related to the total supply meeting the total demand. No matter how the total supply is divided, the demand in every marketplace must be satisfied. Decision variables are amounts on each ro
30、ute from the origin to the destination.5. Discussion on current situation on the chosen topic in the context of a real companyCompared with other models we have learned, choosing this transshipment is the best way. Several reasons are given as follows. For other mathematical models, for example, dec
31、ision theory, is better used when the outcome is known to some extent, such as profit and loss. We have no clues that how exactly the cost is, so decision theory should be abandoned. As for project management, it is not necessary for our case to identify the sequence about transportation. And there
32、is no critical path, thus obviously it does not suit our problem. When it comes to simulation, there is no relation between our problems and probability. This model is also not used.6. Model selection and assumptionIn our case, this is a typical problem could be properly solved by transshipment prob
33、lem. The company transports their products from the two origins, Zhongshan and Shenzhen via two distribution centers in Shanghai and Lianyungang to the destination, Shenyang, Tianjin, Jinan and Shijiazhuang. Based on the different freight rates of each route and different demands of each consumer ma
34、rkets, we need to seek the most efficient and profitable way to distribute them. Given that we have known the supply and the demand of these specific data, the routes are fixed, however we have to calculate average freight price using trucks and vessels.After choosing transshipment problem model, th
35、ere are some assumptions we have considered. The influence of changing situations of transportation and weather on the freight rate should be excluded. Secondly, all the products are supposed to be delivered perfectly to the destinations without any damage or lost. Another point we have taken into c
36、onsideration is that natural disasters and traffic accidents are not included. Under this circumstance, we could make a relatively accurate calculation.7. Process of analysisThe purpose of this case study is to minimize the transportation cost occurred from the transshipment of car washing liquid fr
37、om Zhongshan and Shenzhen in Guangdong province via Shanghai and Lianyungang to Hefei, Hangzhou, Nanjing and Tianjin. In order to minimize the cost, we are trying to arrange the transshipment reasonably and effectively under the help of Microsoft Excel, using linear programming.The following picture
38、 is the project schematic plot.1) Data collectionIn order to solve the problem, first of all we need to collect relevant data.a) Shipping Distance from Suppliers to distribution centersb) Road Transportation Distance from distribution centers to destinationsc) Water Transportation Cost Rated) Road T
39、ransportation Cost Ratee) Supply Quantity of each factoryf) Demand Quantity of each destinationDuring our discussion, we have collected the data of sea distance, motor distance and transportation freight between every two cities.a) The sea distance between Zhongshan, Shenzhen and Shanghai, Lianyunga
40、ng respectivelyTable 1: Sea distance between suppliers and distribution centers (km)Distribution CentersSuppliersZhongshanShenzhenShanghai17491467Lianyungang18101632b) The road distance between distribution centers in Shanghai, Lianyungang and the four final destinations respectivelyTable 2: Road di
41、stance between port cities and destinations (km)DestinationsDistribution CentersShanghaiLianyungangNanjing295245Hangzhou190626Tianjin1318782Hefei420458c) The freight of water transportation from Shenzhen and Zhongshan to Shanghai and Lianyungang respectivelyTable 3: Water Transportation Cost Ratebet
42、ween suppliers and distribution centers(Yuan/km/ton)Distribution CentersSuppliersZhongshanShenzhenShanghai0.01390.0149Lianyungang0.01540.0164d) The freight of road transportation from Shanghai and Lianyungang to the four destinationsTable 4: Road Transportation Cost Rate between distribution centers
43、 and destinations (Yuan/km/ton)DestinationsDistribution CentersShanghaiLianyungangNanjing0.7800.770Hangzhou0.8300.810Tianjin0.8000.790Hefei0.8200.805e) The demand of car washing liquid in each destinationTable 5: demand of destination (ton)DestinationsNanjing49.96Hangzhou59.78Tianjin53.27Hefei84.29f
44、) The supply of car washing liquid in Zhongshan and ShenzhenTable 6: supply of factories(ton)SuppliersZhongshanShenzhen150100By multiplying the data in Table 1 and 3; Table 2 and 4, we can get the freight in measurement of Yuan/ton.Distribution CentersSuppliersZhongshanShenzhenShanghai24.311 21.858
45、Lianyungang27.874 26.765 DestinationsDistribution CentersShanghaiLianyungangNanjing230.100188.650Hangzhou157.700507.060Tianjin1054.400 617.780Hefei344.400368.690The following picture illustrates about all the data we have collected.2) Math modelFirstly we should assume variables that presented as fo
46、llow:Xij=the weight of car washing liquid that transported between every two distribution centers.The second step is to fill the variables into a table in Excel.Then the problem is formulated to determine the objective function and present constraints. In the excel function: Let cell B39:D40; B45:F4
47、6 denote the twelve variables, which are relatively labeled in the preceding tableObjective function: Minimum Z=1467*0.0149X13+1632*0.0164X14+1749*0.0139X23+1810*0.0154X24+295*0.780X35+190*0.830X36+1318*0.800X37+420*0.820X38+245*0.770X45+626*0.810X46+782*0.790X47+458*0.805X48Subject to:X23+X13X35+X3
48、6+X37+X38 The amount of car washing liquid that shipped to X24+X14X45+X46+X47+X48 Shanghai and Lianyungang must be equal to or more than that transported to Nanjing, Hangzhou, Heifei and Tianjin.X35+X45=49.96X36+X46=59.78 The amount of car washing liquid that transported to Nanjing,X37+X47=53.27 Hangzhou, Hefei and Tianjin must be equal to that is needed.