ERKEL APPAREL INTERNATIONAL

Transportation Modelling

Erkel Apparel

Europe & South America

United States

Entities involved in Shipment of Goods

TANNING FACTORIES
Mende Forgia Saragosa Feira El Tigre

MANUFACTURING PLANTS
Madrid Naples Limoges Sao Paulo Caracas

OUTLAND PORTS
Lisbon Marseilles Caracas

INLAND PORTS
New Orleans Jacksonville Savannah

DISTRIBUTION CENTRE
Indiana North Carolina Pennsylvania

Tanning Factory to Manufacturing Plants

Capacity 4000 4400 Mende Madrid 7800

3700

5300

Foggia

Naples

5700

6500

4650

Saragosa

Limoges

8200

5100

6850

Feira

Sao Paulo

7600

3600

5700

El Tigre

Caracas

6800

Skin Processing at Manufacturing Plants

37.5% Loss of Weight

50% Loss of Weight

Rest of the Supply Chain

Madrid
7800

Naples
5700

Lisbon
8000

New Orleans
8000

Indiana

1000

780

5500

Limoges
8200

Marseilles

Jacksonville
5200

North Carolina

1400

950

Sao Paulo
7600

Caracas
9000

Savannah
7500

Pennsylvania

1600

1150

Caracas
6800

Jackets or Skins ?

Rest of the Supply Chain (in Skins)

Madrid
7800

Naples
5700

Lisbon
8000

New Orleans
8000

Indiana

1000 3000

780 1950

5500

Limoges
8200

Marseilles

Jacksonville
5200

North Carolina

1400 4200

950 2375

Sao Paulo
7600

Caracas
9000

Savannah
7500

Pennsylvania

1600 4800

1150 2875

Caracas
6800

1. Management Objective: To Satisfy Demand at Lowest Cost Possible

2. Costs involved in Operations Manufacturing Outland Transportation Shipping Inland Transportation (Factory -> Plant) (CM) (Plant -> Outland Port) (COT) (Outland Port -> Inland Port) (CS) (Inland Port -> Distribution Centre) (CIT)

3. Constraints Involved: Capacity Limitations of Tanning Factories Manufacturing Plants Outland Ports Inland Ports Distribution Centres 4. Complexity of Cost Optimization Involvement of Multiple Resources => Cost incurred individually per resource has to be added to arrive at Total Cost Incurred

5.

Resources Involved: Goatskin (CG) Lambskin (CL) Total Costs Incurred for Each resources (TC) is thus given by TCG = CGM + CGOT + CGS + CGIT TCL = CLM + CLOT + CLS + CLIT TC = TCL + TCG

6.

7.

Transformation from Unprocessed to Processed Skin after Manufacturing calls for reducing the Goatskin weight processed at each plant by 37.5% Lambskin weight processed at each plant by 50.0%

Cost Per Pound (in $)

Mende

Manufacturing Plants
Madrid Naples Limoges

Outland Ports
New Orleans

Inland Ports
Jacksonville Savannah

Distribution Centres
Indiana North Pennsylvania Carolina

Sao Caracas Lisbon Marseilles Caracas Paulo

24 31

22 17

16 22

21 19

23 22

Factories

Foggia

Saragosa
Feira El Tigre Madrid

18

25

28

23
16 14

25
18 15 0.75 3.45 2.25 1.05 1.35 0.6 1.15 0.2 2.35 3.1 1.95 1.9 2.4 2.15 1.8 2 2.4 0.65 0.43 0.38 0.52 0.41 0.34 0.87 0.65 0.5

Plants Outland Ports Inland Ports

Naples Limoges Sao Paulo Caracas Lisbon Marseilles Caracas New Orleans Jacksonville Savannah

Capacity Modelling of Entities

Tanning Goatskin Lambskin Factory Supply Supply Mende 4000 4400 Foggia 3700 5300 Saragosa 6500 4650 Feira 5100 6850 El Tigre 3600 5700 Manufacturing Production Plant Capacity Madrid 7800 Naples 5700 Limoges 8200 Sao Paulo 7600 Caracas 6800 Outland Port Port Capacity Lisbon 8000 Marseilles 5500 Caracas 9000 Inland Port Ports Capacity New Orleans 8000 Jacksonville 5200 Savannah 7500 Distribution Goatskin Lambskin Centre Weight Weight Indiana 3000 1950 North Carolina 4200 2375 Pennsylvania 4800 2875

Effect of Satisfying Demand on Capacities of Entities Involved

Any animal skin processed by the tanning factory MUST reach the end of the supply chain to ensure that the company incurs minimum cost For this, it is essential that all the skins shipped to destinations must EXACTLY match demand However, it is not necessarily required that they match the capacities of other entities involved in the supply chain Hence, the capacity constraints for DESTINATIONS would be an = constraint where as that for other entities would be a <= constraint

Tanning Factory to Manufacturing Plant

Constraints Involved: J25:J29 <= K25:K29, J33:J37 <= K33:K37, E25:I29 >= 0, E33:I37 >= 0, E40:I40 <= E41:I41

Manufacturing Plants to Outland Ports

Constraints Involved Q34:Q38 <= R34:R38 Q42:Q46 <= R42:R46 N34:P38 >= 0

N42:P46 >= 0
N49:P49 <= N50:P50

Outland Ports to Inland Ports

Constraints Involved
X26:X28 <= Y26:Y28 X32:X34 <= Y32:Y34 U26:W28 >= 0 U32:W34 >= 0 U37:W37 <= U38:W38

Inland Ports to Distribution Centres

Constraints Involved

X47:X49 = Y47:49
X55:X57 = Y55:Y57 U47:W49 >= 0 U55:W57 >= 0 U50:W50 = U51:W51 U58:W58 = U59:W59

Objective Function of Modelled Solution

Minimization of Total Cost Involved = Minimization of (1 + 2 + 3 + 4)

Final Solution by Excel Solver Manufacturing Costs Cost of Shipment to Inland Ports Cost of Shipment to Outland Ports Cost of Shipment to Distribution Centres

= $519696.48 = $441921.1 (85.03%) = $25176.25 (4.84%) = $41980 (8.07%) = $10619.12 (2.04%)

Thank You !