1

The Supply Chain

Supplier

Supplier

Supplier

Inventory

Inventory

Distributor

Inventory Inventory

Manufacturer

Customer

Customer

Customer

Market research datascheduling information

Engineering and design dataOrder flow and cash flow

Ideas and design to satisfy end customer

Material flowCredit flow

2

Supply Chain Management

Facilities, functions, activities for producing & delivering product or service from supplier to customer

• Production planning

• Identifying facility locations

• Distributing product

• Selecting suppliers

• Purchasing materials

• Managing inventories

3

Facilities

Plants Warehouses Distribution centers Service centers Retail operations

4

Distribution

Rail Truck Water Air Computer Mail Telephone In person

5

The Transportation Model

Ship items at lowest cost

Sources have fixed supplies

Destinations have fixed demand

6

Transportation Problem

Grain Elevator Supply

1. Kansas City 1502. Omaha 1753. Des Moines 275

600 tons

Mill Demand

A. Chicago 200B. St. Louis 100C. Cincinnati 300

600 tons

7

Network Of Routes

Kansas City (150)

Omaha (175)

Des Moines (275) Chicago (200)

St. Louis (100)

Cincinnati (300)

4

711

6

8

5

11

12

10

8

Shipping Cost Table

MillGrain Chicago St. Louis

CincinnatiElevatorKansas City $6 $8 $10Omaha 7 11 11Des Moines 4 5 12

9

The Transportation Tableau

To

From

Kansas City

Omaha

Des Moines

Demand

Chicago St. Louis Cincinnati Supply

6

7

4

8

11

5

10

11

12

200 100 300 600

275

175

150

10

Solution For Grain Shipment

MillElevator ChicagoSt. Louis Cincinnati Supply ShippedKansas City 25 0 125 150

150Omaha 0 0 175 175

175Des Moines 175 100 0 275

275Demand 200 100 300 600Shipped 200 100 300

Cost 4525

11

Balanced Transportation Models

A transportation problem is balanced if

Total supply at all of the sources =Total demand at all of the destinations

The mill problem is currently balanced with Total Supply = Total Demand = 600 tons

In this case, all of the units are shipped from the sources and all of the destinations receive their demand

12

Unbalanced Transportation Models If Total supply at all of the sources >

Total demand at all of the destinations, the problem is feasible. There will be unshipped

units at some of the source locations though. • (Resolve model with Kansas City supply set equal

to 200 tons)

If Total supply at all of the sources <Total demand at all of the destinations, the problem will be infeasible. • (Resolve model with Kansas City supply set equal

to 100 tons)