erkel apparel case

7/30/2019 Erkel Apparel Case

1/18

ERKEL APPAREL INTERNATIONAL

Transportation Modelling


2/18

Erkel Apparel

Europe & South America United States


3/18

Entities involved in Shipment of Goods

TANNINGFACTORIES

Mende

Forgia

Saragosa Feira

El Tigre

MANUFACTURINGPLANTS

Madrid

Naples

Limoges Sao Paulo

Caracas

OUTLAND PORTS

Lisbon

Marseilles

Caracas

INLANDPORTS

New Orleans

Jacksonville

Savannah

DISTRIBUTIONCENTRE

Indiana

North Carolina

Pennsylvania


4/18

Tanning Factory to Manufacturing Plants

Mende

Foggia

Saragosa

Feira

El Tigre

Madrid

Naples

Limoges

Sao Paulo

Caracas

Capacity

4000

3700

6500

5100

3600

4400

5300

4650

6850

5700

7800

5700

8200

7600

6800


5/18

Skin Processing at Manufacturing Plants

37.5% Loss of Weight

50% Loss of Weight


6/18

Rest of the Supply Chain

Madrid

Naples

Limoges

Sao Paulo

Caracas

Lisbon

Marseilles

Caracas

New Orleans

Jacksonville

Savannah

Indiana

North Carolina

Pennsylvania

1400

1600

780

950

1150

1000

7800

5700

8200

7600

6800

8000

5500

9000

8000

5200

7500

?


7/18

Jackets or Skins ?


8/18

Rest of the Supply Chain (in Skins)

Madrid

Naples

Limoges

Sao Paulo

Caracas

Lisbon

Marseilles

Caracas

New Orleans

Jacksonville

Savannah

Indiana

North Carolina

Pennsylvania

1400

1600

780

950

1150

1000

7800

5700

8200

7600

6800

8000

5500

9000

8000

5200

7500

4200

4800

1950

2375

2875

3000


9/18

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

2. Costs involved in Operations

Manufacturing (Factory -> Plant) (CM)

Outland Transportation (Plant -> Outland Port) (COT)

Shipping (Outland Port -> Inland Port) (CS)

Inland Transportation (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


10/18

5. Resources Involved:

Goatskin (CG)

Lambskin (CL)

6. Total Costs Incurred for Each resources (TC) is thus given by

TCG = CGM + CG

OT + CG

S + CG

IT

TCL = CLM + CL

OT + CL

S + CL

IT

TC = TCL + TCG

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%


11/18

Cost Per Pound

(in $)

Manufacturing

Plants

Outland

Ports

Inland

Ports

Distribution

Centres

Madrid Naples LimogesSao

PauloCaracas Lisbon Marseilles Caracas

New

OrleansJacksonville Savannah Indiana

North

CarolinaPennsylvania

Factorie

s

Mende 24 22 16 21 23

Foggia 31 17 22 19 22

Saragosa 18 25 28 23 25

Feira 16 18

El Tigre 14 15

Plants

Madrid 0.75 1.05

Naples 3.45 1.35

Limoges 2.25 0.6

Sao Paulo 1.15

Caracas 0.2

Outland

Ports

Lisbon 2.35 1.9 1.8

Marseilles 3.1 2.4 2

Caracas 1.95 2.15 2.4

Inland

Ports

New

Orleans0.65 0.52 0.87

Jacksonville 0.43 0.41 0.65

Savannah 0.38 0.34 0.5


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Capacity Modelling of Entities

Tanning

Factory

Goatskin

Supply

Lambskin

Supply

Mende 4000 4400

Foggia 3700 5300

Saragosa 6500 4650

Feira 5100 6850

El Tigre 3600 5700

Manufacturing

Plant

Production

Capacity

Madrid 7800

Naples 5700

Limoges 8200

Sao Paulo 7600

Caracas 6800

Outland

Port

Port

Capacity

Lisbon 8000

Marseilles 5500

Caracas 9000

Inland

Ports

Port

Capacity

New Orleans 8000

Jacksonville 5200

Savannah 7500

Distribution

Centre

Goatskin

Weight

Lambskin

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 matchdemand

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


13/18

Tanning Factory to Manufacturing Plant

Constraints Involved: J25:J29 = 0, E40:I40


14/18

Manufacturing Plants to Outland Ports

Constraints Involved

Q34:Q38 = 0

N49:P49


15/18

Outland Ports to Inland Ports


X26:X28 = 0

U37:W37


16/18

Inland Ports to Distribution Centres


X47:X49 = Y47:49

X55:X57 = Y55:Y57

U47:W49 >= 0

U55:W57 >= 0

U50:W50 = U51:W51

U58:W58 = U59:W59

4


17/18

Objective Function of Modelled Solution

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

Final Solution by Excel Solver = $519696.48

Manufacturing Costs = $441921.1 (85.03%)

Cost of Shipment to Inland Ports = $25176.25 (4.84%)

Cost of Shipment to Outland Ports = $41980 (8.07%)

Cost of Shipment to Distribution Centres = $10619.12 (2.04%)


18/18

Thank You !

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