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ISyE 6203 Consolidation Intro to GIS

ISyE 6203 Consolidation Intro to GIS. John H. Vande Vate Fall 2011. Direct TL shipments Low transport cost gives high Gross Margin High Cycle Stock at Stores gives low ROIC Balance Transport and Inventory EOQ/EPQ improved ROIC dramatically with only small impact on Gross Margin

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ISyE 6203 Consolidation Intro to GIS

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  1. ISyE 6203ConsolidationIntro to GIS John H. Vande Vate Fall 2011 1

  2. Direct TL shipments Low transport cost gives high Gross Margin High Cycle Stock at Stores gives low ROIC Balance Transport and Inventory EOQ/EPQ improved ROIC dramatically with only small impact on Gross Margin Adjusting mode to suit smaller shipments reduced impact on transport costs and Gross Margin What next? Our Company 2

  3. Direct Full Truckloads $158 million in inventory $435 thousand in transportation Gross Margin % = 33% SPEED = 1.08 ROIC = 23% Single EOQ to All Stores $15.8 million in inventory $2.54 million in transportation Gross Margin % = 32.5% SPEED = 1.65 ROIC = 34% Different EOQ shipments $? million in inventory $? million in transportation Gross Margin % = ? SPEED = ? ROIC = ? Summary Balance Inv. & Transport Balance Inv. & Transport w/ more detail & complexity 3

  4. Pretty much come to the end of the possibilities for improving performance under the current rules. So, … CHANGE THE RULES Use LTL instead of FTL (Challenge 4) Change the network Consolidate flows Recognize & exploit economies of scale in transport rates Aggregate flows to exploit economies of scale while managing the inventory impacts. Try to get low inventories at the stores AND larger shipments Our Company 4

  5. Truck load shipments from Green Bay and Denver to Indianapolis Assemble Products in Indianapolis and distribute by full truckload from there to stores What will happen to costs compared to direct full truck load shipments? Transportation Pipeline At plants At Indianapolis Warehouse/Cross Dock At Stores Consolidation: An Example 5

  6. Assume 2 separate operations Manufacturing Assembly & Distribution Manufacturing moves finished units to Assembly as they are completed at no cost. What happens in Assembly & Distribution? Indianapolis 6

  7. Receiving Dock Receives shipments from Green Bay and Denver Assembly Operations Draws goods out of Receiving and Indianapolis Manufacturing, Assembles and sends to Shipping at rates matched to demand Shipping Operations Accumulates finished goods Ships when a full truck load accumulates. Assembly & Distribution 7

  8. Indianapolis Indianapolis Plant Green Bay Denver Indianapolis Shipping Assembly Indianapolis Receiving 8

  9. Indianapolis • Indianapolis Assembly draws goods out of Receiving and moves them into Shipping at a constant rate matched with demand • Two Related Questions • What is in a Truck Load shipment to a Store? • What is the Cycle Stock in Indianapolis Shipping? 9

  10. Challenge 5 • Determine how many • TVs • Computers are in a full truck load shipment from Indianapolis to a store • Give a brief explanation of how you calculated this • Due in 10 minutes 10

  11. Challenge 6 • Assume we operate with full truck load shipments using Indianapolis in this way • Adjust the financial statements to reflect changes in transportation and inventory • Discuss the impacts, relate them to our initial assessment. Explain the differences. • What would you do next? • Due ??? 11

  12. Review of EOQ • Ignoring the Supplier’s Cycle Stock • Considering the Supplier’s Cycle Stock • If we’re the only customer The 2 disappears 12

  13. What if? • What if, say, Denver, is an arm’s length supplier – not part of our company? • Should we consider his Cycle Stock or not? • There’s a 40% difference. It matters. 13

  14. Questions? 14

  15. Useful Tool: GIS Geographic Information System Links databases and maps Useful for addressing questions like: Where should we …? How far away are…? How are …. distributed? Intro To GIS 15

  16. Spatial data Location Stored in a shape file, geodatabase, … Attribute data Associated characteristics Stored in DB GIS systems typically maintain these separately and “join” them for display or analysis GIS 16

  17. Raster model Area covered by a grid of square cells Image data is a Raster model, cells = pixels Vector model Features represented as Points or nodes Lines or arcs Areas or polygons Geographic Data 17

  18. Key Properties of Geo Data Projection: The method of translating locations on the 3-D earth to (X,Y) coordinates on a map or screen Scale: The ratio between distance on a map to the equivalent distance on earth Accuracy Positional: Is it in the right place? Consistency: Is it correctly categorized? Completeness: Is it all there? Resolution: e.g., pixel size Geographic Data 18

  19. Different geo data maintained in different data layers with common location information, Vector Layer: Polygons describing land parcels Vector Layer: Lines defining the street network • Raster Layer: Digital Ortho photo: combines the visual properties of a photograph with the positional accuracy of a map, in computer readable form. Layers Smart Map Different layers linked by common locations 19

  20. ESRI – ArcView, ArcGIS and others MapInfo – MapInfo and others MS – MapPoint (Tutorial, etc) Many others Software Tools 20

  21. Geocoding: Placing data with location information on the map LatLong Street Address Examples: Geocode Stores by ZIP (OurCompany.xls) Geocode Census Data by ZIP (US Census and private vendors sell demographic data) (3XXXXDemographicData.xls) Geocoding 21

  22. Thematic Maps: Display the attributes of geographic data Examples: Population Sized Circles Shaded Regions Median Household Income Shaded Regions Thematic Maps 22

  23. SQL-type query based on geographic information: Eg. Average household income within 20 miles of Store # 1 MapPoint is quite poor at this Example: Household income within 20 miles of Store #1 Geographic Queries 23

  24. As the crow flies Using the Measure Distance Tool Over the road Using the Route Tool Add Store #2 as Start Add Store #1 as End Get Directions Over the road distance Can adjust route options for speeds, hours of driving, rest stops, … Distance Calculations 24

  25. Given fixed centers develop territories based on proximity to those centers MapPoint is very poor at this Either you import them or you build them by hand… Other (more expensive) packages do this automatically Territories 25

  26. MapPoint includes software links (COM or Component Object Model) that allow you to integrate MapPoint into your applications (e.g. with VB, into Excel, Access, …) We won’t go that far. Interested: See About Programming with MapPoint Programming Tools 26

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