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Supply Chain Design for Energy Conservation

Supply Chain Design for Energy Conservation. Jim Noble and Wooseung Jang, Adam Rubemeyer , Kelsey Kotur , Kara Bono. Center for Excellence in Logistics and Distribution ( CELDi ) An NSF sponsored Industry/University Cooperative Research Center. Problem Statement.

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Supply Chain Design for Energy Conservation

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  1. Supply Chain Design for Energy Conservation Jim Noble and Wooseung Jang,Adam Rubemeyer, Kelsey Kotur, Kara Bono Center for Excellence in Logistics and Distribution (CELDi)An NSF sponsored Industry/University Cooperative Research Center

  2. Problem Statement • Evaluate the current state-of-the-art supply chain models.  • Understand and characterize a representative Boeing supply chain in order to determine the relevant trade-offs. • Develop new models that explicitly consider energy conservation issues throughout the supply chain. • Based on developed/modified models, determine the trade-offs between : • costs (total cost including transportation/energy, inventory) • service (time/schedule, shortages, quality) levels • considering energy • with respect to supplier/vendor selection / sourcing (facility location), transportation mode selection (internal & external), routing, load consolidation, etc.

  3. Project Deliverables • Network / mode model for the analysis of energy issues throughout the supply chain • Supply Chain Energy Cost Evaluation Model • Supply Chain Inventory Optimization Model w.r.t. Energy

  4. Excel Model

  5. Excel Model Examples Low gas price High gas price

  6. Excel Model Examples

  7. Excel Model Examples

  8. Optimization Model Two Demands Constant Demand Emergency Demand Decisions Order Quantity Safety Inventory Level Objective: Minimize Total Cost Ordering Cost Transportation Cost Inventory Cost

  9. Model • Objective Function (MINIMIZE): • Transportation, Inventory, Product Cost • Constraints • Demand Constraints • Capacity (transportation and inventory)

  10. Three Product Ordering Scenarios with Emergency Orders Regular Irregular - 2 Irregular - 1 Q α x - s s x s s α

  11. Parameters that affect Safety Stock • Holding cost rate • Unit product cost • Fixed cost to ship via air • Billable Weight • Energy Cost

  12. Conclusions • Energy cost fluctuation has a slight effect on supplier selection as a function of supplier location depending on product cost differences • Energy cost fluctuation can have a significant impact on order/inventory policy and overall cost depending on freight class and weight

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