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Transportation & Supply Chain Costs: Answers to Questions

This article explores various questions related to transportation and supply chain costs, including average inventory, production rate, transit times, and cost calculations. It provides analysis and conclusions based on mathematical calculations and real-life scenarios.

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Transportation & Supply Chain Costs: Answers to Questions

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  1. Transportation & Supply Chain Costs: Answers to Questions John H. Vande Vate Spring, 2001 1

  2. How does the average inventory at the origin compare with the common estimate: Average Shipment Size/2 or Production Rate * Average Headway/2? Assignment #1 (Group) 2

  3. Item Hours from one headway headway*shipment size/2 headway*(headway*Rate of Demand)/2 headway2*Rate of Demand/2 Total Item Hours sum (hi2*D’)/2 Total Time sum hi Average Items in Inventory sum (hi2*D’)/[2*sum(hi)] Analysis 3

  4. sum (hi2*D’)/[2*sum(hi)] How does this compare with Production Rate * Average Headway/2? i.e., with Avg(h)*D’/2? How does sum(hi2)/sum(hi) compare with Avg(h)? Average Inventory 4

  5. Some extremes There’s just one headway Headways are 0 and H More general (h12 + h22)/(h1+h2) ? (h1+h2)/2 2(h12 + h22) ? (h1+h2)2 (h1-h2)2 ? 0 How does sum(hi2)/sum(hi) compare with Avg(h)? 5

  6. If there is variation in the headways then the average number of items in inventory is greater than estimated from the average headway Why? Conclusion 6

  7. Inventories associated with longer headways are not only larger, they are also around longer. (Un)Common Sense 7

  8. Apparent Contradiction Cumulative Production Cumulative number of items Cumulative Demand In transit Time “The maximum accumulation at the destination is the same as it is at the origin” Max. Inv. at Destination Max. Inv. at Origin 8

  9. Explain this apparent contradiction. Is Daganzo just plain wrong? Can we calculate the maximum inventory at the destination? What about the average inventory? Assignment #2 9

  10. Daganzo is right is we also assume that Shipment arrives when customer inventory reaches 0 What does this say about transit times, etc.? Explanation 10

  11. How to calculate this when transit time varies? Inventory at Origin + Pipeline + Destination = Total Inventory Average Inventories at Destination 11

  12. It is a random variable Bound it Calculate a distribution Tail Probabilities ... Maximum Inventory 12

  13. E(f(x))  f(E(x)) Avg. Cost of Shipment  Cost of Avg. Shipment Assignment 3: What relationship is there between Avg. Cost of Shipment Cost of Avg. Shipment? Assignment #3 13

  14. LTL Rates Cost of Avg. Shipment Avg. Cost of Shipment Total Cost Avg. Shipment 14 Volume Shipped Customer 1 Customer 2

  15. Typically the Cost of the Average Shipment Overestimates the Average Cost of a shipment. Calculating the Average Cost of a shipment is more tedious. Get Average Cost of Shipment from averages for each segment Conclusion 15

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