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8/18/2019 115541091 Delivery Strategy at Moonchem Aggregation Problem
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Delivery Strategy
atSupply Chain Management ( IE
659)Professor – Dr San!hoy " Das
Case Stu#y Pro$e!t %eam 6& Mir$am Mils!h
'aurav Ma$um#ar
"arthigeyanMa!hen#ran
enry Mensah
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vervie*+)Intro#u!tion of Moon!hem
,)Pro-lem vervie*
.)/uestions
0)Solution Strategy 1 Illinois Pilot
Stu#y5)perational Data
5+) Moon!hem2s E3isting Distri-utionStrategy
5,) 4lternative +& o 4ggregation7Mo#el
5.) 4lternative ,& Complete4ggregation7 Mo#el
50) 4lternative .& %ailore#4ggregation7 Mo#el11/15/2012Milsch, Majumdar, Machendran,Mensah 2
p
.0
5
6
9
++
+.
+5
+:
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+) Intro#u!tion of Moon!hem Moon Chemical Co. Ltd. (Moonchem) established in 1996 in
an!"hou, China
Leadin! manu#acturer o# $
a) %ndustrial Chemicals,
b) Spe!ialty Chemi!als (eg Cosmeti! Chemi!als);
c) &ood 'ddities,
d) harmaceutical Chemicals etc.
* Manu#acturin! lants + 0 -istribution Centers orldide.
%n the Spe!ialty Chemi!als mar
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Moonchem7s ear8end usiness eie reeals the ne inentor3
strate!3 o# :Consi!nment %nentor3; has achieed a lo* Inventory
%urnover 8atio (I%8) of ,; in s4ite o# hain! a sta-le Pro#u!t
Deman# #rom the Customers.
o# Moonchem7s %nentor3 has been classied as
:Consignment Inventory;.
=oeer, onl3 ,=> o# their total number o# customers use
Consi!nment %nentor3.
Mr. >ohn ?res!e, @ o# u44l3 Chain -e4artment, decided to looA ho
Consi!nment %nentor3 is bein! mana!ed and to come u4 ith an
a44ro4riate 4lan to increase the %B alue.
11/15/2012Milsch, Majumdar, Machendran,Mensah
,) Pro-lem vervie*
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1) hat is the !urrent 4nnual Cost o#Moonchem7s
trate!3 o# sendin! #ull trucAloads to eachcustomer in
the eoria re!ion to re4lenish consi!nmentinentor3D
2) Consider #i?erent #elivery options andealuate the
costs o# each. hat delier3 o4tion do 3ourecommend
#or MoonchemD
11/15/2012Milsch, Majumdar, Machendran,Mensah 5
.) /uestions
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I%8 @ (4nnual Sales Aalue of 'oo#s Sol#) B (4verageInventory Aalue)
Moonchem can7t directl3 inEuence the #eman# from its!ustomers
ut it can decrease the 4verage Inventory value -y
#e!reasing &
Cy!le Inventory
subseFuentl3 the %otal 4nnual Costs incurred.
11/15/2012Milsch, Majumdar, Machendran,Mensah 6
0) Solution Strategy
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' 4ilot stud3 is conducted b3
Moonchem in %llinois tate in the
Peoria region (as marAed in the
ma4) #or the consi!nment inentor3
distribution strate!3 anal3sis. Bhe
resultin! anal3sis is tabulated belo.Customer
%ypeum-er ofCustomers
%otalConsumptio
n(l-Bmonth)
mall 12 1000
Medium 6 5000
Lar!e 2 12000
11/15/2012Milsch, Majumdar, Machendran,Mensah G
0) Illinois Pilot Stu#y
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Lo!istics Contractor$ Holden BrucAin!
BrucA Ca4acit3$ 0,000 lbs
ull %ru!
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Moon!hem sen#s FF %8C"F4DS to ea!h !ustomer;
irrespe!tive of the
!ustomer type
K MK LK 0,000 lbs
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Milsch, Majumdar, Machendran,Mensah 10
5+) Moon!hem2s E3istingDistri-ution Strategy
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Bhe 4roducts are deliered in#epen#ently to each t34e o#
customer on a :>ust8in8Bime; basis here the ptimal r#er
/uantity #or each t34e o# customer is 4redicted usin! the basic
E/ Inventory Mo#el.
N K J(,GDGS)B(hGC)K
n K D B /G
'nnual =oldin! Cost, 4C K (C3cle %nentor3) NhNC K (/GB,)GhGC
'nnual
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11/15/2012Milsch, Majumdar, Machendran,Mensah 12
5,) 4lternative + – o4ggregation7 Mo#el
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Pro#u!ts for ea!h type of !ustomer -eing #elivere# $ointly
in ea!h tru!
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11/15/2012Milsch, Majumdar, Machendran,Mensah 1
5.) 4lternative , – Complete4ggregation7 Mo#el
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Pro#u!ts are #elivere# $ointly for a sele!te# su-set of typeof !ustomers
Step +$ Bhe t34e o# Customer ith the hi!hest
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11/15/2012Milsch, Majumdar, Machendran,Mensah 16
50) 4lternative . – %ailore#4ggregation7 Mo#el
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11/15/2012 Milsch, Majumdar, Machendran,Mensah 1G
6) Inferen!e 1 8e!ommen#ation
I0
I10,000
I20,000
I0,000
I0,000
I50,000
I60,000
IG0,000
Botal Costs Botal C3cle %nentor3
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Complete 4ggregation7 Model is the most suitable -istribution
trate!3 hich
Moonchem should im4lement.
%t ould result in a 5:+> re#u!tion in %otal Costs and :55>
re#u!tion in the
%otal Cy!le Inventory, hich ould in turn result in a higher I%8
for11/15/2012 Milsch, Majumdar, Machendran,Mensah 1*
6) Inferen!e 1 8e!ommen#ation
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%4" L8 L8 4%%E%I
11/15/2012 Milsch, Majumdar, Machendran,Mensah 19
/ES%IS N