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Articles on Materials Management


More articles on Supply Chain Management



The basic information of the Supply Chain Management is the chain relation or the link between the suppliers supplier and customers customer. More is the transparency in partnership concept. The bondage or the link is better.



In Supply chain coordination flow, the corporate supplier or the organizational head has to give the total commitment on behalf of his organization to the main customer either through the channel partners, by way of distribution channel, group catering etc., with big total support from the consortium of linked suppliers may be his Departmental heads in a total cost effective and time effective manner for the result orientation in a Global Benchmarking Strategy.

After the Business Process Outsourcing a good number of areas has adequately improved by the way of 3PL as the Application Service Provider/ Courier Service/ Transcription Facilities/ Tracking System etc. From the Business Process Coordination Flow Diagram 1.1, it will be clear that there is the continuous flow of physical supply and physical distribution of different material, whether the net solution can be just substitute it.

Basically, the load/mode/ and the flow design in multistage aspects gives the proper dynamics by way of cost effectiveness as well as time effectiveness. Length of the proximity link matters in this dynamics. There may be a good number of failure zones to satisfy the customer need, proper time management and the infrastructural facilities are one of the most vital areas being hindrance to the fulfillment of the customer satisfaction, apart from any quality failure zone.

For supply of Raw Materials/ Packaging/ Ingredients/ MRO items it has to be physically distributed by way of proper load, mode and flow concept. From the Figure 1.2, it is also apparent that the product of an organization has to match with the market whether it is in the form of monopoly, oligopoly or competitive market. Feedback has to be taken not only on the production quality but also on the appropriate time of the delivery of the consignments.

The Case Study on Raw Material of semi finished to finished goods will clarify the Multi Stage Dynamics Effect considering the different matrixes keeping the Multiple Plant, Multiple finished good Warehouses, Multiple Raw Material Warehouses.

Objective is to find optimum distribution solution from RMWs to Markets. In case of increase in market demand, the solution should also throw light on estimation of additional number and capacity of

  RMWs, where FGW stand for finished Goods Warehouse RMW stands for Raw Material Warehouse.

For simplicity, we shall confine ourselves to a mono-commodity situation being distributed through a single mode.

3. The problem can be tackled with following assumptions.



 (i) Demand of n-markets (at n-locations) are known. Let average and S.Ds of market demands are :

d1, d2 .. dn
S1, S2 Sn

(ii) The demands of n-market will be catered to by m-FGWs with capacity C1, C2 .. Cm. Let cost of transportation of one unit of Finish

Good from i-th FGW to j-th market be Xy (I = 1, 2, . M)
J-1, 2, .n)

(iii) FGWs will receive goods from K-Plants with production capacity K1, K2 .. Kk. Let cost of transportation from i-th Plant to the j-th FGW by Yij (I=l, 2 .. m) (J=l, 2, k)

(iv) The Plants will receive raw materials from p-RMWs with capacity P1, P2 . Pp. Let cost of transportation of raw material from i-th RMW to j-th plant are Zi (1= 1, 2, p) (J=l, 2, k)


Stage 1

Find optimal transport solution for transportation of finished goods from m-FGWs to n-markets following usual transportation model.

The solution gives amount of goods to be transported from i-th FGW to j-th market so that

demand of each market is satisfied
capacity of each FGW is not overshoot
total cost of transportation from FGWs to the markets is minimized

Stage II

Find optimal transport solution for transportation of finished goods from k-Plants to m-FGWs

The solution gives amount of goods to be transported from i-th Plant to j-th FGW so that

requirement of each FGW is satisfied
each plant know how much to produce (within production capacity)
total cost of transportation from Plants to FGWs is minimized

Stage III

Find optimal transport solution for transportation of raw materials from p-RMWs to k-Plants

The solution will be similar to the solution for the 2nd stage since column total i.e. values of K1, K2 .. Kk are known from the 2nd stage solution.

Thus, we know how much raw materials to be stocked in each RMW so that

Demand of each market is satisfied
Each RMW, Plant, FGW works with optimum capacity
Total cost of transportation from RMWs to Markets (via Plant and FGWs) is minimum.

5. Future Problems


I. Find set of relationships between :

Xij and Yij (1.1)
Yij and Zij (1.2)
and finally between
Xij and Zij (1.3)

Make sensivity analysis of the relationship (1.3). In otherwords find various properties of (1.3) in terms of changes in values of independent variables, parameters of the equation, monotonic behaviours, continuity, growth pattern etc. and the properties which are invariant.

II. Since transportation of goods will be repetitive in nature over time, few FGWs/ RMWs may stock over the optimum requirement to take benefit of

Reduced transportation cost to FGW or RMW

Quick supply to Markets (for FGW) or Plants (for RMWs) for sudden increase in demand.

Similarly, each Market may stock over the average demand to cater to fluctuation of demand of the goods.

Hence, it may be necessary to know standard deviations of demand of the markets. A trend analysis may also be supportive to the aforesaid actions. The problem bails down to repetation of Stage I, II and III when demand of the i-th market is di + Lsi where L is a positive real number to be chosen as a function of markets willingness to cater to what percentage of total demand. Under normality assumption, will be equal to 3 if 99.5% of total demand are desired to be met.

III - Have Mid-term or Long-term estimation/ forecast of dis
- Based on such forecasts see capacity augmentation required for the FGWs
- Accordingly, find required capacity augmentation for Plants and RMWs

If capacity augmentation of any of the FGWs, Plants, RMWs are not feasible or practicable, then one can find additional number of


based on forecast of market demand. Alternatively, Plants have to think of outsourcing the production to a location minimizing total cost including transportation cost to markets, based on Minimax Principle.
(Source MMR)



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