SUCHA Computerized

Supply Chain Management Simulator

Prof. Dr. Fusun ULENGIN

Asst. Prof. Dr. Y. Ilker TOPCU

DecisionsResults

(Report)

DecisionsResults(Reports)

Decisio

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Results

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Decisio

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Results

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Decisions and Reporting

LocalMarketNo. 1

LocalMarketNo. 2

1000 mi.

700 mi. 700 mi.

CentralMarketNo. 51000 mi. 1000 mi.

700 mi. 700 mi.

LocalMarketNo. 4

LocalMarketNo. 31000 mi.

Geographical Market Structure

Facilities at any Local Market

Manufacturing plant of the firm of the local market

Raw material warehouse of same firm

Finished goods private warehouse of the same firm

Finished goods public warehouse of the same firm

Finished goods private warehouse of all other firms

Finished goods public warehouse of all other firms

Logical Decisions

Raw Material Purchasing

Production Scheduling

Warehousing / Inventory

Transportation

Finished Good Allocation

Sales Promotion

Table 1. Inbound Transportation of Raw Materials - Unit Rates and Transit Times

Rail Transportation Truck transportation Material

Car Load (1.5 tons)

LCL (less than 1.5 tons)

Truck Load (0.7 tons)

LTL (less than 0.7 tons)

Oat flour Rate ($/ton) 75 100 115 150 Transit Time 1 week 2 weeks Overnight Overnight Barley Rate ($/ton) 105 145 155 200 flakes Transit Time 2 weeks 3 weeks Overnight Overnight Rice flour Rate ($/ton) - - 500 750 Transit Time - - 1 week 1 week

Table 2. Outbound Transportation of Finished Goods - Unit Rates and Transit Times

Rail Transportation Truck transportation

MaterialCar Load (30

units)LCL

(less than30 units)

Truck Load(15 units)

LTL(less than15 units)

700 miles Rate ($/unit) 5.50 7.50 9.70 11.70Transit Time 1 week 1 week Overnight Overnight

1000 miles Rate ($/unit) 7.00 9.00 13.00 15.00Transit Time 1 week 2 weeks Overnight Overnight

1400 miles Rate ($/unit) 9.00 11.00 17.40 19.40Transit Time 1 week 2 weeks Overnight Overnight

Inbound & Outbound Transportation

An order of 6 tons oat flour at week t3.5 tons by rail

• 2 Car Load (2*1.5 tons) + 0.5 tons LCL

2.5 tons by truck• 3 Truck Load (3*0.7 tons) + 0.4 tons LTL

RM Purchasing Costt = 6 * 1500

RM Transportation Costt = 75*3 + 100*0.5 + 115*2.1 + 150*0.4

Shipments of 2.5 tons oat flour is finished at week t3 tons oat flour is finished at week t+10.5 tons oat flour is finished at week t+2

An Example for Transportation Decision

Production Production Charge =

1968 + Production Made * Variable per-unit cost + Rush Production * 3.5 + Expedited

Production * 2 + (Production planned - Production made) * 3.5; if (Production planned -

Production made)>0

1968 + Production Made * Variable per-unit cost + Rush Production * 3.5 + Expedited

Production * 2; otherwise

where

Production made [units produced] = min (min.{min.(Oat flour available/0.016, Oat flour

required/0.016), min.(Barley flakes available/0.024, Barley flakes required/0.024), min.(Rice

flour available/0.008, Rice flour required/0.008)}, 405) '[raw material quantities are in tons]

Variable per-unit cost = [(Production made - 243) / 29]2 + 0.5

and

Production plannedt = Regular Productiont / 3 + Expedited Productiont / 2 + Rush Productiont +

Regular Productiont-1 / 3 + Expedited Productiont-1 / 2 + Regular Productiont-2 / 3

Available rice flour (2.8 tons) < Required rice flour (3.2 tons=400*0,008)

Production made = 2.8 / 0.008= 350 units

Production Charget = 1968 + 350 * [(350-243)/29)2 + 0.5] + 70 * 3.5 + 120 * 2 + (400 - 350) * 3.5

Reg ExpRush Reg Exp Reg Totalt-2 90t-1 50 50 90t 80 60 70 50 50 90 400

t+1 80 60 50t+2 80

Production planned at week t

An Example for Production Decision

•Inventory (on hand) Carrying Cost = Oat flour on hand [tons] * 1500 * 0.15 + Barley

flakes on hand [tons] * 2000 * 0.15 + Rice flour on hand [tons] * 3500 * 0.15 + FG on

hand [units] * 250 * 0.24

•Raw Material (RM) available for productiont = RM transportedt + RM on handt-1

•RM on hand = RM in warehouse = RM available for production - RM used for

production

•Finished Goods (FG) available on salet [in Home Market (HM)] = FG producedt + FG on

handt-1 - FG Shipment to Other Marketst

•FG available on salet [in Other Markets (OM)] = FG transportedt + FG on handt-1

•FG on hand = FG in warehouse = FG available on sale - FG aggregate sales

•Supply [by a firm in HM] = Shipment made to HM (“Supply to home” on Decision

Sheet/Interface)

•Supply [by a firm in OM] = FG available at market

Inventory Management

Warehousing

Cost of RM Warehouse (WH) = Space [tons] * 10 + RM transported [tons] * 30 + Demurrage

and Detention Cost (DDC) + Change of Capacity Cost (CCC)

Cost of FG-WH [in HM] = Space in Private WH [units] * 4 + FG inventory in WHs [units] *

20 + FG produced [units] * 12 + DDC + CCC in Private WH + CCC in Public WH

Cost of FG-WH [in OM] = Space in Private WH [units] * 4 + FG inventory in WHs [units] *

20 + FG transported [units] * 12 + DDC + CCC in Private WH + CCC in Public WH

where

DDC [for RM] = 80 * excess RM [tons]

DDC [for FG] = 64 * excess FG [units]

Equations Concerning Sales

Indicated Demand (Demand without advertising effect) M(t) [in a specific Market]

= Total DemandM(t-1) * (Demand Index Value(t) / Demand Index Value(t-1))

Total DemandM =firms DemandFM [of a Firm in a specific Market]

DemandFM(t) = Indicated Demand M(t) * Market ShareFM(t-1) + (Advertising ExpendituresFM(t))0.4

Base SalesFM = min (DemandFM, SupplyFM)

BacklogFM = max ((Safe PercentageFM * (DemandFM - SupplyFM)), 0)

Floating CustomersFM = DemandFM - (Base SalesFM +BacklogFM)

Floating CustomersM = Extra SalesM + Unsatisfied DemandM

Aggregate SalesFM = Base SalesFM + Extra SalesFM

Market ShareFM = (Aggregate SalesFM + BacklogFM + Unsatisfied Demand Share FM) / Total

DemandM

Unsatisfied Demand ShareFMt = (Unsatisfied DemandMt * Market ShareFM(t-1))

Market 1Indicated demand (demand w/o ad. effect) in M1 = 200

G1 G2 G3 G4 TotalMSt-1 %50,00 %30,00 %15,00 %5,00 %100,00Demand 100 60 30 10 200Supply 60 50 30 100 240Base Sales 60 50 30 10 150Backlog 24 4 0 0 28Floating customers 16 6 0 0 22Extra Sales 0 0 0 22 22Aggregate Sales 60 50 30 32 172MS %42,00 %27,00 %15,00 %16,00 %100,00

Example 1

Market 5Indicated demand (demand w/o ad. effect) in M5 = 200

G1 G2 G3 G4 TotalMSt-1 %50,00 %30,00 %15,00 %5,00 %100,00Demand 100 60 30 10 200Supply 60 50 30 100 240Base Sales 60 50 30 10 150Backlog 22 5,5 0 0 27,5Floating customers 18 4,5 0 0 22,5Extra Sales 0 0 0 22,5 22,5Aggregate Sales 60 50 30 32,5 172,5MS %41,00 %27,75 %15,00 %16,25 %100,00

Example 2

Market 1G1 G2 G3 G4

Ad. Expenditure $0 $0 $0 $1,000Ad. Caused demand in M1 = 15.85Indicated demand (demand w/o ad. effect) in M1 = 200

G1 G2 G3 G4 TotalMSt-1 %50.00 %30.00 %15.00 %5.00 %100.00Demand 100 60 30 25.85 215.85Supply 60 50 30 100 240Base Sales 60 50 30 25.85 165.85Backlog 24 4 0 0 28Floating customers 16 6 0 0 22Extra Sales 0 0 0 22 22Aggregate Sales 60 50 30 47.85 187.85MS %38.92 %25.01 %13.90 %22.17 %100.00

Example 3

Market 5G1 G2 G3 G4

Ad. Expenditure $0 $0 $0 $1,000Ad. Caused demand in M5 = 15.85Indicated demand (demand w/o ad. effect) in M5 = 200

G1 G2 G3 G4 TotalMSt-1 %50.00 %30.00 %15.00 %5.00 %100.00Demand 100 60 30 25.85 215.85Supply 60 50 30 100 240Base Sales 60 50 30 25.85 165.85Backlog 22 5.5 0 0 27.5Floating customers 18 4.5 0 0 22.5Extra Sales 0 0 0 22.5 22.5Aggregate Sales 60 50 30 48.35 188.35MS %37.99 %25.71 %13.90 %22.40 %100.00

Example 4

PERFORMANCE INDEX = (Present Cash * Mean MS) / 1000 where

Present Cash [for a firm] = Revenue + Cash at previous period - (Advertising & Promotion Cost + RM Transportation Cost + RM Purchasing Cost + Production Charge + Warehouse

Cost + Inventory Carrying Cost + FG Transportation cost)

Revenue [for a firm] = Aggregate Sales [for a firm in all markets] * 250 Mean MS [for a firm] =

t

n

1

Overall MSt / n

Overall MS [for a firm] = (j1

5

MS in marketj * Total Aggregate Sales in marketj ) /

(i1

4

(j1

5

MS in marketj * Total Aggregate Sales in marketj )i )

Competitive Objectives