200
12
Slabs
Min Max $/Unit Demand 120000
0 0 5000 3 holding Cost 0.2
1 5000 10000 2.96 Ordering Cost S 100
2 10000 9999999 2.92
Variable Demand
Mean 11107 Cost per unit
Demand SD 3099 Ordering Cost s
Lead Time (months) 1.5 I (annual)
OSL
Ez 0.15
USL 95%
0.11
10
0.2
75% Convert to Same time frame
11007.6
No of warehouses Trans cost Inv cost
1 41,409,628.00 1500000
2 25,989,764.00 2121320.344
3 16,586,090.00 2598076.211
4 11,368,330.00 3000000
5 9,418,329.00 3354101.966
6 8,032,399.50 3674234.614
7 7,478,425.00 3968626.967
8 2,260,661.25 4242640.687
9 948,686.69 4500000
10 0 4743416.49
Prep
2000000 44909628
4000000 32111084.34
6000000 25184166.21
8000000 22368330 Optimal
10000000 22772430.97
12000000 23706634.11
14000000 25447051.97
16000000 22503301.94
18000000 23448686.69
20000000 24743416.49
j Baseline
cij 1 2 3 4 di row min
1 4 12 20 6 100 4
2 2 10 25 10 50 2
3 3 4 16 14 120 3
4 6 5 9 2 80 2
5 18 12 7 3 200 3
6 14 2 4 9 70 2
7 20 30 2 11 60 2
8 24 12 6 22 100 6
Step 2
j Baseline
cij 1 3 4 di row min
1 4 20 6 100 4
2 2 25 10 50 2
3 3 16 14 120 3
4 6 9 2 80 2
5 18 7 3 200 3
6 14 4 9 70 4
7 20 2 11 60 2
8 24 6 22 100 6
Hence 2
Transportation
FC Total
All 213 800 1013
1,3 255 500 755
1,2 299999 500 300499 3 cannot be dropped As demand supply mismatch
2,3 280 600 880
Baseline Block 1 Block 2 Block 3 Block 4
Sum row min Sum row min Sum row min Sum row min Sum
400 6 600 4 400 4 400 4 400
100 10 500 2 100 2 100 2 100
360 4 480 3 360 3 360 3 360
160 2 160 2 160 2 160 5 400
600 3 600 3 600 3 600 7 1400
140 2 140 4 280 2 140 2 140
120 2 120 2 120 11 660 2 120
600 6 600 6 600 12 1200 6 600
i 0.3
Old New
Item Cost S D i Q Inv Investment Alpha Q
1 50 60 12000 0.3 309.8387 7745.966692 0.424264 151.2241
2 30 60 25000 0.3 577.3503 8660.254038 0.474342 281.7896
3 25 50 8000 0.3 326.5986 4082.482905 0.223607 159.4042
Cost Wi
1 50 70
2 30 60
3 25 100
New
Inv Investment
3780.60361
4226.843334
1992.553056
10000
Manufacturer
S 250
C 2
i 0.2
D 120000
Q* 9165.15139
Manufacturer Receipient
Holding Cost 1833.030278 2749.545417
ICC 3273.268354 1309.307341
Total Cost 5106.298632 4058.852758
Receipient
100
3
0.2