tailieunhanh - Lecture Logistics management: Lecture 14 - Dr. Khurrum S. Mughal

In this chapter, the following content will be discussed: Define the role of procurement, appreciate the importance of procurement in the logistics chain, choose an appropriate supplier, appreciate the advantages of choosing single or multiple sourcing, discuss the steps in a procurement cycle, describe e-procurement and its advantages, talk about different arrangements for purchasing. | 1-1 Logistics Management LSM 730 Dr. Khurrum S. Mughal Lecture 14 1 13-2 CR (2004) Prentice Hall, Inc. Method appraisal A continuous location method Locates on the basis of transportation costs alone The COG method involves Determining the volumes by source and destination point Determining the transportation costs based on $/unit/mi. Overlaying a grid to determine the coordinates of source and/or destination points Finding the weighted center of gravity for the graph COG Method 13-3 CR (2004) Prentice Hall, Inc. COG Method (Cont’d) where Vi = volume flowing from (to) point I Ri = transportation rate to ship Vi from (to) point i Xi,Yi = coordinate points for point i = coordinate points for facility to be located 13-4 CR (2004) Prentice Hall, Inc. COG Method (Cont’d) Example Suppose a regional medical warehouse is to be established to serve several Veterans Administration hospitals throughout the country. The supplies originate at S1 and S2 and are destined for hospitals at H1 through H4. The relative locations are shown on the map grid. Other data are: Note rate is a per mile cost Point i Prod- ucts Location Annual volume, cwt. Rate, $/ cwt/ mi. X i Y i 1 S 1 A Seattle 8,000 2 S 2 B Atlanta 10,000 3 H 1 A & B Los Angeles 5,000 4 H 2 A & B Dallas 3,000 5 H 3 A & B Chicago 4,000 6 H 4 A & B New York 6,000 13-5 CR (2004) Prentice Hall, Inc. COG Method (Cont’d) Map scaling factor, K 13-6 CR (2004) Prentice Hall, Inc. COG Method (Cont’d) Solve the COG equations in table form i X i Y i V i R i V i R i V i R i X i V i R i Y i 1 8,000 160 96 1,168 2 10,000 200 1,720 600 3 5,000 250 500 750 4 3,000 150 825 360 5 4,000 200 1,580 1,100 6 6,000 300 3,180 1,560 1,260 7,901 5,538 13-7 COG Method (Cont’d) Now, X = 7,901/1,260 = Y = 5,538/1,260 = This is approximately Columbia, MO. The total cost for this location is found by: where K is the map scaling factor to convert coordinates into miles. CR (2004) Prentice Hall, Inc. 13-8 CR (2004) Prentice Hall, Inc. COG COG Method (Cont’d) 13-9 CR (2004) Prentice Hall, Inc. COG Method (Cont’d) 2,360,882 Total 660,492 6,000 6 196,644 4,000 5 160,733 3,000 4 561,706 5,000 3 271,825 10,000 2 509,482 8,000 1 TC Ri Vi Yi Xi i Calculate total cost at COG Example The firm is considering 2 alternative sites for its new facility, France and Denmark After evaluating the firm’s Needs, the Managers have Narrowed the list of Important Selection Criteria down into 5 major Factors. Labor availability and attitude People to car ratio Per capita income Tax structure Education and Health Factor Rating Example Since factor weights, selected factors, and assigned scores are all determined subjectively, the managers should be very careful in selecting these items and numbers.