A supplier for the chemical industry sells sulphuric acid to two customers. The

Question

A supplier for the chemical industry sells sulphuric acid to two customers. The supplier manages the stock levels (VMI) for both customers.

The setup looks like this:

The supplier has separate agreements with each customer regarding stock level interval. For Customer 1, the stock level must be between 8-25 m3. For Customer 2, the agreement is 5-17 m3. The distance D1 for Customer 1 is 100 km. The distance D2 for Customer 2 is also 100 km. The distance between the Customer 1 and Customer 2 is 50 km. The transport cost is assumed to be proportional to the distance. The truck loads 30 m3.

Assume that once a stock reaches its lower limit, a replenishment is ordered and delivered so that the stock level the next day will be increased with the delivered quantity.

Example: The current stock level is 9 m3. The usage rate is 5 m3/day and the lower limit is 5 m3. The top limit is 17 m3. Therefore, we want the stock level for the next day to be 17 m3. This means that we have to deliver (17 - 9) + 5 = 13 m3, since 5 m3 will be used during the same day as the delivery.

In the table below, the current situation is presented:

2d. Assume that Customer 2 manages their own inventory. Also, assume that an order is triggered when the stock level is 5 + 5 = 10 m3 and that delivery takes place the next day. Disregard Customer 1.

How many kilometers are needed in total for the coming 10 days’ deliveries?

2e. Assume that a Vendor Managed Inventory setup is used in questions 2e-2i.

On which day in the coming 10 days' period is the first delivery run needed?

2f. How many kilometers will the truck have to drive to complete the first delivery run??

2g. On which day in the coming 10 days' period is the second delivery run needed??

2h. How many delivery runs are needed in total??

2i. How many kilometers will the truck have to drive in total to make the deliveries to Customer 1 and 2??

Customer 1 Customer 2 Storage level, day 1 V1 = 17 m3 V2 = 12 m3 Product usage rate 8 m3/day 5 m3/day Customer 1 Customer 2 1-2 Km V, m3 V, m3 Capacity 30 m3 Capacity 20 m3 D, km D2 km Truck capacity 30 m3 Supplier

Explanation / Answer

2D ) 400 km , see above table

2E) On the second day  

2F) 100 KM

2G) on 4th Days

2H) 4 delivery runs

2I) The top limit for customer 1 = 25 and current level =17 , daliy consumption = 8

Distance between DI and D2 = 50 kM .

Drawing tablefor customer 1 , no of delivery run needed = 4

Distance cover in one run = Supplier -> D2 -> D1 : total distance in 1 run= 150 km

Total distanc in 4 runs = 4 * 150 km = 600 Km

Customer 2 Storage level, day 1 V2 = 12 m3 Product usage rate 5 m3/day Agreement 5-17 m3 Top limit 17 Day Consumption storage level *end of day Delivery Storage level KM 1 5 m3/day 7 2 5 m3/day 2 15 15 100 3 5 m3/day 10 4 5 m3/day 5 17 17 100 5 5 m3/day 12 6 5 m3/day 7 15 15 100 7 5 m3/day 10 8 5 m3/day 5 17 17 100 9 5 m3/day 12 10 5 m3/day 7 400

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