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ISYE6055 E-Supply Chain management Practicum

MULTI CRITERIA DECISION MAKING & VEHICLE ROUTING PROBLEM

E-SUPPLY CHAIN MANAGEMENT PRACTICUM (ISYE6055)

In this competitive market nowadays, the company has great competitors in selling the products into the market. There are several competitors that can threaten the sustainability of company . The increasing of competition amid the companies urges the company needs to reorganize strategies in order to improve its services to attract more customers to increase the sales volume of your company’s product. The product and its services in cheaper, better, and faster ways than other competitors. The key to increase the performance of the processes lies in the ability of the company in collaboration with its business partners (suppliers). The suppliers are such a crucial point in supporting the good performance of the company. With involvement from the suppliers, the company will get the big profit or suffocate because of its loss. So the company must choose the good criteria from the suppliers to support the good performance for the company. In choosing the criteria of suppliers, the company is using Analytical Hierarchy Process to distribute the criteria and its sub criteria. There are 3 criteria, 9 sub criteria in choosing the best supplier from five potential suppliers. The explanation about the criteria and sub criteria is as follow:

1. Price (P)

  1. The ability to be able to give discount for ordering a certain amount (P1)

The supplier can give discount to company so the company is allowed to get profit twice from usual transaction.

b. Price stability to the news in the world (P2)

The stability is all about the rate of dollars exchange and the oil price. The given price of raw materials from suppliers must not be unstable to economic news in the world.

c. The ability to give free shipping for ordering a certain amount (P3)

The supplier can give free shipping to company so the company will have less

cost.

2. Delivery (D)

  1. Delivery on time (D1)

Supplier can fulfill the orders of raw material according to the time that both supplier and company’s deal.

b. Accuracy quantity of delivery (D2)

Supplier shall be able to ensure that the number of ordered product (raw material) is always appropriate to ordered specification.

c. Delivery lead time (D3)

This sub criteria describes the ability of supplier in giving a promising time to deliver the product to company.

3. Quality (Q)

  1. The ability of supplier to receive a change of order from company (Q1)

Supplier shall be able to accept a change of quantity order from the company in specific time.

b. The ability to provide products without any defect (Q2)

Supplier shall be able to produce the raw material with a small number of defect or even zero defect.

c. The conformity of products with ordered specification (Q3)

Supplier can fulfill the orders of raw material according to the ordered specification by the company

The elucidation about the supplier’s performance in each sub criteria is as follow:

Table 1. The Supplier’s Performance

Supplier B

Sub Criteria

Supplier A

Supplier C

P1

Gives 35% discount if

Gives 20% discount if

Gives 20% discount if

company buys 600 pcs

company buys 150 pcs

company buys 100 pcs

P2

The increasing of product

The increasing of product

The increasing of

price in one month in

price in one month in

product price in one

between 11%-20%, and

between 20%-30%, and

month in >45% and

decreasing between 15-

decreasing between 15-

decreasing in >60%

20%

25%

P3

Free shipping if company

Free shipping if company

Free shipping if

buys 300 pcs

buys 150 pcs

company buys 200 pcs

D1

100% on time

90% on time

85% on time

D2

Accuracy: 85%

Accuracy: 88%

Accuracy: 90%

D3

Lead time: 5 days

Lead time: 3 days

Lead time: 1 day

Q1

Receives changes of orders for 8 hours

Receives changes of orders for 24 hours

Receives changes of orders for 11 hours

Q2

Defect: 0%

Defect: 5%

Defect: 2%

Q3

99% fullfiled

95% fullfiled

90% fullfiled

  1. In this case, you are an expert in procurement process of a fashion company named, so you are asked to give the rating for each matrix. From this problem, you must determine the best supplier from three potential suppliers using Analytical Hierarchy Process for the company. Calculate the AHP in Excel format and after getting the result, you must give the rank from 1 to 3 so the company can know which supplier is the best or the worst.

  2. Make sure that you check the consistency for each criteria and sub criteria because inconsistency can undermine your calculation toward the
  3. Please make it into tidy format so the company will see the calculation as clear as

After you have chosen the best supplier for company, the company wants to deliver the product from warehouse (Petojo) to the several distributors around Jakarta. In the delivering process, the company chooses expeditor A. The expeditor must deliver the product to distributor with using optimal route so it will save the company’s cost. To get the optimal route, the company gives the data of actual shipment from expeditor A to each distributor:

Table 1. Actual Data of Shipment Size from Expeditor A to Each Distributor

Code

Expeditor

Distributor

Shipment

Size

1

Expeditor A

Mall Central Park

24

2

Expeditor A

Mall Taman Anggrek

29

3

Expeditor A

Mall Emporium Pluit

48

4

Expeditor A

Mall Kota Kasablanka

17

In delivering your product from company to distributor, the company provides the expeditor with several vehicles. The information for each vehicle that can be used to calculate the total cost can be seen below:

Table 4. Data of Vehicle Operational Cost

Information

Amount

Remark

Price of Car A

Rp 180.000.000

New Car

Price of Car B

Rp 175.000.000

Gasoline Cost

Rp 7.350

Per 1 liter

Driver Cost

Rp 125.000

Per person for one day of work

Maintenance Cost

Rp 3.000.000

For 2 cars in 1 month

Car A' Insurance Cost

Rp 9.250.000

For 1 year (264 days)

Car B' Insurance Cost

Rp 8.750.000

Table 5. Data for Each Vehicle

Type of Car

Transport Capacity

Average Velocity

Capacity Allowance

Gasoline Usage Ratio

Car A (B 3 SCM)

105 units

50 km/hour

8 units

1:8

Car B (B 6 SCM)

98 units

50 km/hour

4 units

1:6

Table 6. Data of Travel Time (in hours)

Destination

Petojo (0)

Mall Central Park (1)

Mall Taman Anggrek (2)

Mall Emporium Pluit (3)

Mall Kota Kasablanka (4)

Petojo (0)

0

Mall Central

Park (1)

0.183

0

Mall Taman Anggrek

(2)

0.204

0.053

0

Mall Emporium

Pluit (3)

0.367

0.217

0.233

0

Mall Kota Kasablanka (4)

0.467

0.603

0.583

0.717

0

While the number of days per year is 264 days and number of days per month is 22.

  1. From the data above, find the optimal route and the total route with using the best method in finding the route!
  2. Calculate the cost for each vehicle (per day) and choose the cheapest one from those vehicles!

Format Weekly Report: Multi Criteria Decision Making & Vehicle Routing Problem (VRP)

BAB 1 Collection and data Processing

  • Supplier selection with Method AHP

In this chapter enter the table of your weighting results (Eigen) between the criteria, the priority value of sub criteria in the criteria, and the table of priority value of the supplier in sub criteria.

  • Data Car A
    • Distance matrix car A
    • Saving matrix car A
    • Clarke and Wright saving heuristic for car A
    • Calculate each route with mode (nearest neighbor, nearest insert, farthest insert, ant colony algorithm, and bee colony algorithm)
  • Data Car B
    • Distance matrix car B
    • Saving matrix car B
    • Clarke and Wright saving heuristic for car B
    • Calculate each route with mode (nearest neighbor, nearest insert, farthest insert, ant colony algorithm, and bee colony algorithm)
  • Estimation cost per day
    • Comparison between Car A and B

BAB 2 ANALISIS

  • In this chapter input the analysis of the priority order of selection of AHP criteria. In this chapter NO analysis of weighting numbers is included, but an analysis of the selected sequence.
  • Analyze best Method VRP
  • Analyze cost car A and car B