sydney.edu.au sydney.edu.au/business/
ITLS6002
Supply Chain Planning and Design Semester 2, 2019
Institute of Transport and Logistics Studies
http://sydney.edu.au/business/itls/
Network Design Assignment Outline
Group and Individual Assignment – Network Design (Groups of 4 or 5 people)
25% of final marks (group component)
15% of final marks (individual component)
Due: Thursday 7 November, 5pm Document version: 2.0, 26 September 2019
Change log
1.0 Initial release
2.0 Minor corrections, added map link
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1 INTRODUCTION AND OVERVIEW
Florian is a large florist chain, with 34 stores spread across Sydney, Australia. They sell an extensive variety of flower arrangements and related products. For popular arrangements they make-to-stock, holding a small inventory of fresh flowers in each store, while other arrangements are make-to-order. Customers can either pick up flowers in one of their stores, or place an order for delivery.
However, despite their success, Florian face increasing competition, and they are reconsidering their distribution network, trying to reduce cost. One difficulty that Florian face is that by providing their full range of flowers in each store, they experience high rates of spoilage for their premium and exotic flowers. Many of the individual stores also have difficulties and inefficiencies when arranging and making delivery to the customers.
To address these challenges, Florian wishes to revamp and expand their distribution network. They intend to introduce fulfilment centres, which will be the only locations which assemble premium flower arrangements, and the only locations from which flowers are delivered.
You have been engaged to design their network to support these changes. Management want you to present them with a report, which effectively communicates the solutions that you have arrived at. In addition, they would like to see an Excel file containing your working.
2 EXISTING AND PROPOSED NETWORK STRUCTURE
Currently, the flowers and associated materials (ribbons, plastics wrapping etc) are transported by medium truck from distribution centres (DCs) to stores. Customers either pick up the flowers from a store, or have them delivered from the store whose delivery region encompasses their nominated address. Figure 1 depicts this distribution network.
Distribution centre(s)
Store Store Store
Figure 1: Existing distribution network
Delivery region
Delivery region
Delivery region
Products transported by medium truck
Products transported by light truck
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In the proposed distribution network, products may differ in terms of how they are distributed. High turnover, make-to-stock products sell rapidly, and are the only type for which inventory is held in every store. Low turnover products, including premium and exotic flowers, have low and/or intermittent demand, which makes them costly to hold in every store. In particular, the low, intermittent demand at each store for the premium flowers leads to high rates of spoilage. Despite the high prices many of these low turnover products can attract, the spoilage compromises profitability. The proposed network is depicted in Figure 2.
High turnover products can be purchased in any store (if they are not in stockout), or they can be delivered to an address of the customer’s choosing from inventory held in one of a number of fulfillment centres (FCs). The low turnover products are held only in FCs, and these flower arrangements are assembled there, thus aggregating the inventory, requiring less safety stock, and reducing the spoilage rates. These products can be ordered online or in store, and can either be picked up in store, or delivered. As you will see in the provided data file, there is an extensive market for delivered flowers, and the low turnover products can be delivered to the store, by the same vehicles that deliver to the customer. The FCs are typically closer to the market than the DCs, which allows for rapid delivery or store pickup.
Distribution centre(s)
Store Store Store
Fulfillment centre(s)
Delivery region
High turnover products, medium truck
Low turnover products, medium truck High turnover products, light truck
Low turnover products, light truck
Figure 2: Proposed distribution network
For efficiency reasons, many of the movements are made by medium truck, including between the DCs and the stores, and between the DCs and the FCs. The movements between FCs and stores and FCs and delivery regions are made by smaller light trucks. These are more practical for transporting completed flower arrangements and allow for delivery to almost all addresses. All transportation capacity is kept in-house, to ensure that the highly delicate product is handled appropriately.
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Delivery region
Your role is to determine which of the proposed DCs and FCs to utilise, and allocate the flows between DCs, FCs, stores and delivery regions.
3 AVAILABLE DATA
To get you started, Florian have provided you with data that will help you perform your analysis, plus a map to help visualise the situation (see Figure 3). All of these data are listed in the Excel file “ITLS6002 2019 S2 Assignment data.xlsx”. The map can be viewed online at: http://bit.ly/2mvwx63, and a static version is in the “Map” worksheet.
Figure 3: Map showing distribution centres, fulfilment centres and stores/delivery regions
The “Markets” worksheet contains all information about the demand for the various types of products (high and low turnover) and the various types of distribution over the last mile (delivery and store shopping/pickup). Demand is represented in very aggregate terms, in tonnes per annum. You will notice that the uptake of delivery and the relative demand for low turnover (generally high value) products varies somewhat across the 34 market regions. The market regions represent Florian stores for high turnover products which are purchased in-store or picked up in-store after online purchase.
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The same store locations are used to represent a general delivery area. The assignment will not focus on specific delivery runs to individual customers – it is enough to move the goods being delivered from a FC to a delivery area, and assume that an efficient delivery run will be devised for any given mix of customer addresses. The stores/delivery areas are marked as olive-coloured pins on the map.
The “DCs” worksheet details the relevant fixed costs per annum for three DC locations which will be evaluated. These could include rent or interest payments, and any costs that may differ across locations. The Northmead DC is the one that is currently in operation. The DCs are marked as blue pins on the map.
The “FCs” worksheet lists the FC fixed costs. Eight of the FCs will be in completely new locations (and are marked as “standalone”). Four of the DCs will be positioned alongside existing stores (marked as “collocated”). In addition to the obvious transportation costs benefits (no truck movement costs for products moved from the FC to the store), collocated FCs may have fixed cost economies of scale. For the purposes of this assignment, you can assume that FCs do not have capacity limits (although these could be readily imposed). The FCs are marked as orange pins on the map.
One of the motivations for using the FCs is to be more responsive to the customer. If the FCs are too far away from the customers, then the trucks will take a long time to reach the customers, and the reliability of scheduled delivery times is likely to be reduced. Consequently, you are to impose some criteria which ensure a minimum level of responsiveness. It is suggested that you use a maximum network distance of 25km between FCs and the stores/delivery areas which are allocated to them.
You will need to calculate an approximation of the cost of moving the flowers through your distribution network. To assist you, in the “Distances” worksheet you have been provided with estimates of the network distances between the DCs and the store/delivery areas, between the DCs and the FCs, and between the FCs and the store/delivery areas. These distances have been generated using Google Maps and are based on a judgement of the most appropriate route for the class of vehicle making the delivery. Given the proximity of many of the facilities to the major Sydney motorways (M7, M4, M5, M2, etc.), and the favourable travel conditions on these roads, these routes make extensive use of the motorways. Toll costs are not considered, nor are any costs linked to travel times.
There are a variety of available ways to convert the distances to costs. It is suggested that you base these on the capacity of the available truck fleet, and their associated costs, where these data are available on the “Trucks” worksheet. Medium trucks, which are used for DC to store/delivery area shipments, and DC to FC shipments, have a capacity of 12 tons, and a cost per truck kilometre of $6. Light trucks, which are used for the delivery runs from the FCs to the stores and the delivery areas, have a capacity of 3 tons, and a cost per truck kilometre of $4. This approach requires you to work out the number of shipments per annum based on the annual flows and the truck capacities. The out and back trip costs could be handled. There is no requirement to consider the cost of the delivery runs within each delivery area.
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4 ASSIGNMENT DETAILS
There is a group component and an individual component to this assignment. For the group component, students are to work in groups of four or five.
Group component
Your group is to write a report that analyses a number of scenarios, answering some specific questions for each.
Scenario 1: Optimise the new distribution network, where only new, “standalone” FCs are to be considered. Only one DC needs to be open: all three DCs are to be evaluated in turn, with detailed results reported for each solution (note that you could estimate a single model with decision variables for DC opening, but you will likely exceed the limits of 200 decision variables in Solver).
Scenario 2: Optimise the new distribution network, where both “standalone” FCs and collocated FCs are to be considered. Only one DC needs to be open: all three DCs are to be evaluated in turn, with detailed results reported for each solution.
Scenario 3: The management of Florian is very curious about the performance of the collocated FCs. Optimise the new distribution network, where only collocated FCs are to be considered. Only one DC needs to be open: all three DCs are to be evaluated in turn, with detailed results reported for each solution.
All scenarios should be compared carefully. You should give a final recommendation about how Florian should proceed, and what network configuration they should use.
Individual component
This part of the assignment must be done independently, including of your group members.
Section 3 of this document has detailed the data that you have available to perform your analysis, and also suggested some assumptions that you can make. There is enough data here to satisfactorily evaluate the above scenarios. However, in addition to evaluating the three scenarios as a group with the data provided, you should individually evaluate one or more of the scenarios using additional (i.e. not merely changed) data, or alternative assumptions. These data could be collected, estimated, or possibly even made up (so long as they are plausible). The aim is to provide a more realistic solution.
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5 GROUP COMPONENT REQUIREMENTS AND MARKING CRITERIA
Table 1: Marking criteria for group component of assignment
#
Criteria
Worth (%)
1
Synopsis
5
2
Introduction
5
3
Description of techniques used
15
4
Technical implementation
30
5
Recommendations regarding scenarios
20
6
Report conclusion
5
7
Presentation (report and Excel)
10
8
Communication and report structure
10
100
Synopsis (5%)
The synopsis should provide a brief description of your recommendations. In effect, I would like to be able to just read your synopsis and understand what your key recommendations are. The synopsis should not be more than half a page in length.
Introduction (5%)
You are to write a brief but professional introduction to the problem you are facing. Your report is to be written to the senior management team of Florian.
Description of techniques used (15%)
Here you are to briefly describe the methods that you used. It is essential that the reader can gain a clear understanding of what you have done, where you can assume that the reader is educated and interested, but not familiar with the methods that you have used. The client is interested not just in what you recommend, but the methods you have employed.
Technical implementation (30%)
All of the calculations should be made available in the Excel file that you submit. You will be marked based on how well the models you construct reflect the network you are trying to optimise, the correctness of your calculations, and the performance of the solutions that you recommend. You don’t need a “Technical implementation” section in your report – the marks are awarded based on your work in Excel.
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Recommendations regarding scenarios (20%)
These marks will be awarded based on how well you critically evaluate the performance of the three scenarios, and the soundness of your final recommendation.
Report conclusion (5%)
You are to write a brief but professional conclusion based on your findings. This section should summarize what has followed before. No new material should be placed in this section. A brief summary of the recommendations should also be included.
Presentation (10%)
10% of grades will be devoted to the quality of the presentation of this component of the assignment, including both the report and the Excel file.
Communication and report structure (10%)
Not only are your findings important, but the way you communicate them to management is as well. Marks are awarded for clarity, and for a logical, structured presentation of your findings.
You are also required to provide a Table of contents for the report. You are to provide a reference list (NOT a bibliography) if required. In writing your report, you are to follow the ‘How to write a paper’ guidebook, which will be made available on Canvas.
Note that the group component is worth 25% of your final marks.
6 INDIVIDUAL COMPONENT REQUIREMENTS AND MARKING CRITERIA
Table 2: Marking criteria for individual component of assignment
#
Criteria
Worth (%)
1
Additional data/alternative assumptions
70
2
Presentation (report and Excel)
10
3
Communication and report structure
20
100
Additional data/alternative assumptions (70%)
For this part of the report, you are free to experiment with alternative data and assumptions. You may be rewarded for the creativity of your solution, for improving the realism of the model, or for extending the scope of what the model can handle.
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Presentation (10%)
10% of grades will be devoted to the quality of the presentation of this component of the assignment, including both the report and the Excel file.
Communication and report structure (20%)
Not only are your findings important, but the way you communicate them to management is as well. Marks are awarded for clarity, and for a logical, structured presentation of your findings.
Note that the individual component is worth 15% of your final marks.
7 WHAT YOU MUST PROVIDE
As soon as your group forms, one person from your group must email me ([email protected]) with the names and student IDs of every member of your group, and a group name (this could be the name of your group’s fictional consulting company).
As noted in Section 3, you have been provided with an Excel file containing the data that you will need to complete this assignment. The file is named “ITLS6002 2019 S2 Assignment data.xls”.
The final deliverables for the assignment are:
• A group report, with a maximum of 8 pages (exclusive of the title page, synopsis, table of
contents, reference list, and any appendices). You may include appendices, but overly long appendices will not be read. In writing your report, you are to follow the ‘How to write a paper’ guidebook, which will be posted on Canvas.
• Your Excel files for the group. Be sure to make these clear and legible. All important findings should be communicated in your group report. If your group does not submit an Excel file, your group may receive a mark of 0 for the entire group component of this assignment.
• Minutes of all group meetings that you have. This group assignment represents a team-based work environment. Consequently, your group should keep minutes of your meetings. The meeting should include the time and date of the meeting, how long the meeting went for, what was discussed, who was allocated what tasks or responsibilities, what tasks were to be completed by whom by the next meeting, and a progress report on any tasks from the previous meeting. These are to be submitted in the appendix of your report as evidence of the contributions (or lack thereof) made by each individual group member.
• An assessment of the performance of each member of your group. This is to be submitted individually by each group member. The form you are required to fill out is on the next page of this document.
• An individual report, with a maximum of 2 pages. You may include appendices. No synopsis or table of contents are required. The ‘How to write a paper’ structure is not required for this part of the assignment.
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• Your individual Excel files. Be sure to make these clear and legible. All important findings should be communicated in your individual report. If you do not submit an Excel file, you may receive a mark of 0 for the entire individual component of this assignment.
Assignment submission will be via Canvas. Submission instructions will be posted on Canvas closer to the due date.
8 LATE ASSIGNMENTS
The penalty for a late assignment is 10 percent of the possible marks per day. So for example, if you are awarded a mark of 20 out of 25, but submit two days late, you will be penalised 5 marks, and receive a mark of 15.
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Peer Evaluation Form – ITLS6002 2019 S2 Assignment, group component
Your Name: ____________ Your SID:
Write the name of each of your group members in a separate column. For each person, indicate the extent to which you agree with the statement on the left, using a
scale of 1 to 4 (1=strongly disagree; 2=disagree; 3=agree; 4=strongly agree). Total the numbers in each column.
If you have any comments to make about a specific group member please write them in the relevant box. Group Name: ______
Names of Group Members:
YOU!
Attends group meetings regularly and arrives on time.
Contributes meaningfully to group discussions.
Completes group assignments on time.
Prepares work in a quality manner.
Demonstrates a cooperative and supportive attitude.
Contributes significantly to the success of the project.
TOTALS
Additional Comments:
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