FINAL PROJECT SUBJECT SUPPLY CHAIN MANAGEMENT IN ERP

UNIVERSITY OF UEH BUSINESS SCHOOL FACULTY OF INTERNATIONAL BUSINESS - MARKETING FINAL PROJECT SUBJECT: SUPPLY CHAIN MANAGEMENT IN ERP Instructor: MSc Quang Canh Trinh Huynh Class Code: 22C1BUS50313701 Student: Nguyen Phuong Uyen Grade - Class: K46 - FTC01 MSSV: 31201024693 Ho Chi Minh City, November 15th, 2022 DECLARATION This essay is developed and processed by students alone, not copied from any other organizations and individuals' articles Signature Uyen Phuong Nguyen LECTURER’S NOTE TABLE OF CONTENTS DECLARATION … … .1 LECTURER’S NOTES…… … … 1 Transport problem …………… … 1.1 Situation creation … …4 1.2 Application……………… …5 1.2.1 Present your current shipping plan 1.2.2 Determine what is the transportation problem of your scenario ………… 1.2.3 Create a table of unit cost / unit profit for your scenario …… .…6 1.2.4 Construct and solve your problem using Excel Solver & QM … .…7 1.2.5 Explain your results…… ………… ….9 Inventory problem … ……………………….11 2.1 Scenario creation … ….11 2.2 Applications …… .… .….11 2.2.1 Basic EOQ model … ………11 2.2.1.1 Present your basic EOQ model … .11 2.2 Identify your inventory problem … .……… 12 2.2.1.3 Calculate, create a graph using QM for Windows… .… 12 2.2.1.4 Present your inventory anomalies …………………13 2.2.1.5 Calculate, create a graph using QM for Windows (if possible) that represent your inventory situation, present your answer and your opinion……14 Reference … … ……… 15 LIST OF TABLES Table 1.1 Numbers of goods supplied by the factory Table 1.2 Capacity of each warehouse Table 1.3 Current transportation plan Table 1.4 Table of unit cost MAIN TEXT OF THE ESSAY Transportation problem 1.1 Based on the P&T Co Scenario, you should build a similar situation with information about the field of operation, the latest business results and especially the transportation problem that your business has to solve The Ajinomoto Company is a wholly owned subsidiary of the Ajinomoto Group The company offers a diverse range of spices, nutritional foods, and beverages that meet the highest quality and safety standards and are appealing to Vietnamese consumers Ajinomoto currently owns 35 different types of popular food products that are well-known throughout the country Ajinomoto MSG, Aji-delicious seasoning, Aji-mayo Mayonnaise, Instant drinks, Aji-Quick seasoning, Canned coffee are among the featured products Ajinomoto products are manufactured in two factories (Bien Hoa and Long Thanh) and then trucked to four distribution warehouses to be distributed throughout the three regions (warehouse in Ho Chi Minh City, Da Nang, Hai Duong, and Can Tho) Transportation problem: Every month, Ajinomoto produces products at two factories and transports them to four warehouses to consume products to the market quantity of 250 tons of products of all kinds They are shipped from the factory to the depots using the truck transport service (5 tons/vehicle) *Below are frieght data tables: Factory Quantity Bien Hoa 23 trucks Long Thanh 27 trucks Total 50 trucks Table 1.1: Number of goods supplied by the factory Warehouse Capacity Ho Chi Minh City 15 trucks Da Nang 12 trucks Hai Duong 13 trucks Can Tho 10 trucks Total 50 trucks Table 1.2 : Capacity of each warehouse supplied by the factory 1.2/ Application: 1/ Present your currency shipping plan in your 1.1 scenario *The current transportation plan is: - Bien Hoa factory is closest to the Ho Chi Minh City warehouse, so it should transport the full amount of goods from Bien Hoa distributed to the warehouse in Ho Chi Minh City, the remaining balance will be transferred to the warehouse in Da Nang - The missing part of the Da Nang warehouse is transported from the Long Thanh factory, and the rest of the Long Thanh factory will fully distribute to warehouses and move to Hai Duong and Can Tho From/ To Warehouse Factory Ho Chi Minh Da Nang Hai Duong Can Tho Long Thanh 13 10 Bien Hoa 15 0 Table 1.3: Current transportation plan (unit: truck) 2/ Determine what is the transportation problem of your scenario (cost or profit?) The transportation problem to be solved in this scenario is to find a suitable transportation plan, save maximum total transportation cost and find transportation routes from factories to warehouses to best suit the company’s constraints Based on the lecture note, we have to fulfill the folllowing assumption:  The Requirements Assumption: Each source has a fixed supply of units, where this entire supply must be distributed to the destinations Each destination has a fixed demand for teams, which must be received from the sources  The Cost Assumption : The cost of distributing units from any particular source to any particular destination is directly proportional to the number of units distributed We can conclude that the total quantity shipped from each manufacturing plant must equal its output (supply) and the total amount received at each warehouse must equal its allocation (demand) 3/ Create a table of unit cost / unit profit for your scenario From/ To Warehouse Factory Ho Chi Minh Da Nang Hai Duong Can Tho Long Thanh 24 41.5 10 Bien Hoa 22 39 12 Table 1.4: Table of unit cost 4/ Construct and solve your problem using Excel Solver & QM * Excel Solver: * QM for Windows: 5/ Explain your result We call Xij the number of trucks transported from the Factory (I) to the warehouse (j) with each i=1,2 and j=1,2,3,4 *The objctive is to choose the value of the variable to gain the minimum cost: Minimize cost = 6X11+ 4X12+ 41.5 X13 + 10X14 + 4X21 + 22X22 + 39 X23+ 12 X24 *The constraint of the problem: X11 + X12 + X13+ X14 = 27 X21 + X22 + X23 + X24 = 23 X11+ X21 =15 X12+ X22=12 X13+ X23=13 X14+ X24=10 *Conclusion: To optimize transportation costs from two factories (Long Thanh, Bien Hoa) to four warehouses (HCMC, Da Nang, Hai Duong, Can Tho) need to divide the freight as follows: Hai Duong warehouse is farthest away, so it will be prioritized to put all goods transported from Bien Hoa factory because the cost from Bien Hoa to Hai Duong is cheaper than from Long Thanh factory to Hai Duong, transporting 13 trucks from Bien Hoa to Hai Duong The remaining goods of Bien Hoa factory are 10 trucks that will be transported to the warehouse in Ho Chi Minh City Long Thanh warehouse divides trucks evenly to the remaining locations, specifically: trucks to HCMC warehouse, 12 trucks to Da Nang warehouse, 10 trucks to Can Tho warehouse After calculating the most optimal solution, it will bring a total cost of 965 (million VND) 2.1 Based on the ACT Co Scenario, you should build a similar situation with information about the field of operation, the latest business results and especially the inventory problem that your business must solve Vietnam National Oil and Gas Group (Petrolimex) has the main business of importing, exporting, and trading in petroleum products and investing in other related businesses Petrolimex has a nationwide warehouse system that supplies more than 17,000 retail stores and more than 5,500 petrol stations in its distribution system According to the results of the 2020 sustainability report, the total amount of petroleum imported by Petrolimex and imported and domestically purchased petrol and oil is 9,664,509 (m3/ton), in which the proportion of imported petroleum accounts for more than 38% Petroleum is imported mainly from major suppliers such as Trafigura, SK Energy, Lukoil, etc Nha Be Petroleum Warehouse is a very large-scale storage tank in Petrolimex's storage system, with an area of 200 hectares and a capacity of 730,000 m3 of warehouse specializing in import, export, preparation, and distribution of petroleum directly to the market domestic petroleum, especially in the South and Central Highlands Due to timely and sufficient supply to distribution systems and other units, Nha Be General Warehouse must always ensure that there is enough to supply When the inventory level of gasoline is low, Nha Be warehouse will import more gasoline from foreign sources, and the time to ship an order is usually 15 days from the date of the order Assuming only the quantity of petrol and oil imported from abroad, each month Nha Be regularly has about 40,000 tons of petroleum for sale Because in order to ensure that there is no shortage of gasoline, Nha Be warehouse must import 80,000 tons of gasoline, every months after the inventory level decreases from 80,000 tons 10 to The cost of importing gasoline is $490/ ton The cost to ship a shipment including staff costs, warehouse costs, office space, and other related costs is estimated at $2,450 Estimate the average expense ratio relative to the cost of storing imported petroleum until it is sold at around 20%, resulting in a holding cost per unit (ton) of gasoline of 20%* 490 = 98 USD/1 ton The final cost that can be incurred is the cost of the inventory shortage, there are many reasons for this cost such as late delivery from the supplier or maybe the order quantity exceeding the average level often Nha Be Petroleum depot has estimated the cost of inventory shortage to be about USD 165 Inventory problem 2.2 Applications 2.2.1 Basic EOQ model Present your basic EOQ model for your 2nd scenario – mainly annual demand, lead time, holding cost, setup cost, etc * Basic EOQ model: - Annual demand rate (D) = 80.000*6 = 480.000 (tan) - Lead time (L) = 15 days - Unit Holding cost (h) = 98 USD - Set up cost (K) = 2.450 USD - Total working day per year (WD) = 200 - Reorder point = D* L 15 = 480000* =36.000 WD 200 - Annual Setup cost = K* D Q - Annual Holding cost = ℎ ∗ Q - Total Variable cost = Annual Setup Cost + Annual Holding Cost 11 Identify your inventory problems The problem to be solved of the Basic EOQ model problem is to calculate the optimal order quantity to import gasoline into storage so that it can both save the most costs and ensure meeting the demand sales when needed Calculate, create a graph using QM for Windows that represent your inventory situation, present your answer and your opinion * Calculate using QM for Windows: 12 * Graph illustration: * Present the answer: After calculating the Basic EOQ problem of Petrolimex's Nha Be through QM, we can conclude the most optimal figures for each specific order as: - Optimal order quantity for each order: Q = 4899 (tons) - Total variable cost is: Total Variable Cost = $480100 - Reorder point: Reorder point = 36000 (tons) Whenever Petrolimex's Nha Be Warehouse has a reorder point of 36,000 tons of petroleum, they will place a new order with an optimal order quantity of approximately 4899 tons of gasoline to store petroleum for distribution but still have to ensure optimal annual variable costs at as low as $480100 Present your inventory anomalies (planned shortages / gradual replenishment) * EOQ model with planned shortages: - Annual demand rate (D) = 80,000*6 = 480,000 (tons) - Unit Holding cost (h) = 98 USD - Set up cost (K) = $2,450 13 - Unit Shortage cost (p) = 165 USD - Annual Setup Cost = K * D Q - Annual Holding Cost = h*( Q− S Q− S )* ( ) Q - Annual Shortage Cost = p * ( S S )*( ) Q Calculate, create a graph using QM for Windows (if possible) that represent your inventory situation, present your answer and your opinion * Calculate using QM for Windows 14 * Present your answer: After calculating the problem of EOQ with planned shortages of Petrolimex's Nha Be Petroleum using QM, we can conclude the most optimal figures for each specific order as: - Optimal order quantity for each order: Q* = 6185 (tons) - The maximum shortage is: S = 2304.69 (tons) - Total cost is: Total Variable Cost = 380273.3 $ - Maximum inventory level is: Maximum Inventory Level = 3880.3 (tons) Petrolimex's Nha Be Warehouse should order 6185 tons of petroleum and maintain a maximum shortage of 2304.69 tons of gasoline/year to reduce total annual variable costs to the lowest level in case of shortages occur Reference Lecture notes (n.d.) Retrieved from Tập đoàn Xăng dầu Việt Nam - Petrolimex : https://www.petrolimex.com.vn/index.html (n.d.) Retrieved from Ajinomoto Việt Nam: https://www.ajinomoto.com.vn/vi/gioi-thieu-chung-ve-ajinomoto/ajinomoto-viet-nam 15 (2020) BÁO CÁO PHÁT TRIỂN BỀN VỮNG 2020 Petrolimex TEXT BOOK -ERP - SCM (2020) UNIVERSITY OF ECONOMIC OF HO CHI MINH CITY - 16 ... National Oil and Gas Group (Petrolimex) has the main business of importing, exporting, and trading in petroleum products and investing in other related businesses Petrolimex has a nationwide warehouse... the cost of storing imported petroleum until it is sold at around 20%, resulting in a holding cost per unit (ton) of gasoline of 20%* 490 = 98 USD/1 ton The final cost that can be incurred is the... meeting the demand sales when needed Calculate, create a graph using QM for Windows that represent your inventory situation, present your answer and your opinion * Calculate using QM for Windows: