final exam subject supply chain management in enterprise resources

UNIVERSITY OF UEH BUSINESS SCHOOL

FACULTY OF INTERNATIONAL BUSINESS - MARKETING

UEH

UNIVERSITY FINAL EXAM

SUBJECT:

SUPPLY CHAIN MANAGEMENT IN ENTERPRISE RESOURCES

Instructor: Mr Trinh Huynh Quang Canh

Student’s Name: Doan Kiéu Gia Khanh Student ID number: 31201027082 Class Code: 22C1BUS50313701 Major: Foreign Trade Class: FTCO1 Grade: K46

Ho Chi Minh City, December 15th, 2022

SUPPLY CHAIN MANAGEMENT IN ENTERPRISE RESOURCES

Instructor: Mr Trinh Huynh Quang Canh

Student’s Name: Doan Kiéu Gia Khanh Student ID number: 31201027082 Class Code: 22C1BUS50313701 Major: Foreign Trade Class: FTCO1 Grade: K46

ò Ho Chi Minh City, December 15th, 2022 §

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2.1 vi vi vi nvoddađadiiáaậậậa44Ý4ẢÉÝ 15

P.00) 0P PP 16

2.2.1 Basic EOQ model - 12 121121221 11211011211101211 121111111110 T11 H1 HH HH 16 2.2.1.1 Present your basic EOQ model L2 2211011211 121111 1155111211211 1 r2 16 2.2.1.2 Identify your 1Inventory proble1m§ cc c1 nn S1 11101211112112 1g ra 17 2.2.1.3 Calculate, create a sraph using QMI for WindowWS che 18 2.2.1.4 Present inventory anomalies (planned shortages/gradual replenishment) 22

2.2.1.5 Calculate, create a sraph using QMI for Windows (1ƒ possible) 24

Referemees + 4i:1:1aa 28

LIST OF TABLES

Page

Table 1: Output of factories (Unit: TOI§) - c1 2.111 1 11011110111111111 1111111111101 HH Ha 7 Table 2: Demand of warehouses (Út: TOfIS) L1 1011111111111 11111111211 1 1H kg 7 Table 3: Currency shipping plan of Hoa Phát (Unit: To) 1 0 112111212211 18118111 Hye, 8 Table 4: Hoa Phat's shipping costs (Umt: Thousand VNID/Ton) c2 HH He, 8

Table 5: Data of Basic EOQ model L2 21021101 12112111111511211111 01101111111 11111 111k tre 16

Table 6: Data of EOQ model with Planned Shortag€s ọ SH 0102222 HH He 22

LIST OF FIGURES

Page

Figure 1: Enter data of Hoa Phát transport model on Exeel ŠoÌV€r ác neo 9 Figure 2: Solver conditions of Hoa Phát transport model .-.- cv nt tre 10 Figure 3: Excel Solver”s results of Hoa Phat transport model cà thưa 11 Figure 4: Enter data Into QMI for WIndOWS nh HH HH HH HH HH nh HH 11 Figure 5: QM for Windows T€SuÏ(S cá cọc HH HH HH HH HH HH co HH HH HH 12 Figure 6: Graph of The network representation of transportation problem -:ssc so 13 Figure 7: Graph of Phi Cuong’s inventory level oie iiss 17 Figure 8: Enter data of inventory model on Excel Soler oo ccc c St HH nga 18 Figure 9: Solver conditions of inventory model occ eee eects sient: 19 Figure 10: Excel Solver’s result of inventory problem c2 n1 1tr re 20 Figure 11: Enter data into QM for WindowWs HH HH HH Hà He HH HH tiệt 20 Figure 12: QMI for Windows T€SUÏL án HH HH Hà HH dt 21 Figure 13: The curve graph shows the optimal solution ofthe Basic EOQ model 21 Figure 14: Graph of Phú Cường ”s Imnventory levels when there 1s a shortase of goods 23 Figure 15: Enter data of EOQ model with Planned Shortages ác nh nh Hee 24 Figure 16: Solver conditions of EOQ model with Planned Shortages oc cccccceneneee 25 Figure 17: Enter data into QM for WIIOWS ánh HH HH HH HH HH HH Hit 26 Figure 18: QM for Windows T€SUÏ( án HH HH nà HH hd HH HH HH hot 26

Situation creation (2 points)

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 (You can consult any sources you want, from company’s website, newspaper consulting firm's report, etc just remember to cite at the end)

Hoa Phat Group is a leading industrial production group in Vietnam, and is the largest steel production enterprise in Southeast Asia From a company specializing in trading construction machines since August 1992, Hoa Phat in turn expanded into other fields: furniture, steel pipes, construction steel,

refrigeration, real estate and agriculture

Hoa Phat operates in 5 fields: Iron and steel (construction steel, hot rolled coil) - Steel products (including steel pipes, galvanized steel, wire drawn steel, prestressed steel) - Agriculture - Real Estate - Household electrical appliances Steel production is the core field that accounts for 90% of the Group's revenue and profit With the business philosophy of "Harmony and Development", Hoa Phat spends

hundreds of billions VND per year to carry out corporate social responsibility to the community

Construction steel in the chain of steel factories is produced at 3 main factories: Hung Yén, Hai Dương, Dung Quất (Quảng Ngãi), and then construction steel is transported to the warehouse to serve the needs of the parties Currently, the group has warehouses in 4 major cities across the country: Ha N6i, Da

Nẵng, Hồ Chí Minh City, and Cần Thơ

The group is currently reviewing its current strategy to see if the business can develop a new shipping plan to keep total transportation costs to a minimum

1.2

Application (3 points)

1 Present your currency shipping plan in your 1.1 scenario

Assumption: Each factory will produce on a constant schedule and similarly cities have a constant demand for steel output during the year And there is no delay in the amount sent or received, which means that there needs to be a balance between total supply from all factories and aggregate demand in all destinations in all cities Based on geographical distance and current conditions in Vietnam, Hoa Phat

Group has the following shipping plan:

- Since Hung Yén factory is the closest to Ha N6i warehouse, all steel produced by Hung Yén factory will be distributed mm Hà Nội

- The production factory in Hai Duong will circulate and distribute steel at the Da Nang warehouse

- The production factory Dung Quat will circulate and distribute steel at H6 Chi Minh City warehouse

- The remaining output of 3 factories Hai Duong, Hung Yén and Dung Quat will be distributed at

Can Tho warehouse

City Distribution

Hà Nội 650,000 Đà Nẵng 420,000

Hồ Chí Minh 780,000

Can Tho 300,000

City

Factory ne os Loe eee x

Ha Noi Da Nang Ho Chi Minh Can Tho

Hưng Yên 650,000 0 0 100,000 Hai Dwong 0 420,000 0 50,000 Dung Quat 0 0 780,000 150,000

Table 3: Currency shipping plan of Hoa Phat (Unit: Tons)

2 Determine what is the transportation problem of your scenario (cost or profit?)

The transportation problem is to find another more optimal solution in transporting and distributing goods to an absolute minimum in order to save transportation costs for Hoa Phat Group In addition, a new route and shipping quantity must be designed from each factory to each distributor to make sure that the total amount of steel transported by the 3 factories must be equal to the supply there, and the total amount of steel transported to the 4 cities must be exactly equal to the demand of those cities

3 Create a table of unit cost / unit profit for your scenario

The table shown below are the shipping costs from the factories to the 4 cities of Hoa Phat, based on the currency shipping plan shown above:

City

Factory - x x

Hà Nội Đà Nắng Hồ Chí Minh Cân Thơ Hưng Yên 200 1000 2200 2100 Hải Dương 100 700 2000 2300 Dung Quất 1800 200 1200 1400

4 Shipping cost from factories to cities (Unit: Thousand VND/Ton) — Factory = = : 6 | Hà Nội | Da Nang | Ho Chi Minh | Can Tho

7 + 8 |

Subject to the Constraints:

SBS18:SES18 = SBS20:SES20 Add

) SFS15:SFS17 = SHS15:SHS17

Change

Delete Reset All Load/Save as @] Make Unconstrained Variables Non-Negative

Select a Solving v

Method: xị Options Solving Method

Select the GRG Nonlinear engine for Solver Problems that are smooth nonlinear Select the LP Simplex engine for linear Solver Problems, and select the Evolutionary engine for Solver problems that are non-smooth

ls

Figure 2: Solver conditions of Hoa Phat transport model

* Result is shown below after using Solver:

10

1 2 3

4 cost from factories to cities Thousand VND/Ton) 5

6| Factory [Hana | Da Chi Minh | Can Tho

7 Yén 8 | Hai

9 10

is distributed from factories to cities Tons)

19 = = = = Total cost

20 Total demand 650,000 420000 780000 300,000

21|

Figure 3: Excel Solver’s results of Hoa Phat transport model

- Using QM for Windows:

e Enter data into QM :

O Maximize

(3) Breakeven/Cost-Volume Analysis () Mamize fry staring method ~

(®: Decision Analysis — (Forecasting | TAP DOAN HOA PHAT

Game Theory

hs - Hà Nội | Đà Năng | Hồ Chí Minh| CanTho| SUPPLY Hy TRỢ Progamming | ng yên 200 1000 2200 2100! 730000 ieee scenes Hai Duong 100 700 2000 2300 500000 ~ Markov Analysis Dung Quất 1800 200 1200 1400 920000 b Material Requirements Planning DEMAND 650000 420000 780000 300000 (2): Project Management (PERT/CPM)

(+) Quality Control

"Scoring Model eer

(e) Statistics (mean, var sd: normal dist)

1

© Result:

Goal pore TAP DOAN HOA PHAT Soluti

“= Integer 8 Mixed Integer Programming | solution value = ai 4 Hồ Chí À

> Quality Control -~ Simulation

(xi: Statistics (mean, var, sd; normal dist)

5 Explain your result

Performing the construction of the problem on Excel Solver and QM for Windows, we get two

similar results of 1,884,000,000 VND In addition, there is also a change in the amount of transportation

from factories to distributors, specifically by the network representation of transportation problem is

shown below:

12

HO CHi MINH 780,000

DUNG QUAT /

300,000

Figure 6: Graph of The network representation of transportation problem

Let X1j be the volume of steel transported from factory 1 to city j of Hoa Phat Group with each 1=1,2,3 and j=1,2,3,4

The objective is to choose the values of these 12 decision variables (X1j):

Minimize total cost = 200X11 + 1000X12 + 2200X13 + 2100X14 + 100X21 + 700X22 +2000X23 + 2300X24 + 1800X31 + 400X32 + 1200X33 + 1400X34

Subjetc to the Constraints:

XII + X12 + X13 + X14 = 730,000 X21 + X22 + X23 + X24 = 500,000 X31 + X32 + X33 + X34 = 920,000 XII+ X21 + X31 =650,000 X12 + X22 + X32 = 420,000

13

X13+ X23 + X33 = 780,000 X14 + X24 + X34 = 300,000

According to the new shipping strategy, Hoa Phat only has to pay a total cost of 1,884,000,000 (VND), while in the current shipping plan, the company has to pay a total cost of 2,519,000,000 (VND) Thus, the new shipping strategy has optimized shipping costs, and they can saving 635,000,000 (VND) Therefore, Hoa Phat Group will reduce shipping costs to an absolute minimum of 1,884,000,000 VND if they applies the following shipping methods:

® Hung Yén factory transported 570,000 tons of construction steel to the Ha N6i warehouse and

160,000 tons of steel to the Can Tho warehouse

® Hai Duong factory transported 80,000 tons of construction steel to Ha Noi warehouse and 420,000 tons of construction steel to the Da Nang warehouse

® Dung Quat factory (Quang Ngai) transported 780,000 tons of construction steel to the

warehouse in Hé Chi Minh City and 140,000 tons to the Can Tho warehouse

14

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 (You can consult any sources you want, from company’s website, newspaper, consulting firm's report, etc Just remember to cite at the end) — you can use the same company as previous section

Phu Cuong Steel Company Limited is a distributor of international standard D6 wire rod of Hoa Phat Group in Hé Chi Minh City, and at the same time make purchases and sales of goods throughout the city The company has a constant demand for coils throughout the year and forecasts demand for the year

to be 12,000 D6 wire rods When the inventory level reaches a low level, the company will let the

warehouse management unit contact Hoa Phat's factory to order a large quantity of wire rods to replenish the warehouse Hoa Phat will ship the goods to the warehouse within 10 days from the time of placing the

order

On average, Phu Cuong sells about 1000 wire rods every month According to the order policy, the agency will contact the factory to place an order with 2000 wire rods every 2 months Orders have no

problems in delivery and always arrive at the warehouse on time

The problem posed for Phu Cuong here is whether the inventory level of 2000 wire rods is reasonable or not? Therefore, the company must consider the related costs to come up with the most optimal new inventory plan and know that when placing an order, the quantity ordered will depend on

various cost factors Other related costs are shown below:

¢ Labor costs: Employees are paid by Phu Cuong at the price of 150,000 VND per hour with a working time of 7 hours per day

¢ Purchase cost: Phu Cuong is supplied with D6 wire rods from Hoa Phat's factory at the price

of 3,000,000 VND per wire rod

¢ The cost related to the monitoring and managing orders is 300,000 VND Therefore, the total

costs incurred in the process of placing an order = 150,000 x 7 + 300,000 = 1,350,000 VND

15

® Inventory cost: 100,000 VND per wire rod (including the cost of renting warehouse space, taxes on inventory items, insurance costs against damage - against loss of inventory, inventory monitoring costs)

¢ Phu Cuodng’s employees work 335 days ina year

¢ Shortages occur resulting in additional costs, the company's operations process may incur additional shortage costs due to supplier delays or have orders larger than usual orders The annual shortage cost is estimated by Phu Cuong to be 250,000 VND multiplied by the quantity of missing wire rod

2.2 Application (4 points)

2.2.1 Basic EOQ model (2 points)

1 Present your basic EOQ model for your 2"‘ scenario — mainly annual demand, lead time, holding

cost, setup cost, ete

e Assumption: There is no shortages out of plan

® Annual demand: D = 12,000 wire rods/year ¢ Setup cost: K = 1,350,000 VND

© Cost to keep goods in warehouse: h (holding cost) = 100,000 VND/wire rod

¢ Waiting time for the factory to deliver all coils to the warehouse on time from the date of order: L (Lead time) = 10 days

¢ Employee's working day in a year: WD = 335 days/year

* Order Quantity: Q = 2000 wire rods

¢ TVC (Total Variable Cost) = Annual Setup Cost + Annual Holding Cost

WD Working days per year 335 days

16