1 Supply Chain Decision Support Systems ISyE3103

2 Demand Planning Accurate demand forecasts are critical for the efficiency of the entire supply chain. Uses statistical tools Demand forecast is part of the input for most of the supply chain decision support systems. We will start discussing forecasting today.

3 Logistics Network Design Determines –Warehouse and factory locations –Assignment of retailers or customers to warehouses Input: –Candidate locations –Transportation costs –Aggregate demand forecasts

4 Inventory Deployment Determines which inventory to keep at what level, in which warehouses, and at what times. Input: –Transportation costs –Demand forecasts –Inventory holding costs

5 Sales and Marketing Region Assignment Determines assignments of sales representatives to marketing regions so that both the customers and the sales representatives are happy while sales are maximized. Input: –Customer locations –Demand forecasts

6 Distribution Resource Planning (DRP) Determines the routes and the inventory policies for a set of warehouses and retailers. Input: –Warehouse and retailer locations –Transportation costs –Demand forecasts

7 Material Requirements Planning (MRP) Uses a products bill of materials (BOM) and component lead times to plan when manufacturing of a particular product should begin. Very popular in the industry BUT often creates impossible schedules because it does not take production capacities into account. Decision maker creates a feasible schedule by modifying the MRP output.

8 Inventory Management Inventory management is complicated when many different items are present Proposes inventory policies with low cost and high customer service. Input: –Transportation costs –Inventory holding costs –Lead times –Demand forecasts

9 Production Location Assignment and Facility Deployment Given a network of production facilities being capable of producing particular products, suggests possible assignments of products to manufacturing facilities. Input: –Transportation costs –Inventory holding costs –Lead times –Demand forecasts

10 Fleet Planning Determines how to send out products with a firms own truck fleet and/or commercial carriers. Difficulties: –Complex rate structures (e.g. TL vs LTL) –Usually a dynamic decision making problem Two examples: –Mobil: 77% of routes are different than a manual system and saves $1 million annually –CSX: Computer aided routing and scheduling (CARS) generates routes very similar to the manually generated ones without taking into account all the business rules. BUT this also implies that it is not very cost effective.

11 Lead Time Quotations Sales representatives need to quote delivery lead times in real time while taking orders. Usually quoted lead times are longer than necessary to guarantee delivery by the promised date. Determines accurate lead times by taking the current production schedules, manufacturing times, and delivery times into account.

12 Production Scheduling Proposes a manufacturing sequence and schedule by considering: –Products –Processes –Due dates –Precedence relationships.

13 Workforce Scheduling Proposes a possible employee schedule to ensure necessary labor is available at all time by considering: –Production schedules –Labor costs –Set of work rules FEDEX used such a system during negotiations on work rules with its pilots.