508-220

Logistics and Supply Chain

Management (LSCM)
by

Asst.Prof.Dr. Sorawit Yaovasuwanchai

International MBA Program
Siam University
Class: August - November 2016

Course Outline
Class Date & Time:
Email:

Every Tuesday night (18.00-21.00) starting at August 16th 2016

yong2happy@gmail.com

Facebook:

Sorawit Yao and Group LSCM@Siam

Textbooks:

PDF files of these textbooks can be downloaded on Facebooks group.

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)

Supply Chain Logistics Management Bowersox 2002

Logistics and SCM Christopher 2011
Handbook of Logistics and Distribution Management Rushton et al 2010
Matching Supply With Demand 2nd Cachon 2009
Transportation A Supply Chain Perspective 7ed Coyle et al 2011
Maritime Economics 3e Martin Stopford 2009
Moving Boxes by Air Morrell 2011
Purchasing and SCM 4th Monczka et al 2009
Warehouse Management Complete Guide to Improving Efficiency & Minimizing Costs
Richards 2011
Production and Operations Management Anil Kumar 2008
Mastering Import & Export Management 2012
CRM Customer Relationship Management Buttle 2009
Handbook of Industrial and Systems Engineering Badiru 2006

Course Description:
The development of logistics system and supply chain to support business strategy of business
organizations by considering activities such as communications, inventory management, warehouse
management, transportation and plant location, analyze the impact of logistics and supply chain on
efficiency of business. http://www.inter.siam.edu/master-degree-program/masters-in-business-administration/curriculum-2/

Learning Objectives:
(1) Students can identify the major activities in logistics and main players in supply chains.
(2) Students can identify the proper methods to solve the relevant problems found in the logistics
activities and faced by main players in supply chains.
(3) Students can provide the detailed steps of those methods identified.

Score Composition (100 marks):

Individual Assignment #1

10

Individual Assignment #2

10

In-Class Participation & Contribution

30

Group Assignment

20

Final Exam (Closed Book)

30

Schedule
Class

Tuesday

Aug 16

Whats Logistics? Whats the Supply Chain? Where are you?

Aug 23

Common Problems in Logistics and SCM

Aug 30

Purchasing and Procurement Part 1

Sep 6

Purchasing and Procurement Part 2

Sep 13

Demand Forecasting

Sep 20

Inventory Management Part 1

Sep 27

Inventory Management Part 2

Oct 4

Risk Pooling

Oct 11

Warehouse Management Part 1

10

Oct 18

Warehouse Management Part 2

11

Oct 25

Transportation Management Part 3

12

Nov 1

Transportation Management Part 1

13

Nov 8

Transportation Management Part 2

14

Nov 15

National Policy in Logistics

15

Nov 22

Supply Chain Integration

16

Topics Covered

* * * Final Examination (Closed Book) * * *

Class2
CommonProblemsinL&SCM
Definition of L&SCM by CSCMP
CSCMP = The Council of Supply Chain Management Professionals
Supply Chain Management encompasses the planning and management of all
activities involved in sourcing and procurement, conversion, and all logistics
management activities. Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries, third party service
providers, and customers. In essence, supply chain management integrates supply
and demand management within and across companies.
Logistics Management is that part of supply chain management that plans,
implements, and controls the efficient, effective forward and reverses flow and
storage of goods, services and related information between the point of origin and
the point of consumption in order to meet customers' requirements.
(http://cscmp.org/aboutcscmp/definitions.asp)

CoylesLogisticsEvolutionaryModel

Mentzers ModelofSupplyChainManagement(2001)

3
http://engsci.aau.dk/kurser/F06/Lscm/Lscm/Lesson%201/DEFINING%20SUPPLYCHAIN%20MANAGEMENT.pdf

TypicalDepartmentsinAManufacturingCompany
ResearchDevelopment(R&D)
EngineeringandTechnical

Purchasing
(Procurement)

Production
Warehouse

Finance&
Accounting

Sale&
Marketing

HR

IT

(Human
Resource)

(Information
Technology)

Distribution

GroupActivity(InClass)
1Group=1Department
Whatare
thecommonlogisticsrelated problems
facedbyeachyellowcoloreddepartment?
Isthisproblemcausedbythisowndepartment
orotherdepartment(s)

AManufacturingCompanywith
2PlantsLocatedinDifferentLocations
Customers

Suppliers
Plant1

Plant2

Whatarethepossibleproblems/challenges
facedbyamanufacturerwith2plants?

WhataretheTypicalDepartmentsin
ATrading Company?
Howabouta ServiceProviderCompany?

Howaboutif
thesecompanieshavemanybranches

ARetailerCompanywith3DCsandManyStores
Stores

Suppliers
DC1
DC1
DC2

Whatarethenew&differentproblemsforthisretailer?

http://www.slideshare.net/boinyc/investmentopportunitiesinautosectorinthailand

SupplyChainofHardDiskinThailand

Whatcouldgowrong
inanysupplychain?

Whatcouldbeaproblem or
challengeforanysupplychain?

Class 3. Purchasing and Procurement Part 1

3.1 (Supplier Selection or Vendor Selection)
If your company needs to use a raw material, say RM1, for 50 ton/months for the next 13
months. Currently, there are 4 suppliers that sell RM1 in the market. When asking people in
your company, it turns out that different people prefer different suppliers. If your
companys procurement policy is to buy RM1 from one supplier only, how would you
systematically select the most appropriate supplier?
3.2 (Centralized vs Decentralized Purchasing)
You have just been promoted to be the new purchasing manager of a big bank which has
more than 300 branches nationwide. For long time, all office supplies (paper, envelope,
pen, printer toner, ink, etc.) are purchased by the head quarter of the bank, and then
distributed to all branches. Each branch is not allowed to purchase anything. Some people
disagree with this method and now ask you to change it. They think that each branch
should be allowed to purchase anything they need. You are forced to decide whether to
change it or not. Please suggest how to analyze this problem step by step so that the proper
decision can be made. Do not decide to change it or not. Explain how to analyze.
3.3 (Sole Supplier vs Multiple Suppliers)
People in your company are fighting about whether buying a raw material, say RM3, from a
single supplier or buying RM3 more than one supplier. Last year, RM3 was purchased from
one supplier but 2 years ago RM3 was purchased from 2 different suppliers. RM3 is costly
and contributes to a large percentage of cost of goods sold. However, it is a nightmare if
there is a shortage of RM3 in the production line. Please suggest how to analyze this
problem step by step so that the proper decision can be made. Do not decide to go with
single supplier or multiple suppliers. Only explain how to analyze it.
3.4 (Global Sourcing and Offshoring Production)
Your company is located in Australia and produces a chemical that are exported to all over
the world. Your company is facing a challenging problem associated with a raw material,
namely RM4. It has been a while that your local suppliers of RM4 increase the price
continuously. However, you just discovered that there is a supplier in China that sells RM4
at the much lower price. (a) Should your company purchase RM4 from this new supplier in
China instead? Moreover, a reliable expert told you that it will be much cheaper for your
company to set up a new plant in China to produce the same chemical, and to export to all
over the world. (b) Should your company move to China instead? Please suggest how to
analyze this problem step by step so that the proper decisions for both (a) and (b) can be
made. Do not decide to buy or not buy from China for (a) and do not decide to move to
China or not (b). But explain in details how to analyze it.

3.5a (Cooperative Purchasing as an SME)

Your company is an SME and buying a raw material from a big supplier, namely BS1.
Unfortunately, BS1 almost has a monopoly in the market of this raw material, and tends to
increase the price constantly. Many of you competitors are asking you to join them to form
a special partnership so that the usage volume of this raw material is large enough so that
the partnership can bargain with BS1 to lower its price. But you need to disclose your
sensitive information to everyone in this partnership. You are not sure whether you should
join this partnership or not. Please suggest how to analyze this situation so that the
decision (of joining or not) can be made. (Source: Ramanathan 2014)
3.5b (Cooperative Purchasing as a big supplier)
You are the CEO of BS1. You heard the news that many of your customers, where most of
them are SMEs, are thinking about joining this partnership in order to force you to lower
your price. You are not sure how to react to the situation. Please develop a set of different
plans to respond to the possible outcomes of this situation.

Class 4. Purchasing and Procurement Part 2

4.1 (Make or Buy Decision)
For many years, your company has bought a raw material, namely RM1, from a supplier,
namely S1. Your company just signed a 3-year contract with a big customer. Because of this
contract, your company needs 200 % more of RM1 for the next 3 years. Some people in
your company think that we should stop buying from S1 and let the production department
produce RM1 instead. You have checked with the production manager and he said that his
department has a capability to produce RM1 if a special machine is purchased.
Please suggest how to analyze this problem step by step so that the proper decision
can be made. Do not decide to make or not to make. Explain how to analyze.

4.2 (VMI = Vendor-Managed Inventory, sometimes SMI = Supplier-Managed Inventory)

VMI is a well-known concept of logistics and supply chain management. When purchasing
raw materials or products from vendors/suppliers, many traditional companies will manage
the inventory of raw materials by themselves, that is, they need to check the inventory
level by themselves periodically. Whenever, the inventory is too low, they need to decide
how many to purchase and when to issue a purchasing order (PO) to vendors so that the
raw materials are delivered and arrive in time. Managing the inventory and purchasing can
consume lot of time and manpower. Therefore, the companies with VMI strategy will allow
their suppliers to manage the inventories for them. Suppliers are allowed to access the
inventory information of the buying companies at real time through internet. When the
inventory is too low, suppliers will immediately replenish with new delivery of raw material
to fill up the inventory. The buying companies do not need to issue any PO to suppliers.
Usually, a buying company and a supplier need to sign a contract together in order to
implement VMI.
Your company has more than 100 suppliers and is now interested in VMI. But dont
know how to start. Please suggest how to start VMI step by step for your company.
4.3 (How any supplier can persuade its customer to implement VMI)
A supplier can reap many benefits from VMI if its customer decides to implement VMI
together. Normally the supplier has to wait until the customer issues a PO to buy a raw
material from the supplier. With VMI, the supplier can see the inventory level of the raw
material at the customers location in real time, and the supplier does not have to wait for
any PO to make a new delivery of raw material.
(1) What are the benefits to the supplier if VMI is implemented?
(2) Suppose a supplier has requested to a customer to implement VMI together, but it
turned out that the customer rejected the request. How the supplier can persuade the
customer to implement VMI?

4.4 (Supplier Co-location)

Supplier co-location is a more advanced version of VMI. Here, a customer trusts a supplier
so much that the customer allows some staff of supplier to work full-time at the customers
location. This staff has his or her own room and computer facility, and has an access into
more detailed information in the customers database system. This staff has a responsibility
in managing the inventory at the customers location.
Fresh Chic is a manufacturer of frozen chicken and has sold its products to a big
hotel namely Holiday Sin for almost 15 years. 10 years ago both parties started
implementing VMI. About 3 years ago co-location was implemented. Peter is just newly
employed by Fresh Chic but his office is at Holiday Sin. Because his duty is to manage the
inventory of all chicken purchased from Fresh Chic and used by Holiday Sin. Someone told
him that the person who formerly worked in his position unexpectedly resigned.
(1) You are the purchasing manager of Holiday Sin. What can you do to make sure
that Peter will work for the full benefits of Holiday Sin?
(2) You are the CEO of Fresh Chic. What can you do to make sure than Peter will
work for the full benefits of Fresh Chic?
(3) You are Peter. One day the CEO of Fresh Chic asked you to make decisions in the
favor of Fresh Chic. The CEO promised a big bonus to you if you can perform.
Another day the purchasing manager of Holiday Sin asked you to make decision
in the favor of Holiday Sin. The manager also promised a one-year hotel benefit
(e.g. free room and buffet) if you can perform. What would you do?

Class 5. Demand Forecasting

5.1 The production department of your company is planning for the quantity of 3 specific
raw materials that are required for production in the next year. The monthly quantities
used in the past 3 years are given below. With this information, please suggest to the
production department how to forecast all 3 raw materials for the next year.

Month
1
2
3
4
5
6
7
8
9
10
11
12

Raw Material 1
2013
28
21
22
20
25
28
26
30
27
25
30
25

Year
2014
21
24
27
24
21
29
29
21
23
25
21
29

2015
21
24
22
24
28
22
22
25
24
23
25
28

Month
1
2
3
4
5
6
7
8
9
10
11
12

Month
1
2
3
4
5
6
7
8
9
10
11
12

Raw Material 2
2013
34
33
37
35
33
36
33
37
40
43
38
37

Raw Material 3
2013
44
37
32
14
35
40
51
39
72
78
75
62

Year
2014
42
44
36
19
40
53
64
55
74
89
95
74

2015
63
55
47
28
48
62
83
58
98
106
108
91

Year
2014
44
46
42
48
40
47
43
49
48
53
45
52

2015
50
48
53
53
56
58
58
53
57
56
61
62

5.2Yourcompanyproducesandsellsgoldnecklaces.Thesalemanagercomestoseeyou
andshowyoutheinformationofannualsaleofYear14asinthetablebelow.

Year1
Year2
Year3
Year4
AnnualSale(UnitsSold)
3500
5000
6500
6000

SomeonealsogivesyoutheinterestrateduringfromYear15,whichare7.75,6.25,5.5,
5.75,and6,respectively.CanyouhelpthesalemanagerforecasttheannualsaleofYear5?

5.3 How could these companies/organizations do in order to obtain the following

information?

1 Amanufacturerofcannedsoup
Anewrecipetobesoldinthenextyear
2 Amanufacturerofcannedsoup
Howmanyunitsofcurrentrecipetobesoldin
thenextyear
3 AgarmentcompanyproducingTshirt HowmanyunitsofthenewmodelofTshirtto
produceineachsize:S,M,L,XL.
4 AgarmentcompanyproducingTshirt There are 12 different colors but have to
chooseonly4colorsforthenewmodel.Which
colorsshouldbechosen?
5 Agovernment
Thebenefitsanddisadvantagesofconstructing
aseaporttoallstakeholders
6 Agovernment
Publicopiniononincreasingtaxes
7 AnAustralianbank
Thebenefitsanddisadvantagesofsettingupa
newoverseabranchinChina
8 AnAustralianbank
Thelevelofcustomersatisfactionofthebanks
services

5.4ATVmanufacturer,namelyJamjung,isintheprocessofdesigninganewTVmodelthat
is expected to be sold all over the world. The company is thinking about implementing a
market survey using questionnaires in many countries. What are the important factors of
successful market survey for the company? In other words, what should be done so that
thecompanycanhavethemorereliableandaccurateresultsfromthemarketsurvey?

Class 6. Inventory Management Part 1

6.1 Cycle Counting/Perpetual Counting, and Annual Full Stock Counting
Please suggest how these companies implement their stock counting. How frequent should
they count (daily, weekly, and monthly) and how many items (all items, some items, few
items) should be counted at a time?
- A convenient store like 7-Eleven
- A gold store
- A large warehouse of a factory with more than 10,000 items

6.2 EOQ = Economic Ordering Quantity

John lives in an apartment. And he drinks 9 liter of beer daily. He does not go out of his
apartment much so the only way for him is to make an order by telephone to the beer
shop. It takes just less than 5 minutes until the order is delivered to his door (probably the
beer shop is very close to his apartment). However, the beer shop will charge him 20
dollars/order for a delivery of no matter how big or small the order is. He has a very big
(unlimited capacity) but old refrigerator/fridge and always keeps all his beers in the fridge.
He is good in accounting and he found that it costs him 1 dollar for electricity to keep 1 liter
of beer in a fridge for a day. It is now 5 am in the morning and he has no beer left in his
fridge. He is planning about how to make orders for the next 7 days. Please help him decide
how much beer he should order each time and how many times he should order so that he
has his beer for the next 7 days and pay the least total cost (total cost = delivery cost +
electricity cost)
6.3 Re-order Point and Safety Stock/Buffer Stock
Peter is a friend of John and Peter lives in a mountain far away from the city. And he also
drinks lots of beer daily. Some days he drinks 6 liters. Some days he drinks up to 8 liters.
Once he makes an order to the beer shop. Sometimes it takes 5 days until the order is
delivered to his house in the mountain. Some other times it takes up to 7 days until the
order arrives. Since he lives far away from the city, the beer shop requests him to make an
order of at least 200 liters in every order he makes. So in every time he makes an order, the
ordering quantity is always 200 liters. Please suggest when Peter should make an order to
the beer shop, that is, Peter should make an order when his beer stock decreases to how
many liters?

Class 7. Inventory Management Part 2

7.1 Lead Time Reduction
When lead time is reduced, the inventory and work-in-process (WIP) will also reduce. In
Case No. 6.3, what will Peter do if the beer shop takes only 2 days to deliver an order to
him. Yes, he will have less inventory of beer. Please suggest any possible idea to the
following departments/companies/organizations about how they can reduce their lead
time.
1. How can a production department reduce the production time of a product?
2. How can a bank reduce the waiting time of customers waiting for service?
3. How can a construction company reduce the time in constructing a building?
4. Suppose a buying company also buys a raw material from a supplier? How can this
buying company reduce their time and effort in managing the inventory of this
raw material and purchasing this raw material from the supplier?
5. Mary does not have time to buy grocery so when she has time to visit a
supermarket, she usually buys a large quantity of stuff she needs. How can Mary
reduce the quantity she buys?
6. How can 7-Eleven reduce their time in distributing goods to most branches that
are located in heavily congested city areas.
7.2 Lot Size Reduction/Small Batch Scheduling/Just in Time (JIT)
When lot size or batch size is reduced, the inventory and work-in-process (WIP) will also
reduce. A family of 5 people buying 10 eggs/day and another family of 5 people buying 70
eggs/week: which family will probably have the less egg inventory? Please suggest any
possible idea to the following departments/companies/organizations about how they can
apply the concept of lot size reduction. What are benefits? And what are the difficulties or
disadvantages in doing so?
- A university
- A mobile phone manufacturer
- 7-Eleven
7.3 Newsvendor Problem (Newsboy Model)
Salar store sells many fashion items. Salar has to order these
items many months in advance of the fashion season in order to
get a good price on the items. Salar is now planning to buy a lady
casual dress like in a photo from a manufacturer in China. Each
unit of this dress costs Salar $100. This dress will be sold to
customers at a price of $250 per unit. If there is any remaining
unit that cannot be sold during the season it can ALWAYS be sold
to the outlet store at $80 per unit. If the store runs out of this
dress during the season it has to obtain this dress from an
alternative supplier and the cost is higher, which is $190 per
unit. Salar wants help in deciding how many units of this dress to
order in advance. Can you help?

7.4 MRP = Material Requirement Planning

Source: Buzzle.com

Situation 1
A bicycle manufacturer, iBike, is planning to assemble 10 bicycles on April 30. Suppose iBike
now already has the inventory of all parts in the photo. But iBike does not have any
inventory of tires at the moment. iBike usually buys tires from a tire manufacturer namely
Bigstone. The lead time given by Bigstone is 2 days. What date should iBile place an order
to Bigstone and how many units of tires?
April
Ordering Quantity (units)
Required Quantity (units)

27

28
20

29

30
20

Situation 2
iBike is planning to assemble 10 bicycles on April 25, and 20 bicycles on April 30. iBike now
already has the inventory of all parts in the photo except tires. Suppose Bigstone requests
that the minimum size of an order is 30 tires. A delivery fee of 250 dollars/order will be
charged to iBike. Also, it costs iBike 1 dollar/night to keep a tire in the warehouse overnight.
The lead time given by Bigstone is still 2 days. How many orders should iBike place to
Bigstone, and what is the quantity of each order(s)?
Solution 1:

April
Ordering Quantity (units)
Required Quantity (units)
Inventory Quantity (units)
Delivery Fee (dollars)
Inventory Cost (dollars)

Solution 2:

April
Ordering Quantity (units)
Required Quantity (units)
Inventory Quantity (units)
Delivery Fee (dollars)
Inventory Cost (dollars)

22

23

24

25

26

27

28

29

30

Total Cost

22

23

24

25

26

27

28

29

Total Cost

30

Class 8. Risk Pooling

8.1 Postponement, Product Delayed Differentiation
Riverpool and Arsene are two famous football teams in UK. Both teams have their shops
selling shirts in London. Shirts are printed with different numbers. Each number belongs to
a different player of a team. Usually shirts with the number belong to famous players of a
team are in higher demand. Riverpool shop will have different quantity of finished shirts
already printed with different numbers. Arsene shop has a different strategy. Arsene shop
only has blank unfinished shirts. When customers come to the shop and buy shirts,
customers must choose the number, then the chosen number will be printed on a blank
shirt.
Compare the benefits and disadvantages of the strategies of the shops of both teams.

Another example of Postponement: Color Mixing Machine

8.2 Product Pooling

A bed manufacturer, namely iBed, is specialized in producing all types of bed and has been
in this business for more than 25 years. Now iBed is thinking about making a new product
that has never been made before. It is the sofa bed. That is, it is a bed that can be
transformed into a sofa. Or it is a sofa that can be transformed into a bed.
What are the benefits for iBed if sofa beds are produced?
And what are the challenges or difficulties to do so?

8.3 Location Pooling

Peter has a mobile shop on the 1st floor of MBK, a big shopping mall in Bangkok. Mark also
has a mobile shop on the 3rd floor of MBK. Peter and Mark never knew each other before
until just recently that they became good friend through someone. Now Peter proposes to
Mark that both of them should join their inventory of mobile phones together. Suppose a
customer of Peter wants a model of mobile phone but Peters shop does not have it but
Marks shop has it. Mark will always give the model to Peter so that Peter could sell it to his
customer. This proposal is just like combining 2 stores into one shop with 2 branches.
If you are Mark, will you accept the proposal? Why? Or why not?
What are the reasons behind your answer?

Class 9. Warehouse Management Part 1

9.1 Zone Picking and Order Picking
Amason.com has a warehouse for storing many products. When a customer places an
order, one picker is assigned to pick all product items of that order (so-called Order
Picking). Suppose an order consists of 5 items. A picker assigned to pick all these 5 items
may have to walk inside the warehouse like in this photo. Order picking is currently the way
this warehouse operates.

Photos modified from

"Integral Warehouse Management"
By Jeroen P. Van Den Berg on Page 70-71.
Access online at
https://books.google.co.th/books?id=
NileTsN6SJgC

Picker

But Johnson suggests that this warehouse should change to Zone Picking. That is, 4 aisles
(or 4 lanes) are divided into 2 zones. One picker is assigned to pick any item in only one
zone. The photo below assigns 1 picker to 2 aisles. So there are 2 pickers and 4 orders to
pick. Each picker picks any item of 4 orders that is located only in his or her zone. Once all
items are picked, these items will be consolidated and sorted according to each order by
another worker, namely Sorter. Do you believe Johnson and change to zone picking? Why?

Sorter

9.2 Order Batching (Single Order Picking vs Batch Picking)

Here we focus on order picking. That is, one picker is assigned to pick all items in an order.
But in some situation one picker could be assigned to pick 2 or more orders together at the
same time. For example, there are 2 orders as in the photo below. If we let one picker to
pick only one order, it is called Single Order Picking. Therefore, we need to 2 pickers for
this photo.

However, if we assign one picker to pick both orders, this is called Batch Picking. Then we
need only 1 picker for this photo. However, when this picker finishes the picking, all picked
items must be consolidated and sorted according to each order (this is not necessary for
single order picking.).

Consolidate & Sort

Do you think that single order picking better than batch picking? Why or why not?

9.3 Design of Aisles and Blocks in a Warehouse

Michael is designing the layout of a warehouse. He now has 2 different designs as shown in
the photos below. Both designs have only one gate which is located at the same position
(marked as depot in the photos). Gate is used for moving goods into and out of the
warehouse. Which design is better in your opinion and why?
Design 1
1 block
10 locations/block
20 x 8 = 160 locations
8 main aisles
1 rear aisle
0 cross aisle
1 front aisle

Rear Aisle

Front Aisle

Design 2
2 blocks
3 locations/rear block
5 locations/front block
16 x 8 = 128 locations
8 main aisles
1 rear aisle
1 cross aisle
1 front aisle

Rear Aisle

Cross Aisle

Front Aisle

Photos drawn by Interactive Warehouse http://www.roodbergen.com/warehouse/index.php

Class 10. Warehouse Management Part 2

10.1 Fixed Location System vs Random Location System
In a warehouse, there are 2 ways to assign locations to products. Fixed location system is to
prepare a specific location (or a specific group of locations) to be used for storing a specific
product in advance. This product must be stored at this pre-assigned location only.
Random location system is to store any product to any location that is appropriate at the
time when a product arriving the warehouse.
The first picture is to keep different parts on a shelf that has many slots. In random location
(left), parts can be stored at any slot/location. Different parts can also be stored together at
the same slot. In fixed location (right), a specific part must be stored at the pre-assigned
slot.

Photo from "Reinventing the Warehouse: World Class Distribution Logistics" by Roy L. Harmon on Page 130.
Access online at https://books.google.co.th/books?id=sbjxauoU918C

The second picture is to keep different products in a warehouse that has many locations. In
random location (left), different products can be stored at any location. In fixed location
(right), a specific product must be stored at the pre-assigned location.

A
B

Random Location
C
aisle
A
D
B
A
B
C

B
D
B

A
A
B
B

A
A
B
B

Fixed Location
aisle
C
C
D
D

Please compare the advantages and the disadvantages of both systems?

C
C
D
D

10.2 FIFO (First In First Out)

In a warehouse, it is best that items of any product are moved into and out of the
warehouse in the FIFO fashion. This way, the older items will be used or move out of the
warehouse before the newer items. FIFO is critical for products that are prone to fast
expiration or short shelf life such as food or drug. But it is common that items that come
first are usually stored at the inner most of the location or the deepest location of a tank or
box or container like in the following photo. And LIFO (Last In First Out) is naturally
practiced instead.

Based on your experience or your creativity, please suggest how to make FIFO happen in
any warehouse, store, shop, or shelf.

10.3 Warehouse Layout

The following photos show 3 different types of warehouse layout.
Type 1. Receiving gate and shipping gate are on the different side of warehouse.
Shipping Gate

Receiving Gate

Type 2. Receiving gate and shipping gate are on the same side of warehouse but next to each other

Receiving Gate

Shipping Gate

Type 3. There is only one gate in the warehouse used for both receiving and shipping

Gate

In general, some products or items are moved into and out of the warehouse more frequently than other
products. Therefore, if all items can be categorized into 3 groups: fast movers, medium movers, and slow
movers, how should each group be assigned to which locations in each type of warehouse layout?

Class 11. Transportation Management Part 1

11.1 Fixed Route System
A fish sauce manufacturer, namely FS, has 3 trucks with equal capacity. One driver is always
assigned to one truck. FS has about 150 customers in Bangkok and nearby provinces. FS
currently applies the fixed route system in delivery operation. That is, 150 customers are
divided in 15 routes (R1-R15). There are 10 customers per route. FS operates 5 days/week,
i.e., Monday to Friday. The table shows the fixed schedule for all trucks. For example, on
every Thursday Truck 2 will deliver to only customers on Route 11.

Day Truck 1
Mon
R1
Tue
R4
Wed
R7
Thu
R10
Fri
R13

Truck 2 Truck 3
R2
R3
R5
R6
R8
R9
R11
R12
R14
R15

(1) What are the advantages and disadvantages of the fixed route system?
(2) If you can change anything, what will you change so that FS may improve its delivery
operation?

11.2 Point-to-Point System vs Hub-and-Spoke System

A company has 7 factories located in different cities in Thailand. Every day the company has
to move finished goods or raw material among these factories. At present, the company is
using the point-to-point system. For example, in order to move things from Factory E to A,
the company will use one truck from E to A. The company will always use one truck if there
is a need to move things from one factory to another factory.

Some people suggest that the company should apply the hub-and-spoke system instead.
For example, let the factory G become hub and the other factories are spokes. To move
things from E to A, there will be one truck that moves things from Factory E to Factory G
first. Then, there will be another truck that moves things from Factory G and also from
other factories (if there is any) to Factory A. With this new system, there will be no truck
traveling between spokes. There are only trucks that travel between one hub and all
spokes.

Please compare the advantages and disadvantages of both systems, and suggest the
appropriate system to the company.

11.3 Lane and Temporal Imbalance (Source: Logistics Engineering Handbook by G. Don Taylor 2007)
Liners own and operate containerships (big ships that carry many containers, travel through
the ocean, and visit many seaports). Airlines bring both passengers and cargoes travel
through the sky. Both liners and airlines face the problem of imbalance in freight and
passenger flow.

A route for a liner traveling North-Bound from Surabaya (Indonesia) to Vostochniy (Russia)

Lane imbalance happens when the amount of cargo/passenger from the origin to
destination is much more than the amount from the destination to origin, or vice versa
(Taylor, 2007). That is, the freight flow or the passenger flow from A to B is so much
different from the flow from B to A. Liners traveling between China and USA will find that
the freight flow from China to USA is much more than the freight flow from USA to China as
China exports more products to USA.
Temporal imbalance happens when the amount of cargo/passenger from the origin
to destination increases significantly during some period and reduces significantly during
some period (Taylor, 2007). During winter, more people from Europe travel to Thailand.
And less Thai people travel to Europe. During summer, less people from Europe travel to
Thailand. Fruit products also cause temporal imbalance. Passenger flow also changes during
the week or even during the day (as more people travel in the morning and evening.)
When there is an imbalance, liners and airplanes may have to travel with little
revenue in the lane that has less freight and passenger flow. The revenue could be less than
the operating cost during some period.
Please suggest how liners and airplanes can reduce the effect of lane and temporal
imbalance. In other words, how can they keep balance between both lanes? Or what can
they do so that the flow of freight and passenger does not change significantly as time
changes.

Class 12.Transportation Management Part 2

12.1 Traveling Salesman Problem (TSP)
Today Leo is responsible to deliver small packages to 39 customers as shown in the photos
below. Black dots are the locations of all customers. The black box is the location of his
company. He must depart from his company and visit all customers, then come back to the
company. Please help him find the route so that the total distance that Leo travels is
minimal. What method that you use to find the route for Leo. (There are 4 similar photos
for you to experiment with your different methods.)

Photo source: Dry, M., Lee, M. D., Vickers, D., and Hughes, P. Human performance on visually presented travelling salesperson problems with
varying numbers of nodes. The Journal of Problem Solving 1, 1 (2006), 2032.
http://docs.lib.purdue.edu/cgi/viewcontent.cgi?article=1004&context=jps

12.2 Vehicle Routing Problem (VRP)

A company, namely 3X, is located at the center of the city (shown as the square box in the center of the
picture below). Today, 3X has to deliver its products to 14 customers shown as circles. 3X has to deliver the
different number of boxes to each customer (shown as different values inside each circle.) Suppose a truck
can carry up to 10 boxes. And you are the only truck dispatcher of 3X. Please suggest 3X:

how many trucks required for today, and

which truck carries which customers boxes, and
what is the route or the sequence of customers in each truck?
what method that you use to find the routes of all trucks so that the total distance travelled by all
trucks are as low as possible.

There are 4 similar photos that you can try and play with your methods

Class 13. Transportation Management Part 3

13.1 Route Planning
AAA is a manufacturer of a
chemical located in Korat
(Nakornrachasima) province. For
many years, AAA has exported
the chemical to a customer VVV
which has a factory in Hanoi, the
north of Vietnam.
Currently, road transport is used
to send the chemical from AAA
to VVV by crossing the border
between Thailand and Laos (at
Mukdahan/Savannakhet) and
crossing the border between
Laos and Vietnam (at
Dandawanh/Lao Bao).
Image: http://www.nittsu.co.th/services/trucking-services#tab-thai-laos-vietnam

Next year, VVV will open another

factory at Ho Chi Minh city
located at the south of Vietnam.
And VVV also wants AAA to send
the chemical to the factory at Ho
Chi Min city too in the next year.
Question:
How would you plan to send the
chemical to both factories? Will
you still do cross border by
truck? Will you cross Cambodia?
Or will you fly? Or will you go to
the ocean? Or what will you do?

13.2 Design of Distribution Network

A retailer company has 2 distribution centers (DC). The company has 3 big suppliers and
thousands of small suppliers. The company has 100 retail stores nationwide. Currently, the
company has different methods of distribution in different suppliers as follows.
Supplier
Sup 1
Sup 2
Sup 3
Small suppliers

Current Methods
All products of Supplier 1 (or Sup 1) will be sent to DC1 only. Then DC1
has to distribute the products of Sup 1 to all 100 stores.
All products of Sup 2 are sent to both DCs. DC1 will then send the
product of Sup 2 to 50 stores. DC2 also sends the product of Sup 2 to
the other 50 stores.
60% of all products of Sup 3 are sent to both DCs, and each DC is
responsible for 50 stores. 40% of all products of Sup 3 are sent directly
from Sup 3 to all stores, i.e., not passing any DC.
Each small supplier has to send their products to either DC1 or DC2.
Then each DC will send their products to all stores.

People are complaining that different methods in different suppliers are so confusing and
difficult to manage. How would you change the way this retailer company manage the
distribution network?

13.3 Extension of Fleet Size vs Outsourcing

A manufacturer of electrical appliances, namely Toshibo, has a fleet of 20 trucks that are
used for delivering products to customers. Next year many people believe that Toshibo will
have more customers. Therefore 20 trucks may not be enough. But some people do not
believe so and say that 20 trucks will be enough. These are some solutions suggested by
different people in Toshibo regarding this issue.
1. Buy new trucks: some people suggest that Toshibo should invest in some new trucks.
2. Outsource when required: some people suggest that when 20 trucks are not enough,
Toshibo can hire another transport company or sub-contractor to help in delivery.
3. Sell all trucks and implement 100% outsource: some people go to the extreme by
suggesting that Toshibo should let a logistics company be responsible for 100% of all
delivery activities. And all trucks Toshibo currently has could be sold.
What are the advantages and disadvantages of these 3 solutions?
In which situation that a solution is probably better than another solution?

Class 14. National Policy in Logistics

14.1 Number of licensed transport operators in a country
In most countries, national regulators, such as Ministry of Transport or Department of
Transport, have a main responsibility to control the number of licensed transport operators
such as airlines and truckers (the companies that operate trucks and provide the delivery
service). Why the number of licensed operators must be controlled? What will happen if
there are too many licensed operators? Or too few licensed operators?
14.2 Construction planning of transportation infrastructure
In your opinion, between these 2 opinions, which one is correct?
Demand for goods comes first, then roads are built or ships set sail.
Road are built first (or ships travel first), then demand for goods come later.
When constructing a road from a city to another city, should we build 2-lane roads or 4-lane
roads? When building a seaport, should we construct a port with 20 berths or a port with
50 berths? When governments need to decide to construct an infrastructure, they have 2
options.
Option A: to construct in a single large and complete project, or
Option B: to construct in many small incremental projects.
Compare the advantages of both options.
14.3 Port Privatization
Seaports in some countries are still operated by governments or authorities. Most countries
usually have only 1 or 2 main seaports sometimes called as container terminals. Recently,
many ports around the world have been privatized and concessions are granted to public
companies that are port operators. Some of top port operators in the world are PSA
International (Singapore), Hutchison Port Holdings (Hong Kong), APM Terminals
(Scandinavia), DP World (Dubai), and China Merchants Holdings International
As a small developing nation, it is better to privatize its seaport and grant concessions
to foreign big companies or not? Discuss the advantages and disadvantages of privatization.
14.4 Expropriation
Constructing a transport infrastructure such as road and port requires large area of land.
Expropriation is the act of taking of privately owned land by a government to be used for
constructing roads and ports. Most countries have the expropriation law. Do you agree
with this law? What are the advantages and disadvantages of expropriation?
will be your answer if you sit in that car?

Class 15. Supply Chain Integration

15.1 Teamwork in a department
How could you build teamwork in your department? What are enablers for teamwork?
15.2 Integration with all departments in a company
How could you integrate all functions or all departments in a company?
What are enablers for a fully integrated company both vertical and horizontal?

Source: Christopher (2011) Logistics and Supply Chain Management

15.3 Integration between 2 companies

How could you integrate your company with a customer?
How could you integrate your company with a supplier?
What are enablers for successful relationship between you and your partner?
The Prisoners Dilemma (penalty options years in jail)

15.4 Supply Chain Integration

How could you integrate every party in your supply chain starting from the suppliers of
your suppliers up to the customers of your customers?

SCOR Model (Supply Chain Operations Reference Model)