IEE 535

Deliverable 4
LOCAL DISTRIBUTION STRATEGY
- TEAM 5

Where we stand ?
Located the Distribution Centers.
Analyzed the optimal inventory policy for each
of the
distribution centers.
Deducted the port allocation and importing
decisions.

Local Distribution strategy

Dynamic Routing problem due to sequential
demand.
A system that dynamically allocates the servers
to its demand is required.

Proposed System
The vehicles begin at the distribution centers and wait for a demand to be realized.
Once the demand is realized, a vehicle is sent to satisfy the demand and it stays at the last
zipcode and waits for a call from the LDC about the next demand point. Every car driver
keeps satisfying demands until all the batteries it is carrying are exhausted or all its
demand points are met.
At the instant when another demand is realized, we have to make a decision as to whether
the demand will be satisfied by the vehicle which is already at a demand point or if we will
send another vehicle form the distribution center.
This decision is made based on the nearest location to the demand point. The distance from
the demand point to the distribution center and the distance between the demand point
and the free vehicle is calculated and the nearest one is assigned a demand point.
The customer is lost if all the vehicles are busy or if the nearest vehicle is found to be a
vehicle which is still in service and the waiting time is more than 10 mins.

No. of vehicles Required ?

M/M/c Queue

The
routing system is then modeled as an M/M/c queue , where c is the
number of vehicles we use per day. Where , Service rate =
Arrival rate = =
No of cars needed

1.050881024

L
#Utilization >=
100%
#Utilization >=
100%
#Utilization >=
100%

Lq
#Utilization >=
100%
#Utilization >=
100%
#Utilization >=
100%

W
#Utilization >=
100%
#Utilization >=
100%
#Utilization >=
100%

Wq
#Utilization >=
100%
#Utilization >=
100%
#Utilization >=
100%

0.046362 0.01471

3.152643072

0.046362 0.01471

1.576321536

0.046362 0.01471

0.046362 0.01471

P(wait)

Utilization

3.15264307

1.57632154

1.05088102

0.788160768

5.293038339

2.140395267

114.1666211

46.1666211

0.575288 0.78816077

0.046362 0.01471

0.630528614

3.623021645

0.470378573

78.14569118

10.14569118

0.275628 0.63052861

0.046362 0.01471

0.525440512

3.285603137

0.132960065

70.86784269

2.867842695

0.120085 0.52544051

0.046362 0.01471

0.450377582

3.191546262

0.03890319

68.83911081

0.839110813

0.047476 0.45037758

0.046362 0.01471

0.394080384

3.163729634

0.011086562

68.2391283

0.239128305

0.017046 0.39408038

0.046362 0.01471

0.350293675

3.155648952

0.00300588

68.06483445

0.064834446

0.005575 0.35029367

0.046362 0.01471

10

0.315264307

3.153411143

0.000768071

68.01656667

0.016566671

0.001668 0.31526431

Distribution Center

No. of Vehicles Required

New York

Chicago

Philadelphia

Los Angeles

San Francisco

Simulation
We have simulated this model using EXCEL to get a fair idea of the demand
points that we can cover on a particular day and to determine of the vehicle is
sent from the depot or the vehicle in transit.
The simulation was considered for the new york distribution center for the
daily demand of one type of battery, with the following parameters :
Service rate = 1/71
Arrival rate = 0.421

Distribution Cost
Vehicle : Toyota Tacoma
Cost of the vehicle = $16000 * 6 = $96,000
Fuel Cost per vehicle per day = $15 per vehicle per day
Total fuel cost = 15*6*300 = $27,000
Cost of labor = $25000 * 6 = $150,000
Total distribution cost at Chicago distribution center = $273,000

QUESTIONS?