Economic Order Strategy in Dining Service Distribution Center

Qian Zhang Qiuyue Zhao

Problem Definition

S2

S1

S3

S4

S5

S6

Dining Hall -1

Dining Hall-2

Dining Hall-3

Problem Definition

Transportation Cost

Holding Cost

Perish Cost

Location of Suppliers

Inventory Level

Product life

Product Price

Objective

• Minimize total cost

• How much to order from which supplier

• Tracing the inventory of product from

certain supplier at time t

• Check how much product DC dump at

time t

Assumption• DC only order once in a certain time period• All the products delivered from DC until all the

orders arrived• Frequency of product delivered from DC to dining

halls in a certain period is known• The shortage for DC is not allowed• The holding cost for each kind of product is same• One supplier can provide multiple types of

products

Model

Parameter

Psk Price of the kth type of product by the sth Supplier

H Holding cost per product

Rs Transportation cost per truck of the sth Supplier

askt =1, if product k shipped by supplier s expires at time t

0, otherwise

Bs Truck transportation capacity of supplier s

Dkt Demand for product k at time t

Fsk Supply capability of supplier s for product k

Model

Variables

Qsk quantity of product k ordered from supplier s

Xskt inventory of product k from supplier s at time t

Yskt how much we use product k from supplier s to

satisfy demand in time t

Zskt amount we dump of product k from supplier s

at time t

Is times of delivered trucks

Model

Objective Function

skts k t

CH H X s k t

Min C CH CP CT

sk skts t

CP P Z k

s sCT R I s

skk

ss

QI

B s

Model

Constrains

Satisfy demand

Inventory balance

Minimize perish

Supply capability

Initial inventory

skt kts

Y D

, 1skt skt skt sk tX Y Z X

*(1 )skt skt sktZ X M a

sk skQ F

1sk skX Q

Model

Data Collection

• H=$0.08• P

• B

10

P1 P2 P3

S1 1.3 2.6 3.4

S2 1.8 2.3 3.2

S1 S2 S3 S4

B 150 170 200 210

• At time t1

11

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10

S1 0 0 0 100 0 2260 0 0 0 1690

S2 3000 100 1800 18 0 0 2720 0 2052 0

S3 0 0 0 1452 210 0 540 4798 0 0

Data Collection

Result

S2S1 S3 S4 S5 S6

P1 P2 P3 P4 P5

P6 P7 P8 P9 P10

100

2260 1690

3000 100 1800 18

2720

2052

1452 210

540 4798

2000 5100 1141 150

500 301 48

1230

400500

2000

570

Products

Suppliers

Thank you!