OPERATIONS MANAGEMENT

Operations Management

Operations Management

Case 2

Japanese Warehouse Cities

 

 

European Location

4.Adachi

5. Ota

6. Edagawa

Supply

Total

1. Hamburg

0

37

0

37

37

2. Marseilles

0

0

28

70

28

3. Liverpool

0

55

0

55

55

Shipped

0

92

28

 

 

 

Japanese Warehouse Cities

 

European Location

4.Adachi

5. Ota

6. Edagawa

1. Hamburg

430

380

550

2. Marseilles

500

580

460

3. Liverpool

450

360

480

Distribution Center

Warehouse

7.Himeji

8. Matsudo

9.Adach

Total

4.Adachi

0

0

0

0

5.Ota

7

40

45

92

6. Edogawa

28

0

0

28

Distribution center demand

35

40

45

 

Shipped

35

40

45

 

Distribution Center

Warehouse

7. Himeji

8. Matsudo

9.Adach

4.Adachi

75

63

75

5.Otawa

100

110

95

6. Edogawa

68

90

95

 

$

Total Cost

58019

Analysis

The situation at hand is that there are three warehouses in Europe's namely: Hamburg, Marseilles and Liverpool. The three distribution centers supply the goods to the ports in Japan named; Adachi, Ota and Edagawa. These ports than send the goods to the distribution centers; Himeji, Matsudo and Adach, who dispatch the final goods to the retailers. The purpose of these calculations was to determine the lowest and most optimum transportation model for the distribution of these goods.

Using the minimum cost method, the costs are allocated to the cells with the minimum cost (Paul et.al, 2011). In the first table, the total supply available is 162,000 kg whereas the demand for the distribution centers is 120,000 kg. In order for the shipments to be optimum the lowest cost of dispatch from the Hamburg warehouse is to the port of Ota for $380 per 1000 kg. The warehouse of Hamburg has a total capacity of 37,000 kgs and the minimum cost can be utilized from there. So in the first part the port of Ota has been supplied the units and the capacity of Hamburg is utilized fully.

This leaves the supplier with the port of Adachl and Edagawa and they have the supply of the port of Marseilles has to be utilized, but one of the ports capacity has to be left out as the supply is more than demand. The cost of supplying from Marseilles is higher in comparison to the other warehouses. However the cost of supplying at Edagawa is lower than the other warehouses and the capacity of 28,000 kg is utilized as the port of Adachi has to be supplied with the stock. The cost at the Adachi port is lower than Edagawa, so more of the units will be allocated to that port.

The remainder supply left is 55,000 kg, and that can only be supplied from the port of Liverpool as it has the total required capacity. Again, keeping the lowest capacity and cost in mind these units will be allocated to the port with the lowest cost. The port with the lowest cost is the port of Ota with $360 per 1000 kg.

Logically, the minimum cell cost method gets the lowest cost as the cost is allocated to the cell with the minimum cost. This method is better than the other methods when it comes to getting to the lowest cost. The method gets the closest estimate to the most optimum solution. The allocation is done to the most feasible port with the least coast and the requirements are adjusted accordingly.

The port of Ota has the most units with a total of 92. The maximum of the available units is allocated to the distribution centre of Adach as it has the lowest cost and it is given the maximum units ...