ISyE 3103B – Fall 2001
Supply Chain Modeling: Logistics
Prof. John Vande Vate
Practice Exam 1 (September 25, 2001)
- Answer TRUE or FALSE for each of the following questions :
a) Customer service improves as a result of higher inventory levels.
b) Freight forwarders typically do not own their own transport fleet.
c) The objective of a logistics system is to minimize transportation costs.
d) Purchasing policies of a company do not affect transportation costs.
e) When regular fluctuations are observed in demand data, one must always adjust for seasonality in the exponential smoothing method to forecast demand.
f) The overall cost to a company to airfreight goods is always more than the cost to send goods on any other mode of transport.
g) Inland waterways are not navigable at all times of the day and year.
- Briefly explain why hub-and-spoke networks are used for LTL transportation.
- What mode of transport (truck, rail, air or ocean freight), and why, would you use to ship :
a) Electronic chips from Taiwan to the US ?
b) Fertilizer from Little Rock, AR to Boise, ID ?
c) Crude oil from Saudi Arabia to Norfolk, VA ?
d) T-shirts from Long Beach, CA to retail outlets in MA ?
e) Grain from Des Moines, IA to Atlanta, GA ?
- The Ace Trucking Company must determine the number of drivers and trucks to have available on a weekly basis. The standard schedule has drivers departing on pickup and delivery routes on Monday and returning on Friday. The trucking requirements can be determined from the total volume to be moved during the week. To be useful, however, Ace must know this volume one week in advance. The volume for the last 10 weeks was:
Week / Volume (1,000’s of lbs) / Week / Volume (1,000’s of lbs)
10 weeks ago / 2,056 / 5 weeks ago / 2,268
9 / 2,349 / 4 / 2,653
8 / 1,895 / 3 / 2,039
7 / 1,514 / 2 / 2,399
6 / 1,194 / 1 (this week) / 2,508
a) Provide the forecast for the next 2 weeks for each of the following (see the following pages)
i) Simple exponential smoothing
ii) Simple trend model
b) Which of these models is most appropriate? Why?
Level Only
TIME SERIES FORECASTING
Curve fitting and model validation
MODEL TYPE: Level only
Level sm. const. = .01
Prd Period Sea-
no. label------Actual Forecast Trend sonal Error
5 6 1,194.00 1,953.40 1.00 -759.40
6 5 weeks ago 2,268.00 1,945.80 1.00 322.20
7 4 2,653.00 1,949.02 1.00 703.98
8 3 2,039.00 1,956.06 1.00 82.94
9 2 2,399.00 1,956.89 1.00 442.11
10 1 (this week) 2,508.00 1,961.31 1.00 546.69
THE FORECAST
MAD = 476.22 BIAS = 223.08 RMSE = 528.72
The forecasts for periods 11 and 12 are:
Period Forecast
11
12
What would be the forecast for period 12 if the actual demand in period 11 is 2662 units?
Period Forecast
12
Simple Trend Model
TIME SERIES FORECASTING
Curve fitting and model validation
MODEL TYPE: Trend
Level sm. const. = .40 Trend sm. const. = .01
Prd Period Sea-
no. label------Actual Forecast Trend sonal Error
5 6 1,194.00 1,713.96 -3.42 1.00 -519.96
6 5 weeks ago 2,268.00 1,502.55 -.36 1.00 765.45
7 4 2,653.00 1,808.37 3.02 1.00 844.63
8 3 2,039.00 2,149.24 2.58 1.00 -110.24
9 2 2,399.00 2,107.72 3.74 1.00 291.28
10 1 (this week) 2,508.00 2,227.98 4.86 1.00 280.02
THE FORECAST
MAD = 468.60 BIAS = 258.53 RMSE = 539.30
The forecasts for periods 11 and 12 are:
Period Forecast
11
12
What would be the forecast for period 12 if the actual demand in period 11 is 2662 units?
Period Forecast
12
- BMW manufactures Z3’s at their plant in Greer, SC. From the parking lot at the plant, car haulers (several of them a day) transport finished vehicles to the port of Savannah, GA – a trip that takes about 5 hours. An ocean vessel arrives at Savannah once a week to pick up vehicles and take them to the port of Bremerhaven, Germany. This journey takes 2 weeks. The necessary paperwork is completed at the port and then the vehicles are driven to a large stockyard located a few miles away. Car haulers arrive at the stockyard at regular intervals and haul the cars away for final delivery to various dealer sites across Europe.
Starting from the time that finished vehicles roll off the assembly line in Greer to the time that they are delivered to the dealers, list all the costs that BMW incurs. Which of these costs do you think would form the largest component of total cost ?
- Dow Chemicals Inc. has just proposed a contract with your trucking company. They will offer you exclusive transportation privileges for one of their products, and at favourable rates. Would you accept the contract right away ? If yes, why ? If no, what factors would you consider before accepting or rejecting the contract ?
- A company uses a load driven system to distribute customized products in a pure pull manner. (The products are made to order and so are destined for a specific customer when they are made). It distributes the goods in truckload quantities of 500 units from 4 plants to 10 wholesale outlets. The average time on the road from plant to wholesale outlet is 3 days. The company produces 500,000 units per year with an average value of $1,000 each. Inventory carrying costs are calculated at 30% of the value of the goods per year. State clearly all the assumptions that you make in getting the answer.
a) What is the carrying cost for pipeline inventory in the system including products on the road and at the plants awaiting shipment ?
b) Routing all shipments to its wholesale outlets through a single crossdock increases the average time on the road (excluding time spent at the crossdock) to 4 days. What effect will this have on the carrying cost for pipeline inventory (including product on the road, at the crossdock and awaiting shipment at the plants) ?