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‹#› Het begint met een idee
CHAPTER 6 – DISTRIBUTION AND TRANSPORTATION IN A
SUPPLY CHAIN
Dung H. Nguyen
Faculty of International Economic Relations
University of Economics and Law

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Vrije Universiteit Amsterdam
 Distribution
 Transportation
CONTENTS
CONTENTS
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Vrije Universiteit Amsterdam
ROLE OF DISTRIBUTION
ROLE OF DISTRIBUTION
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Steps to move and store a product from a supplier stage to a
customer stage
 Drives profitability by directly affecting supply chain cost and the
customer value
 Choice of distribution network can achieve supply chain objectives
from low cost to high responsiveness

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FACTORS INFLUENCING DISTRIBUTION NETWORK DESIGN
FACTORS INFLUENCING DISTRIBUTION NETWORK DESIGN
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 Distribution network performance evaluated along two dimensions:
1. Value provided to the customer
2. Cost of meeting customer needs
 Evaluate the impact on customer service and cost for different
distribution network options
 Profitability of the delivery network determined by revenue from
met customer needs and network costs

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Vrije Universiteit Amsterdam
FACTORS INFLUENCING DISTRIBUTION NETWORK DESIGN
FACTORS INFLUENCING DISTRIBUTION NETWORK DESIGN
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 Service factors
o Response time
o Product variety
o Product availability
o Customer experience
o Time to market
o Order visibility
o Returnabilty
 Cost factors
o Inventory
o Transportation
o Facilities and handling
o Information

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Vrije Universiteit Amsterdam
MANUFACTURER STORAGE WITH DIRECT SHIPPING
MANUFACTURER STORAGE WITH DIRECT SHIPPING
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
MANUFACTURER STORAGE WITH DIRECT SHIPPING AND IN-TRANSIT MERGE
MANUFACTURER STORAGE WITH DIRECT SHIPPING AND IN-TRANSIT MERGE
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
DISTRIBUTOR STORAGE WITH CARRIER DELIVERY
DISTRIBUTOR STORAGE WITH CARRIER DELIVERY
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
DISTRIBUTOR STORAGE WITH LAST-MILE DELIVERY
DISTRIBUTOR STORAGE WITH LAST-MILE DELIVERY
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
MANUFACTURER OR DISTRIBUTOR STORAGE WITH CUSTOMER PICKUP
MANUFACTURER OR DISTRIBUTOR STORAGE WITH CUSTOMER PICKUP
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
RETAIL STORAGE WITH CUSTOMER PICKUP
RETAIL STORAGE WITH CUSTOMER PICKUP
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
ROLE OF TRANSPORATION
ROLE OF TRANSPORATION
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The physical movement of materials between points in the supply
chain
 Transport principles:
o Economy of scale
o Economy of distance
 Transportation members:
o Shippers and Consignees
o Carriers and Agents
o Owners and operators of transportation infrastructure
o Transportation policy makers

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Vrije Universiteit Amsterdam
RELATIONSHIPS BETWEEN TRANSPORTATION AND LOGISTICS
RELATIONSHIPS BETWEEN TRANSPORTATION AND LOGISTICS
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 Transportation costs and facility locations
 Inventory requirements and transport mode
 Transport mode and packaging
 Type of carrier and material handling equipment
 Shipment consolidation and shipment size
 Customer service goals and type/quality/service of carrier

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Vrije Universiteit Amsterdam
TRANSPORT RATE AND TARIFF
TRANSPORT RATE AND TARIFF
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 Transport rate
 Tariff
 Minimum charge
 Surcharge
 Commodity
 Freight-All-Kind (FAK)
 Demurrage
 Detention

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Vrije Universiteit Amsterdam
MODES OF TRANSPORT
MODES OF TRANSPORT
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 Air
 Package carrier
 Road
 Rail
 Water
 Pipeline
INTER-MODAL – MULTI-MODAL

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Vrije Universiteit Amsterdam
ATTRIBUTES AFFECTING THE CHOICE OF TRANSPORT MODE
ATTRIBUTES AFFECTING THE CHOICE OF TRANSPORT MODE
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 Cost
 Speed
 Reliability
 Capability
 Capacity
 Flexibility
 Value of materials
 Importance
 Security
 Special facilities available

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Vrije Universiteit Amsterdam
CONTAINER & ULD
CONTAINER & ULD
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Cont. Type
Avg Tare
Weight (tons)
Avg Max
Weight (tons)
Avg Max
Cargo
Avg Max
Volume (cbm)
45 HC 4.2 28.0 23.8 85.0 45’ x 8’ x 9’6” 13.5 x 2.4 x 2.8
40 HC 3.7 27.0 23.3 75.0 40’ x 8’ x 9’6” 12 x 2.4 x 2.8
40 DC 3.5 27.0 23.5 67.0 40’ x 8’ x 8’6” 12 x 2.4 x 2.5
20 DC 2.4 21.0 18.6 33.0 20’ x 8’ x 8’6” 6 x 2.4 x 2.5
Dimension (LxWxH)
Feet - Meter
Source: vietnamairlines

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Vrije Universiteit Amsterdam
DIRECT SHIPMENT NETWORK TO A SINGLE DESTINATION
DIRECT SHIPMENT NETWORK TO A SINGLE DESTINATION
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
DIRECT SHIPPING WITH MILK RUNS
DIRECT SHIPPING WITH MILK RUNS
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
ALL SHIPMENTS VIA INTERMEDIATE CENTER WITH STORAGE/CROSS-DOCKING
ALL SHIPMENTS VIA INTERMEDIATE CENTER WITH STORAGE/CROSS-DOCKING
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
SHIPPING VIA DC USING MILK RUNS
SHIPPING VIA DC USING MILK RUNS
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Source: Chopra and Meindl (2016)

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Vrije Universiteit Amsterdam
INTRODUCTION TO LINEAR PROGRAMING – EXERCISE 1
INTRODUCTION TO LINEAR PROGRAMING – EXERCISE 1
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A model consists of linear relationships representing decisions, given
an objective and resource constraints
Product
Labor
(hr./unit)
Clay
(kg/unit)
Profit
($/unit)
Bowl 1 4 40
Mug 2 3 50
40 hrs of labor available per day
120 kgs of clay
Resource Requirements

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Vrije Universiteit Amsterdam
MODEL (EXERCISE 1)
MODEL (EXERCISE 1)
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 Decision variables
 Objective function
 Constraints

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Vrije Universiteit Amsterdam
EXERCISE 2
EXERCISE 2
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A retailer ships smartphones from three warehouses to three stores on a
monthly basis. Each warehouse has an amount of supply per month, and
each store has a fixed demand per month. The retailer wants to know the
number of smartphones to ship from each warehouse to each store in order
to minimize the total cost of transportation.
Warehouse Supply (units)
1 300
2 200
3 200
Store Demand (units)
A 150
B 250
C 200
From warehouse A B C
1 $16 $18 $11
2 $14 $12 $13
3 $13 $15 $17
To store

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Vrije Universiteit Amsterdam
EXERCISE 3
EXERCISE 3
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A retailer ships smartphones from three warehouses to three stores on a
monthly basis. Each warehouse has a fixed supply per month, and each store
has a fixed demand per month. However, each warehouse does not need to
ship smartphones to all three stores per month. Please find the number of
smartphones to be shipped from warehouses to stores in order to minimize
the total cost of transportation.
Warehouse Supply (units)
1 150
2 175
3 275
Store Demand (units)
A 200
B 100
C 300
From warehouse A B C
1 $6 $8 $10
2 $7 $11 $11
3 $4 $5 $12
To store

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Vrije Universiteit Amsterdam
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)
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Source: Chinneck (2000)

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Vrije Universiteit Amsterdam
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Source: Chinneck (2000)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)

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Vrije Universiteit Amsterdam
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Source: Chinneck (2000)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)

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Vrije Universiteit Amsterdam
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Source: Chinneck (2000)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)

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Vrije Universiteit Amsterdam
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Source: Chinneck (2000)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)

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Vrije Universiteit Amsterdam
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Source: Chinneck (2000)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)
EXERCISE 4 (THE SHORTEST ROUTE PROBLEM)

32.
‹#› Het begint met een idee
CHAPTER 6 – DISTRIBUTION AND TRANSPORTATION IN
A SUPPLY CHAIN
THANK YOU!