Lot Sizing with Multiple Customers Delivered Truckloads Seperately
Annual demand for Large customer, RL = 60
Annual demand for Medium customer, RM = 24
Annual demand for Small customer, RS = 8
Customer specific delivery cost, sL =$ 250
Customer specific delivery cost, sM =$ 250
Customer specific delivery cost, sS =$ 250
Unit Cost, CL = $ 10,000.00
Unit Cost, CM = $ 10,000.00
Unit Cost, CS = $ 10,000.00
Common delivery cost, S = $ 800
Holding cost, h = 25%
Truck capacity = 12.00
Ship Full Truckloads independently
#
Deliveries Delivery Transport Holding Days of
/year Quantity Cost Cost Total cost Inventory
Large 5.0 12 $ 5,250 $ 15,000 $ 20,250 36.5
Medium 2.0 12 $ 2,100 $ 15,000 $ 17,100 91.25
Small 0.7 12 $ 700 $ 15,000 $ 15,700 273.75
$ 53,050
Your Guess Total Cos $ 155,140
Optimal Solution Cos $ 53,050
Savings from Optimiz $ 102,090
Lot Sizing with Multiple Customers Delivered Optimal Quantities Seperately
Annual demand for Large customer, RL =
Annual demand for Medium customer, RM =
Annual demand for Small customer, RS =
Customer specific delivery cost, sL =
Customer specific delivery cost, sM =
Customer specific delivery cost, sS =
Unit Cost, CL =
Unit Cost, CM =
Unit Cost, CS =
Common delivery cost, S =
Holding cost, h =
Truck capacity =
Ship Optimal Quantities independently
# Deliveries
√((2×60×(800+250))/(0.25×10000))=
/year Delivery Quantity
60/7.10= 8.5×1050=
Large 8.5 7.10
√((2×24×(800+250))/(0.25×10000))=
24/4.49=
Medium 5.3 4.49 5.3×1050=
√((2×8×(800+250))/(0.25×10000))=
8/2.59=
Small 3.1 2.59 3.1×1050=
Your Guess Total Cost $ 155,140
Optimal Solution Cost $ 35,454
Savings from Optimization $ 119,686
60
24
8
250
250
250
10,000
10,000
10,000
800
25%
12.00
Transport Days of
Cost Holding Cost Total cost Inventory
7.10/2×0.25×10000= 21.6
$ 8,874 $ 8,874 $ 17,748
4.49/2×0.25×10000=
$ 5,612 $ 5,612 $ 11,225 34.1
2.59/2×0.25×10000=
$ 3,240 $ 3,240 $ 6,481 59.1
$ 35,454
`
Annual demand for Large customer, RL =
Annual demand for Medium customer, RM =
Annual demand for Small customer, RS =
Customer specific delivery cost, sL =
Customer specific delivery cost, sM =
Customer specific delivery cost, sS =
Unit Cost, CL =
Unit Cost, CM =
Unit Cost, CS =
Common delivery cost, S =
Holding cost, h =
Deliver all customers simultaneously
# Deliveries Delivery
√((2500×(60+24+8))/(2×(800+3×250)))=
/year Quantity
60/8.6=
Large 8.6 6.97
24/8.6=
Medium 8.6 2.79
8/8.6=
Small 8.6 0.93
Your Guess Total Cost $ 136,558
Optimal Solution Total Cost $ 26,702
Savings from Optimization $ 109,856
60
24
8
$ 250
$ 250
$ 250
$ 10,000
$ 10,000
$ 10,000
$ 800
25%
Transport
Cost Holding Cost Total cost
$ 9,044.25 6.97/2×2500= $ 8,707 $ 17,751
8.6×(800+3×250)= 2.79/2×2500=
$ 2,153.39 $ 3,483 $ 5,636
0.93/2×2500=
$ 2,153 $ 1,161 $ 3,314
$ 13,351 $ 26,702
Days of
Inventory
21.2
21.2
21.2
Tailored Deliveries to Customers
Annual demand for Litepro, RL = 60
Annual demand for Medpro, RM = 24
Annual demand for Heavypro, RH = 8
Product specific ordering cost, sL = $ 250
Product specific ordering cost, sM = $ 250
Product specific ordering cost, sH = $ 250
Unit Cost, CL = $ 10,000
Unit Cost, CM = $ 10,000
Unit Cost, CH = $ 10,000
Common order cost, S = $ 800
Holding cost, h = 25%
Deliver to selected subset of customers in each delivery
Step 1: Calculate relative frequency
Step 1 Step 2 Step 3 Step 4
ni ni mi n
Large 8.5 17.3 1 9.37
Medium 5.3 11 1 9.37
Small 3.1 6.3 2 4.68
Calculate costs
Frequency # orders
Optimal multiple /year Order Size Holding
Solution 1/mi n Q Order Cost Cost Total cost
Large 9.37 6.41 $ 9,834.15 $ 8,007.81 $ 17,842
Medium 1.00 9.37 2.56 $ 2,341.46 $ 3,203 $ 5,545
Small 0.50 4.68 1.71 $ 1,171 $ 2,135 $ 3,306
$ 26,693
