IE 1079/2079. Summer Dr. Louis Luangkesorn. Introduction. What is logistics? Course Content. Course structure. Course policies.

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1 Outline University of Pittsburgh June 22, Course What is logistics? focuses on the supply chain of services and products Comparisons IE Supply Chain Analysis - Focuses on production inside plants IE Facility design - Focus on organization of plants This course focuses on activities that occur between operating locations. According to the Council of Logistics Management, logistics is: The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.

2 What this course covers Overview of Review of linear programming Location models Vehicle routing problems Major topics Competitive location models Demand aggregation Hub location Reverse logistics Lectures of main topics Homework Midterm Lectures of major topics done by graduate students in class Material covered by graduate students will be covered on a final Applications Telecommunications Natural reserves Public sector Warehousing Ports... Presentations of case studies/applications by undergraduates Office hours Homework Office Hours - M, W 4:30-5: Benedum Hall lol11@pitt.edu Homework is a mix of written assignments and software Programs must be written alone. You are allowed to consult, but all consultation should be acknowledged in the homework writeup If you need to include code or libraries, identify the source of the code. All code should include comments that describe the code (in english) and identify any relavent source material.

3 Texts 1 Zvi Drezner and Horst W. Hamacher, : Applications and Theory (Springer-Verlag, 2004). Primary text for the course including basic location modeling and most of the major topics. Textbooks Articles Software 2 David Simchi-Levi, Xin Chen, and Julien Bramel, The Logic of Logistics: Theory, Algorithms, and Applications for Logistics and Supply Chain Management, 2nd ed. (Springer, 2004). This covers Vehicle Routing and some Inventory. 3 Andre Langevin and Diane Riopel, Logistics Systems: Design and Optimization, 1st ed. (Springer, 2005). This has material for major topics and case studies. 4 Steven Nahmias, Production and Operations Analysis. Economic Order Quantity from IE 1080/ Journal articles from library for cases Operations Research, Management Science, Interfaces, IIE Transactions Modeling Software LP Alternatives Gnu Linear Programming Toolkit Gnu Math Programming Language Application Programming Interface (C/C++/R) Data set - Pennsyvlania Counties 67 counties County seats used as demand nodes County population is scaled to act as demand Distances between county seats Data files available on website Data based on GIS (PASDA) and Census data (census.gov) Excel Solver Included in Excel Included version limited to 200 decision variables and 100 constraints LINDO/LINGO Trial version available 300 variables, 150 constraints, 30 integer variables Pennsylvania has 67 counties.

4 Why use a modeling language? Advantages of a modeling language Math modeling is a reflection of physical reality. The model is communicating that reality to the person reading it. Reader needs to associate the depiction of the model with reality. Model is used to communicate truth. The description of the model is often enough to provide insight by itself. To be useful, the model has to be communicated to people who know the problem, but NOT math programming. Excel spreadsheets - Opaque, very difficult to debug and to explain C API - Accurate, but unreadable to non-computer programmer Modeling languages both communicate the model and data to the computer/solver and can be explained to subject-matter experts. Algebraic Modeling Languages Presentations: Graduate students Present a lecture on one major topic LINGO AMPL/GMPL GAMS Select from list based on chapters in one of the texts, or suggest a survey paper to cover. Chapters are likely to be split between two students Lecture is 45 minutes in length Consult with professor about lesson plan and objectives Develop and solve three problems for use in homework/final

5 Presentations: Undergraduates A Network of Logistics Research an application from research literature Describe the business/application environment Explain the nature of the problem Describe and formulate the model Describe the data used and the data sources Examine method of analysis Describe how model was used and results 15 minute presentation Logistics decisions may be gropued into several dimensions based on various criteria. Strategic, Tactical, Operational Time frame Resource requirements Level of managerial responsibility Strategic decisions Examples of strategic decisions Long lasting effect on firm span functional areas beyond logistics Logistics network Definition of customer service Customer service objectives Degree of vertical integration and outsourcing Physical network strategy and design Communications and information network

6 Tactical/network decisions Examples of tactical decisions Demand forecasting Decision upated weekly/monthly/quarterly Purchasing and production decisions Inventory policies Transportation strategy Procurement and Supply Strategies Transportation strategies Warehousing Material handling Order processing procedures Product packaging Operational decisions Examples of Operational decisions Day-to-day decisions Characterized by short time frames Scheduling Vehicle routing Order processing and fulfilment Inventory Production

7 What makes logistics difficult? How are logistics problems addressed in practice? Minimize systemwide costs and maintain service levels simultaineously. This becomes more difficult the larger and more complex the system gets. Uncertainty in demand, transportation times, transportation network, availability of resources, production/service times, etc. Repeat what has worked in the past. Rules of thumb Consultants (i.e. what has worked well for a competitor may work for you) Advance Planning Systems (APS) Data entered into databases and reviewed Algorithms applied to data Suggested solution is presented Nature of the Network Nature of the network Nature of facilities Nature of demand Objective and setting Planer vs Network vs Discrete location Tree vs General graph Distance metric

8 Nature of Facilities Nature of demand Number of facilities Capacitated or uncapacitated Nearest facility or general fulfillment allocation Heirarchal or single-level Desirable or undesirable Deterministic or probabalistic Single or multiple products Elastic or inelastic Objective and setting Static or dynamic Single or multiple objective Private or public sector