Analysis of Case – Bloomex.
ca Logistics
Optimization
Prof. Debabrata Das
IIM Kashipur
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About the Company
Leading Canadian floral company
Collect orders via call center & online storefront
How are they different from others?
Same-day delivery to almost any location in Canada
Photo delivery confirmation
Fresher flowers that last longer in a vase
Lower price than a typical flower deliver service
100% satisfaction guaranteed
Orders can be placed 24 hours a day
Chat with a live agent
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Transhipment Demand Centers
Grower
Centers 381
1,050 191
30 171
Unlimited 64
127
100
184
Ontario to Florida ??? 64
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Map of Canada
5
Map of USA and Canada
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Shipping Costs
Growing points to transhipment centers
Transhipment Center
Grower (shipping cost in Canadian dollar per
box)
Supply (in box) Ontario Florida Vancouver
1050 SA 14 9 20
30 SEA 35 20 35
∞ Europe 30 15 35
100 Ontario 0 n/a 15
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Shipping Costs
Transhipment centers to demand points
Transhipment Demand Points
Center (shipping cost in Canadian dollar per box)
Ont Van Cal Win Ott Mon Hal
Ontario 0 15 14 13 3.5 3.5 4
Florida 5 10 10 10 7.5 7.5 10
Vancouver 14 0 7 8 14 14 22
Demand
381 191 171 64 127 184 64
(in box)
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Transhipment Demand Centers
Grower
Centers 381
1,050 191
30 171
Unlimited 64
127
100
184
64
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Transshipment Problem
Linear Programming Formulation
Using the notation:
xij = number of units shipped from node i to node j
cij = cost per unit of shipping from node i to node j
si = supply at origin node i
dj = demand at destination node j
continued
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Transshipment Problem
Linear Programming Formulation (continued)
Min cx
all arcs
ij ij
s.t.
arcs out
xij si Origin nodes i
arcs out
xij x
arcs in
ij 0 Transhipment nodes
x
arcs in
ij d j Destination nodes j
xij > 0 for all i and j
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Transhipment Demand Centers
Grower
Centers 381
1,050 191
30 171
Unlimited 64
127
100
184
64
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Shipping Costs
Growing points to transhipment centers
Transhipment Center
Grower (shipping cost in Canadian dollar per
box)
Supply (in box) 5.Ontario 6.Florida 7.Vancouver
1050 1. SA 14 9 20
30 2. SEA 35 20 35
∞ 3. Europe 30 15 35
100 4. Ontario 0 n/a 15
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Shipping Costs
Transhipment centers to demand points
Transhipment Demand Points
Center (shipping cost in Canadian dollar per box)
8.Ont 9.Van 10.Cal 11.Win 12.Ott 13.Mon 14.Hal
5.Ontario 0 15 14 13 3.5 3.5 4
6.Florida 5 10 10 10 7.5 7.5 10
7.Vancouver 14 0 7 8 14 14 22
Demand
381 191 171 64 127 184 64
(in box)
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Objective Function
Minimize Overall Shipping Costs:
Min 14x15 + 9x16 + 20x17 + 35x25 + 20x26 + 35x27
+ 30x35 + 15x36 + 35x37 + 0x45 +1000x46 + 15x47
+ 0x58 + 15x59 + 14x5,10 + 13x5,11 +3.5x5,12 + 3.5x5,13 +4x5,14
+ 5x68 + 10x69 + 10x6,10 + 10x6,11 +7.5x6,12 + 7.5x6,13 +10x6,14
+ 14x78 + 0x79 + 7x7,10 + 8x7,11 +14x7,12 + 14x7,13 +22x7,14
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Constraints
Amount Out of SA: x15 + x16 + x17 < 1,050
Amount Out of SEA: x25 + x26 + x27 < 30
Amount Out of Europe: x35 + x36 + x37 < 10,000
Amount Out of Ont: x45 + x46 + x47 < 100
Amount Through Ont:
x15 + x25 + x35 + x45 = x58 + x59 + x5,10 + x5,11 + x5,12 + x5,13 + x5,14
Amount Through FL:
x16 + x26 + x36 + x46 = x68 + x69 + x6,10 + x6,11 + x6,12 + x6,13 + x6,14
Amount Through Van:
x17 + x27 + x37 + x47 = x78 + x79 + x7,10 + x7,11 + x7,12 + x7,13 + x7,14
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Constraints
Amount into Ont: x58 + x68 + x78 = 381
Amount into Van: x59 + x69 + x79 = 191
Amount into Cal: x5,10 + x6,10 + x7,10 = 171
Amount into Win: x5,11 + x6,11 + x7,11 = 64
Amount into Ott: x5,12 + x6,12 + x7,12 = 127
Amount into Mon: x5,13 + x6,13 + x7,13 = 184
Amount into Hal: x5,14 + x6,14 + x7,14 = 64
Non-negativity of Variables: xij > 0, for all i and j.
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Excel Solver: Shipping Cost
Transhipment Center (TC)
Ontario Florida
Vancouver
(Toronto) (Miami)
Grower (G)
South America 14 9 20
Southeast Asia 35 20 35
Europe 30 15 35
Ontario (Toronto) 0 1000 15
demand Center (DC)
Ontario
Vancouver Calgary Winnipeg Ottawa Montreal Halifax
(Toronto)
Transhipment Center
Ontario (Toronto) 0 15 14 13 3.5 3.5 4
Florida (Miami) 5 10 10 10 7.5 7.5 10
Vancouver 14 0 7 8 14 14 22
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Excel Solver: Transhipment Model
Transhipment Center (TC)
Ontario Florida Supply at
Vancouver
(Toronto) (Miami) Growers
Grower (G)
South America 0 0 0 0 <= 1050
Southeast Asia 0 0 0 0 <= 30
Europe 0 0 0 0 <= 10000 "unlimited" supply
Ontario (Toronto) 0 0 0 0 <= 100
Inflow to TC 0 0 0
demand Center (DC)
Ontario Outflow Inflow to
Vancouver Calgary Winnipeg Ottawa Montreal Halifax
(Toronto) from TC TC
Transhipment Center
Ontario (Toronto) 0 0 0 0 0 0 0 0 = 0
Florida (Miami) 0 0 0 0 0 0 0 0 = 0
Vancouver 0 0 0 0 0 0 0 0 = 0
Inflow to DC 0 0 0 0 0 0 0
= = = = = = =
Demand 381 191 171 64 127 184 64
Total Shipping Cost 0
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Q1. What the cost and savings would be if Miami
(Florida) were opened as a transshipment center. What
shipment plan would be optimal?
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Excel Solver: Solution
Transhipment Center (TC)
Ontario Florida Supply at
Vancouver
(Toronto) (Miami) Growers
Grower (G)
South America 345 705 0 1050 <= 1050
Southeast Asia 0 0 0 0 <= 30
Europe 0 32 0 32 <= 10000 "unlimited" supply
Ontario (Toronto) 100 0 0 100 <= 100
Inflow to TC 445 737 0
demand Center (DC)
Ontario Outflow Inflow to
Vancouver Calgary Winnipeg Ottawa Montreal Halifax
(Toronto) from TC TC
Transhipment Center
Ontario (Toronto) 381 0 0 0 0 0 64 445 = 445
Florida (Miami) 0 191 171 64 127 184 0 737 = 737
Vancouver 0 0 0 0 0 0 0 0 = 0
Inflow to DC 381 191 171 64 127 184 64
= = = = = = =
Demand 381 191 171 64 127 184 64
Total Shipping Cost 18503.5
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Q2. There would be occasions when it is possible to source
additional flowers from some of the growing locations.
What would be the gain from finding additional supply (and how
much supply?)
What might be the best location from which to acquire an
additional supply of flowers, assuming flower prices are similar
at various sources?
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Excel Solver: Sensitivity Report
Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$20 South America 1050 -6 1050 32 705
$E$21 Southeast Asia 0 0 30 1E+30 30
$E$22 Europe 32 0 10000 1E+30 9968
$E$23 Ontario (Toronto) 100 -20 100 32 100
$I$29 Ontario (Toronto) Outflow from TC 445 -20 0 32 705
$I$30 Florida (Miami) Outflow from TC 737 -15 0 32 9968
$I$31 Vancouver Outflow from TC 0 -25 0 32 0
$B$32 Inflow to DC Ontario (Toronto) 381 20 381 705 32
$C$32 Inflow to DC Vancouver 191 25 191 9968 32
$D$32 Inflow to DC Calgary 171 25 171 9968 32
$E$32 Inflow to DC Winnipeg 64 25 64 9968 32
$F$32 Inflow to DC Ottawa 127 22.5 127 9968 32
$G$32 Inflow to DC Montreal 184 22.5 184 9968 32
$H$32 Inflow to DC Halifax 64 24 64 705 32
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Q2. Answer:
For each additional unit of supply that would be available in South
America, the cost will decrease by CAD 6. This relationship will
hold for up to 32 additional units.
For each additional unit of supply that would be available in
Toronto, the cost will decrease by CAD 20. This relationship will
hold for up to 32 additional units.
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Thank You !!!
Contact:
[email protected]
