A note on centralised decision making and the role played by 4PL providers.
The other day while taking the case study of Kimberly Clarke and their vendor managed inventory programme in US for the senior PGDBM students at XIME, we had an interesting suggestion/observation coming from the students side that centralised inventory management is more efficient than decentralised inventory management. Indeed, it has been proved in literature that centralised inventory management is more efficient than decentralised ones. In fact, my thesis had some bearings on how centralised decision making will make an inventory system more efficient and lead to cost reduction. It is basically because in decentralised systems, the independent entities upstream and downstream, often under different management control will be working at optimising their local costs than optimising the supply chain costs.
Optimising the entire supply chain costs would entail some entities incurring higher costs for the sake of the whole supply chain, which would not happen in the case of decentralised networks. But how can different entities working at cross purposes of local optimisation work for the overall benefit of the entire supply chain ?
It is in this context that we discussed about an external entity who co-ordinates the functions of the different players in the supply chain.We have the different third party logistics providers who perform the different functions for the organisation like transportation, warehousing, IT etc.. The fourth party who co-ordinates all these functions for the organisation, in turn acts like a centralising authority overseeing the different functions of the organisation being implemented by again different entities, we call this centralising authority the fourth party logistics provider.
In short, the fourth party logistics provider acts as an integrator of multiple 3PL providers. This integration is not only across one organisation function, but multiple functions across multiple organisations. The 3PL provider is thus able to integrate functions for the organisation at a higher level. The organisation benefits from the 4PL provider not only from the higher level integration and aggregation which is provided to the organisation, but also from the superior learning and implementation the 4PL player has across different similar or dissimilar organisations.
george..
Tuesday, April 1, 2008
Thursday, March 13, 2008
Revenue management assignment I, March 14, '08
1. a.
Devan airlines flies its passengers on Boeing 737, 200 seater capacity, from Bangalore to Pune at a cost price of 1500 per seat. It charges rs. 2500 per seat. The cost of providing a backup in case of overbooings showing up is Rs. 3500 per seat. If the cancellations follow a normal distribution with mean of 24 and variance of 25, find the optimal overbookings on a flight on the said route to maximise revenue in the long run.
b. If the CEO decides to find the effect of reducing and increasing the selling prive per ticket in steps of Rs 250, keeping the backup price same, how does it affect the optimal overbooking level.
c. The CEO decides to talk to friendly airlines and get better deals to fly overbooked passengers. Help him to get th effect of increase and decrease of backup costs in steps of rs.250 upto a max of 4500 and min of 2500.
d. Since ompetition is brewing up, the steady flow of pasengers is affected and the variance of cancellations is found to decrease during new year season to 12 and during lean seasons of March - May to 50. Fnd the opt overboooking levels in the new scenario.
2. Qantas operates from Melbourne to Hongkong on a daily basis it's A320 aircraft with 200 seats on board at $500 for a business class ticket and $ 230 for an Economy class ticket. Find out the capacity to be kept aside for the luxury traveller if this demand is normally distributed with a mean of 85 and a variance of 40 ( ~N(85,40)). Find the total revenue from this cost pattern for the airlines for each fully booked non-stop flight.
If the CEO decides to reduce the luxury class cost to $450, ( app same demand distribution as the $500 demand),calculate the capacity for each segment and the total revenue for a fully booked flight.
The CEO decides to introduce a deluxe class at $ 800, demand for which is ~N(35,20), what is the revised capacity of the three segments ( the total seats are reduced to 170 to facilitate better comfort for the deluxe class passenger) and the resulting total revenue for a fully booked flight.
3. The postponements ( one postponement possible per passenger ticket) for the daily Air Deccan flight from Bangalore to Kochi ( ATR , max capacity of 100) on any week day is found to be N(12,10). The cost to the company for flying a passenger is Rs 500 while it charges Rs. 800/- (besides the airport tax of Rs 1400). Any overbooked customer showing up is accommodated on Indigo Air at Rs 3500/= (incl. airport tax of Rs.1400). Find the no. of tickets which need to be overbooked to ensure maximum revenue for Air Deccan.
On weekends the cancellations reduce and is ~ N(8,9). Find the opt. no of over bookings to be done on weekends by Air Deccan.
4. Hotel Leela Palace Kempinski, Bangalore, the No 1 business Hotel in the world has total 250 rooms. There are 10 luxury suites kept aside for VVIPs each costing Rs 20000 per night. The economy rooms are priced at Rs 5000 per night while the business class rooms are available at rs 9000 per night. Find the no of rooms to be set aside for the economy customer and the business customer if the demand for business class is ~N(40,25).
The economy rooms were going vacant on some of the days and hotel GM decides to introduce a super economy class of rooms at Rs 3000 per night for the holiday traveller to maximise revenue. If the demand for the economy class at Rs 5000/= is ~N(105,22), find the new capacity segregation for the different customer segments in the hotel.
5. The ABC shoe shop buys 400 pairs of Nike shoes in bulk from Metro at rs.800 per pair. They sell it to customers over a two month period at the end of which it is disposed. The demands at different prices during the different weeks are as given below.
Week 1-2, 2500 - 1.5*p_i,
week 3-4, 2500 - 1.6*p_i,
week 5-6, 2500 - 1.8*p_i,
week 7-8, 2500 - 2*p_i
How should the ABC stores vary the price of the shoes over the two months to maximise revenue. If the retailer charges a fixed price over the two months, what should it be? How much gain in revenue results from dynamic pricing?
(to be submitted by 19 march '08)
Devan airlines flies its passengers on Boeing 737, 200 seater capacity, from Bangalore to Pune at a cost price of 1500 per seat. It charges rs. 2500 per seat. The cost of providing a backup in case of overbooings showing up is Rs. 3500 per seat. If the cancellations follow a normal distribution with mean of 24 and variance of 25, find the optimal overbookings on a flight on the said route to maximise revenue in the long run.
b. If the CEO decides to find the effect of reducing and increasing the selling prive per ticket in steps of Rs 250, keeping the backup price same, how does it affect the optimal overbooking level.
c. The CEO decides to talk to friendly airlines and get better deals to fly overbooked passengers. Help him to get th effect of increase and decrease of backup costs in steps of rs.250 upto a max of 4500 and min of 2500.
d. Since ompetition is brewing up, the steady flow of pasengers is affected and the variance of cancellations is found to decrease during new year season to 12 and during lean seasons of March - May to 50. Fnd the opt overboooking levels in the new scenario.
2. Qantas operates from Melbourne to Hongkong on a daily basis it's A320 aircraft with 200 seats on board at $500 for a business class ticket and $ 230 for an Economy class ticket. Find out the capacity to be kept aside for the luxury traveller if this demand is normally distributed with a mean of 85 and a variance of 40 ( ~N(85,40)). Find the total revenue from this cost pattern for the airlines for each fully booked non-stop flight.
If the CEO decides to reduce the luxury class cost to $450, ( app same demand distribution as the $500 demand),calculate the capacity for each segment and the total revenue for a fully booked flight.
The CEO decides to introduce a deluxe class at $ 800, demand for which is ~N(35,20), what is the revised capacity of the three segments ( the total seats are reduced to 170 to facilitate better comfort for the deluxe class passenger) and the resulting total revenue for a fully booked flight.
3. The postponements ( one postponement possible per passenger ticket) for the daily Air Deccan flight from Bangalore to Kochi ( ATR , max capacity of 100) on any week day is found to be N(12,10). The cost to the company for flying a passenger is Rs 500 while it charges Rs. 800/- (besides the airport tax of Rs 1400). Any overbooked customer showing up is accommodated on Indigo Air at Rs 3500/= (incl. airport tax of Rs.1400). Find the no. of tickets which need to be overbooked to ensure maximum revenue for Air Deccan.
On weekends the cancellations reduce and is ~ N(8,9). Find the opt. no of over bookings to be done on weekends by Air Deccan.
4. Hotel Leela Palace Kempinski, Bangalore, the No 1 business Hotel in the world has total 250 rooms. There are 10 luxury suites kept aside for VVIPs each costing Rs 20000 per night. The economy rooms are priced at Rs 5000 per night while the business class rooms are available at rs 9000 per night. Find the no of rooms to be set aside for the economy customer and the business customer if the demand for business class is ~N(40,25).
The economy rooms were going vacant on some of the days and hotel GM decides to introduce a super economy class of rooms at Rs 3000 per night for the holiday traveller to maximise revenue. If the demand for the economy class at Rs 5000/= is ~N(105,22), find the new capacity segregation for the different customer segments in the hotel.
5. The ABC shoe shop buys 400 pairs of Nike shoes in bulk from Metro at rs.800 per pair. They sell it to customers over a two month period at the end of which it is disposed. The demands at different prices during the different weeks are as given below.
Week 1-2, 2500 - 1.5*p_i,
week 3-4, 2500 - 1.6*p_i,
week 5-6, 2500 - 1.8*p_i,
week 7-8, 2500 - 2*p_i
How should the ABC stores vary the price of the shoes over the two months to maximise revenue. If the retailer charges a fixed price over the two months, what should it be? How much gain in revenue results from dynamic pricing?
(to be submitted by 19 march '08)
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