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    LSCM - Assignment 2

    Uploaded by

    Ankit Kumar Singh
    The drivers chose a decentralized strategy with deferred payment, allowing them freedom in ordering quantities and not requiring upfront capital investment. The average total profit over each two-month period for drivers and cargo was $223.589. Under centralized optimization, the total profit would be $38,379, higher than the actual decentralized amount. Centralized decision making leads to higher accuracy and profits but lower driver satisfaction due to less freedom and potential capital requirements, while decentralized has more driver satisfaction but lower efficiency and profits.

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    LSCM - Assignment 2

    Uploaded by

    Ankit Kumar Singh
    277 views3 pages
    The drivers chose a decentralized strategy with deferred payment, allowing them freedom in ordering quantities and not requiring upfront capital investment. The average total profit over each two-month period for drivers and cargo was $223.589. Under centralized optimization, the total profit would be $38,379, higher than the actual decentralized amount. Centralized decision making leads to higher accuracy and profits but lower driver satisfaction due to less freedom and potential capital requirements, while decentralized has more driver satisfaction but lower efficiency and profits.

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    optimization case

    Original Title

    LSCM- Assignment 2

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    The drivers chose a decentralized strategy with deferred payment, allowing them freedom in ordering quantities and not requiring upfront capital investment. The average total profit over each two-month period for drivers and cargo was $223.589. Under centralized optimization, the total profit would be $38,379, higher than the actual decentralized amount. Centralized decision making leads to higher accuracy and profits but lower driver satisfaction due to less freedom and potential capital requirements, while decentralized has more driver satisfaction but lower efficiency and profits.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    277 views3 pages

    LSCM - Assignment 2

    Uploaded by

    Ankit Kumar Singh
    The drivers chose a decentralized strategy with deferred payment, allowing them freedom in ordering quantities and not requiring upfront capital investment. The average total profit over each two-month period for drivers and cargo was $223.589. Under centralized optimization, the total profit would be $38,379, higher than the actual decentralized amount. Centralized decision making leads to higher accuracy and profits but lower driver satisfaction due to less freedom and potential capital requirements, while decentralized has more driver satisfaction but lower efficiency and profits.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    1. What strategy do you think the drivers used to decide what orders to place?

    Comment on
    the choice of the strategy.

    The drivers will choose “Decentralized strategy” with deferred payment agreement. This will
    be beneficial for the drivers in the following ways:
    a) Drivers have full freedom for choosing the quantity to be ordered.
    b) Drivers do not need to make capital investment in purchasing inventory.
    c) They can utilize their knowledge of the kind of products that are selling well in the
    markets they operate

    2. On average what is the sum of profit made by the drivers and the cargo over each two
    -month replenishment period?
    The average of profit made the drivers and cargo over each two-month is $223.589 Total Profit- and
    the total cumulative profit is $37563. Please Refer excel sheet for detailed calculation.

    3. Suppose we are still using the first strategy (i.e. decentralized decisions), but the drivers now
    correctly optimized the quantity to order in each period. What would be the sum of the
    profit made by the Cargo and its drivers over each two-month replenishment period?
    Profit made by the drivers in centralized decision system = $12,313
    Profit made by Cargo in centralized decision system = $26,066
    Sum of profit made by driver & Cargo cumulatively = $38,379

    4. Suppose we are now using second strategy (i.e., centralized decisions) so that Cargo makes
    decisions for each driver in each period to optimize the total revenue earned by the drivers.
    What would be the sum of the profit made by the Cargo and its drivers over each of the
    two-replenishment period?
    Profit made by the drivers in centralized decision system = $39,995

    5. Based on your answers above, write a paragraph summarizing the pros and cons of the
    centralized and decentralized strategy?

    Centralized

    The efficiency of centralized system is higher

    Overall profit in centralized system is more than decentralized system ($39,955 vs $38379)
    Pros

    Higher Accuracy of data forecasting


    Offloading replenishment decision from drivers, would relieve drivers from additional
    burden of demand forecasting
    Con Drivers would be dissatisfied if the freedom of deciding on inventory is taken away from
    s them
    Drivers would be forced to invest capital in buying inventory

    De-centralized
    Pros Drivers can decide on the quantity to be ordered. Hence more satisfaction on the part
    of retailers.

    Low efficiency in supply chain network


    Cons
    Less profit as compared to centralized supply chain

    Less accurate demand forecasting

    6. The tab “Part 1 (forecast model) in the same spreadsheet contains the sales provided by
    Herbacetamol’s manufacturer, and catalogues past Herbacetamol’s sales over a single year
    with hourly granularity. Look at these data and answer the following questions:
    a) Investigate the data contained in this tab. Is there a time of year that Herbacetamol is
    more popular? A day of the day? Is there a trend in sales over time? Do these factors
    depend on one another? Can you come up with explanations for the patterns you
    observe in these data?
    b) How would you build a demand model based on these data that Cargo could use to
    predict future Herbacetamol sales?

    Avg Sales , Weekday


    25

    20

    15 Total

    10

    0
    1 2 3 4 5 6 7

    a) Herbacetamol monthly sales trend is as shown in the curve below:

    Conclusion:
    1. Herbacetamol generally tends to sell well on the 7 th day i.e. on Saturday
    2. From the pivot table in data sheet (Part 1 detailed), we can conclude that Sales in Jan-
    March quarter is higher than other quarters across the years followed by Oct- Dec quarter.
    b) TO BE DONE

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