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Milliken Asia

Milliken Asia. Presented by Christina Jones & Rajani Shenoy Arvind Ganesan, Siddharth Gudal, Tarun Keswani, Clarence Wardell. Agenda. Overview & Assumptions Case 1: Current Demand Case 2: Current Forecasted Demand Conclusions. Company Overview.

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Milliken Asia

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  1. Milliken Asia Presented by Christina Jones & Rajani Shenoy Arvind Ganesan, Siddharth Gudal, Tarun Keswani, Clarence Wardell

  2. Agenda • Overview & Assumptions • Case 1: Current Demand • Case 2: Current Forecasted Demand • Conclusions

  3. Company Overview • One of the largest privately held textile and chemical manufacturers in the world • Located in Spartanburg, SC • Milliken Chemical, a division of Milliken & Company, makes hundreds of products and colorants for paint, petroleum, plastics, textiles, fibers, and other manufacturing processes. www.milliken.com

  4. Project Overview • Milliken’s chemical division is looking to expand their warehousing in the Asia – Pacific Region • Where should warehouses be located in order to support customers in this region, with respect to: • Reduction of Lead Time for product delivery to the customer • Reduction of Overall Costs to Milliken, and consequently costs incurred by the customer

  5. Project Overview • Divide the problem into four independent sub-problems, two will be discussed: • Case 1: 2005 “Current Demand” • Demand currently served out of temporary warehouses in Asia-Pacific Region • Case 2: Forecasted “Current Demand” • 2010 Forecast for demand currently served out of temporary warehouses in Asia-Pacific Region

  6. Set of Potential WHs • Demand at each Point • Distance btw/ WH & Point • Number of Warehouses to open (1, 2, 3, 4, or 5) • Assume unlimited capacity warehouses • Given inputs find optimal warehouse locations that minimize total distance traveled by products • Determine resulting lead times from warehouse to demand point, given optimal locations • Determine Inventory Requirements at each warehouse (Pipeline, Cycle, Safety) • Where and how many warehouses should Milliken open? Process Inputs Optimization Analysis Conclusions

  7. Potential Warehouse Locations • Assume port cities are potential warehouse locations • Singapore • Busan, S. Korea • Bangkok, Thailand • Kaohsiung, Taiwan • Shanghai, China • Hong Kong • Port Klang, Malaysia • Guangzhou, China • Beijing, China • Jakarta, Indonesia • Melbourne, Australia • Manila, Philippines • Pasir Gudang, Malaysia • Seoul, S. Korea • Taipei, Taiwan • Johor Darul, Malaysia Note: No Potential Warehouses in India (due to restrictions) and Japan (due to high costs)

  8. Map of Potential Warehouse Locs

  9. How Many Warehouses? • Assume that Milliken will: • Open no more than 5 Warehouses in Asia • Reposition currently operated, but not-owned, warehouses • Assume that new warehouses will not be constrained by capacity

  10. Demand at Each City • Demand in 14 Countries / Regions • Japan, Korea, Taiwan, Thailand, China, Malaysia, Australia, Hong Kong, India, Indonesia, Philippines, New Zealand, Vietnam, & Fiji • Data received for 2005, YTD 2006, and Forecasted 2010 • Aggregate demand over city & product • Case 1: 2005 • Case 2: 2010

  11. Distance Traveled • For each Demand Point and Potential Warehouse: • Determine Latitude & Longitude for each city • Calculate great arc distances between two points

  12. Facility Location Problem • Locate warehouses such that Total Distance weighted by Demand Volumeis minimized • Satisfy capacity and demand constraints • Do not exceed max number of warehouses allowed

  13. Problem Formulation Subject to: Minimize total distance where:

  14. Safety Stock • Sensitivity Analysis: Service Levels 80%, 90% , 99% • Average Daily Demand – shifted from demand points to assigned Warehouses • Standard Deviation in Daily Demand • Average Lead Time from Spartanburg to opened Warehouse Locations • Standard Deviation in Lead Time (10% Variance assumed) Case 4

  15. Cycle Stock and Pipeline Inventory • Fixed Shipment Cost of $3,000 • Net Weighted Unit Inventory Cost of $2.194 • Holding Cost – 20% of Net Weighted Unit Inventory Cost • Average coverage of 210 miles per day during transit for calculation of transit times to warehouse locations

  16. Agenda • Overview • Case 1: 2005 Current Demand • Case 2: 2010 Forecasted Demand • Conclusions

  17. Case 1: Current Demand Profile • Korea comprises the most demand with 260,000 units/year • Vietnam is the least with 90 units/year Case 1

  18. Case 1: Map of Demand Points Case 1

  19. Case 1: Optimal Warehouse Location Case 1

  20. Results for One Warehouse Case 1

  21. Results for Two Warehouses Case 1

  22. Results for Three Warehouses Case 1

  23. Results for Four Warehouses Case 1

  24. Results for Five Warehouses Case 1

  25. Pipeline Inventory Case 1

  26. Annual Cycle Stock Case 1

  27. Safety Stock Case 1

  28. Maps Case 1

  29. Maps Case 1

  30. Recommendation • In order to achieve 1 week lead times, must open at least 3 warehouses in Bangkok, Seoul, and Melbourne • Need cost data to formulate final recommendation Case 1

  31. Agenda • Overview • Case 1: 2005 Current Demand • Case 2: 2010 Forecasted Demand • Conclusions

  32. Case 2: Forecasted Demand Profile • Korea comprises the most demand with 297,000 units/year • Vietnam is the least with 135 units/year Case 2

  33. Case 2: Map of Demand Points Case 2

  34. Case 2: Optimal Warehouse Location Case 2

  35. Results for One Warehouse Case 2

  36. Results for Two Warehouses Case 2

  37. Results for Three Warehouses Case 2

  38. Results for Four Warehouses Case 2

  39. Results for Five Warehouses Case 2

  40. Pipeline Inventory Case 2

  41. Annual Cycle Stock Case 2

  42. Safety Stock Case 2

  43. Maps

  44. Maps

  45. Recommendation • In order to achieve 1 week lead times, must open at least 3 warehouses in Bangkok, Shanghai, and Melbourne • Need cost data to formulate final recommendation Case 2

  46. Agenda • Overview & Assumptions • Case 1: Current Demand • Case 2: Current Forecasted Demand • Conclusions

  47. Conclusions • Must explore option to open warehouse in India in order to minimize lead times • Consistent warehouse locations in Bangkok, Seoul, Taipei, Melbourne & Johor Darul from 2005 & 2010 • Cost data pending from client to make final recommendations

  48. Questions?

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