Transportation & Logistics Overview

TRANSPORTATION & LOGISTICS MANAGEMENT 1
COMPANY OVERVIEW
 Established in the year 1937 by Dr. Prabhat Chandra Chakroboty at 34
alipore road . The firm after granted drug license was named “Mendie
Pharmaceuticals works “ after Mendine the first product of the firm.
 Gradually firm evolved into into a partnership compny having four
partners , in 1975 company was converted into Private Limited company
and renamed as “ Mendine Pharmaceuticals Pvt.Ltd ”
 The company was granted the license of a Bonded manufactory and was
engaged in manufacture of pharmacopoeia tinctures , spirits and
proprietary reparations.
 Today , company has branches at Varanasi, Patna, Jamshedpur, Cuttack ,
Guwahati and Agartala.

INTRODUCTION
The myopic view of supply chain design
“ people designed supply chain as simple linear processes of goods and information
swiftly passing through an efficient logistics and IT pipelines and concentrate on only
that part of the pipe directly controlled by them or at best that of their customers and
suppliers “
Dominant players in a supply chain network :
1. Suppliers
2. Logistics Players : B2B & B2C
3. Contract Manufactures
4. Distributors
5. Retailers
There are two types of logistics activity in a supply chain
 Movement of raw materials from source of supply to the beginning of
production line is called Inbound Logistics .
 Movement of finished goods from end of the production line to the consumers
is called Outbound Logistics.
 Movement of used or damaged goods from consumers to manufacturer is called
Reverse Logistics.

PROBLEM STATEMENT
Warehouse and Transshipment or cross docking hubs are play a crucial role in a
supply chain because of the fact that there is always a mismatch between rate
of production and rate of consumption. Strategic location selection is not only
the solution of this problem , organized and rational operation of each activity
pertaining to the distribution of product from the warehouse are equally
important to improve the responsiveness of supply chain keeping the cost low.
Hence a strategic decision has been planned to restructure the existing
Midnapur distribution route from the Midnapur depot by keeping the
total travel distance as minimum as possible.
Adequate inventory level in a warehouse ensures streamlined flow of material
across the supply chain, Maintaining rational inventory level improve
responsiveness of supply chain while keeping the ordering and holding cost
low. The reorder level is the level of inventory which triggers an action to
replenish that particular inventory stock. It is an minimum amount of an SKU
which a firm holds in stock.
Hence a detail study has been executed based on the previous demand
pattern of each sKU to specify the ROL of each depot.

OBJECTIVE OF THE STUDY :
Objective of this project is to obtain feasible route coverage plan which will be
used to cater the East Midnapur, South 24 Parganas and Howrah distribution
channel.
Another objective of this study is to establish ROL level for the existing product
line that ensure continuous flow of outbound laden ( Finished Goods ).

REVIEW OF LITERATURE
Forty five years ago, an academic and practitioner from the north of England published
a method of tackling the vehicle routing problem (VRP) in an American journal. Little
could they have realized how the method they devised would still be a significant part
of the research agenda nearly half a century later. Adaptations of their method are
significant components in the analysis of the many different extensions to the problem
that have been investigated. This paper provides the historical background to the
development of the savings method and subsequent proposed variations to the basic
savings formula and other improvements, and then charts the role the savings method
has played in the investigation of VRPs with additional constraints. Some interesting
examples of practical applications of the savings method are reported. Finally,
comments are made on the use of the savings method in commercial routing
packages. The vehicle routing problem (VRP) can be stated very simply: a set of
customers with known location and demand are to be supplied from a depot by
delivery vehicles of known capacity subject to all customer demand being met, vehicle
capacity not being exceeded and total trip length not exceeding some specified level. If
times of delivery at customers’ locations are also specified then it is often described as
the “vehicle scheduling” problem. Fletcher Clark & Wright savings criterion is the basic
mathematical model for solving a classified vehicle routing problem. Usefulness of this
technique is further enhanced by the availability of several user friendly software such
as MATLAB, MICROSOFT EXCEL, etc.
Descriptive statistics analysis and Gaussian normal distribution are used to define the
ROL level. The Gaussian normal distribution is taken as reference from the book
“Communication Engineering - Singh & Sapre “

METHODOLOGY :
To obtain a feasible route coverage plan , I took the help of Microsoft Excel and
Google Map based geocoding technique. Thereafter a optimum depot location
is found to cater the East Midnapur market and this analysis is based on the
Gravity model. Where the center of gravity of a cluster or market is
concentrated at the depot and the location of this depot can easily be found out
with the help of Microsoft excel and solver add ins.
In the second part of this project, I exploit the usefulness of Gaussian normal
distribution to find the most probable monthly sales figure of a depot for a
particular product , because demand is nothing but a random variable. This
stochastic analysis will help me to define the ROL.

DATA COLLECTION

Supply Chain network of Mendine Pharmaceuticals
DEPOTS CLUSTER
DUMDUM
MIDNAPUR MALDA BURDWAN
NEW
ALIPORE
CUTTACK
GUWAHAT
I
AGRATALA PATNA
VARANASI
JAMSHEDPUR
SUPPLIERS
FACTORY
DAKGHAR , KOLKATA
CENTRAL
WAREHOUSE
BEHALA

CUSTOMERS
SPACE
Inbound Transportation :
Suppliers Factory
RM, BOP, PM
Outbound Transportation :
Factory Customers Space
Finished Goods
DEPOT CLUSTER MSR HQs

MSR - HQ
Moyna
Tamluk:1
Tamluk:2
Sutahata
Chaitanyapur
Kolaghat
Demari
Khirpai
Panskura
Sonamui
Amarshi
Bhagawanpur
Khejuri
Nandigram
Mothchandipur
Balisai
Contai:1
Contai:2
Egra
Nachinda
FACTORY
DAKGHAR
CENTRAL W/H
BEHALA
MIDNAPUR
DEPOT
RETAILERS/STOCKIST
LAST
MILE

EXISTING DISTRIBUTION MODEL OF EAST MIDNAPUR
The entire east midnapur distribution model is divided in four routes , namely
1. Tamluk :1
2. Tamluk : 2
3. Contai : 1
4. Contai : 2
Tamluk 1
291 km
Tamluk 2
230 km
Caontai 1
372 km
Contai 2
297+30 km
Chaitanyapur
kolaghat Amarshi Balisai
Mahishadal
Demari Bhagbanpur Contai_1
Radhamani
Khirpai Bhupatinagar Contai_2
Sutahata
Panskura Khejuri Egra
Tamluk :1
Sonamuni Nandigram Ghatal
Tamluk :2
Nachinda
Moyna

DATA ANALYSIS

ROUTE OPTIMIZATION MODEL: 1
 Total distance covered by this by this route optimization model is 283 km.

Vehicle sourcing point PANKURA
Loading MIDNAPUR DEPOT
MSR HQ MOYNA
MSR HQ MAHISHADAL
MSR HQ CHAITANYAUR
MSR HQ SUTAHATA
MSR HQ TAMLUK
MSR HQ DEMARI
MSR HQ KOLAGHAT
MSR HQ SONAMUI
MSR HQ GHATAL
MSR HQ KHIRPAI
End point & MSR HQ PANSKURA
TOTAL DISTANCE 283 km

ROUTE OPTIMIZATION MODEL: 2
 Total distance covered by this route optimization model is 327 km .

Vehicle sourcing point Belda
Loading @ depot Midnapoore
MSR HQ Bhogobanpur
MSR HQ Chandipur
MSR HQ Nandigram
MSR HQ Khejuri
MSR HQ Nachinda
MSR HQ Contai
MSR HQ Bhupatinagar
MSR HQ Balisai
MSR HQ Egra
End point & MSR HQ Belda
Total Distance 327 km

OPTIMUM LOCATION OF MIDNAPUR DEPOT
There are many analytical method available for deciding upon warehouse / depot
location, with the objective of minimizing cost. This cost depends upon the distance
between the warehouse and customers as also on the frequency or number of loads
carried to the customers.
This model can be termed as Gravity model which is used for identifying suitable
geographic location for a warehouse / depot that will minimize the cost by keeping
total route distance as small as possible.
This model can be developed with the help of Microsoft Excel

 Location of depot in 2D ( Cartesian Plane ) =
X = 96.44
Y = 121.43

UNDERSTANDING THE WAREHOUSE LOCATION IN 2D PLANE :
Bhogobanpur and Chandipur both are very close to coordinate ( 96,121 ), so we can
consider Bhoganpur or chandipur as depot for catering entire East Midnapur.

ROUTE DISTRIBUTION MODEL ( CONSIDERING CHANDIPUR AS EAST
MIDNAPUR DEPOT )
 Total distance covered under this optimization model
= ( 159+135+205+146) = 645 km
 In this model existing vehicle capacity will not be acting as a constraint as per as
feasibility of this model is considered.

ROUTE COVERAGE PLAN : HOWRAH DISTRIBUTION CHANNEL
 Total distance covered = 200 Km.
BEHALA
ANDUL
PACHLA
ULBERIA
GARHCHUMAK
AMTA
UDAYNARAYANPUR JAGATBALLAVPUR
DOMJUR
RAMRAJATALA
DASNAGAR
SALKIA
SHIBPUR

ROUTE COVERAGE PLAN : SOUTH 24 PARGANAS :
BEHALA
AMTALA
DIAMOND HARBOUR
KULPI KASHINAGAR
JAYNAGAR

SPECIFYING ROL LEVEL OF DIFFERENT SKUS BASED ON STATISTICAL ANALYSIS OF PREVIOUS
DEMAND PATTERN

ROL LEVEL OF CARMOZYME
CARMOZYME 100 ml at Varanasi Depot ( Sales data 2013- 2016 )
PRODUCT NAME YEAR APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH
CARMOZYME 100 ml
2013 1,270 1,426 1,495 1,421 828 1,035 1,219 299 897 372 1,311 782
2014 1,131 1,386 1,242 662 1,416 1,084 482 292 634 382 1,008 461
2015 1,722 1,262 826 630 966 1,680 562 720 506 568 410 657
2016 1,252 1,732 866 1,406 416 - - - - - - 416
Normal Distribution of sales data
 From normal distribution curve we can conclude that probability of monthly sales of Carmozyme 100 ml at Varanasi is Highest at 100O.
 Analyzing the normal distribution curve and and sales figure of Varanasi depot we can fix up the ROL level at 1000 for the months April, june, July, august, September & February.
 For the months October, November, December,January and March the ROL level can be reckoned as the average value of monthly sales ( 566, 328, 509, 531, 579) and the dispersion may keep into account.

CARMOZYME 200 ml @Varanasi Depot :
Year April May June July August September October November January February March
CARMOZYME 200
ml
2013 479 615 867 555 540 510 870 540 330
2014 658 720 730 570 645 600 660 210 750 465 750 780
2015 728 980 420 450 525 780 465 660 300 435 600 408
2016 390 640 660 540 450 840 600 510 252 330 420 270
2017 90 390 255
AVERAGE SALES MONTH WISE 563.75 738.75 669.25 528.75 540 682.5 648.75 480 408 330 540 428.25
DISPERSION
135.307
7511 144.5845341 162.0237251 46.68712349
69.552138
72 133.1117951
145.96125
34 165.6804153
199.40411
23
147.351620
3
145.430395
7 211.6581855
Normal Distribution Curve : ROL = 500
 By analyzing Normal Distribution curve we can fix ROL level at 500 .

CARMOZYME 450 ml @ Varanasi depot :
CARMOZYME
450 ml
2013 180 220 220 260 140 125 280 95 280
2014 280 380 300 160 140 200 180 160 140 140 220 200
2015 220 200 260 140 160 160 210 220 40 80 200 132
2016 60 200 80 200 140 320 60 80 60 100 120 260
2017 120 100 210
MONTHLY AVERAGE SALES 185 250 215 190 145 201.25 182.5 138.75 130 110 160 200.5
DISPERSION 80.4673847
75.498344
35 82.91561976
45.8257569
5 8.660254038 73.51657976 79.49056548 55.71972272 94.33981132 22.36067977 50.99019514 45.61523868
Normal Distribution Curve :
ROL level can be fixed at 175 units according to Normal Distribution curve.

CARMOZYME 100 ML @ Midnapur Depot :
Sku april may June July August September October November December January February March
2015 24077 16946 22196 16544 18546 17703 14349 18500 11839
2016 20624 15780 25955 23635 18062 28775 9398 18981 5947 14719 22511 18819
2017 30433 7739 10389
Normal Distribution of Demand
 ROL can be fixed as 12500 units .

CARMOZYME 200ML @ Midnapur Depot :
200 ml
2015 35107 23930 34531 32124 33455 34211 19091 35704 17132
2016 29269 23085 37890 35427 45359 19612 21335 38322 49279 25918 30055 25338
2017 10869 17052 73995
Normal Distribution curve of demand
 ROL = 30000 units

CARMOZYME 450ML @ Midnapur Depot :
200 ml
2015 18170 18047 26608 22556 26525 29765 33530 16345 9236
2016 7613 10833 26533 38138 19133 19110 53778 9887 8637 18349 21776 50526
2017 16282 53647 14471
ROL can be reckoned as 22000 units (approx) according to Normal Distribution curve.

CARMOZYME Drops @ Varanasi Depot :
ROL LEVEL ( VARANASI DEPOT ) : CARMOZYME DROPS
SKU YEAR APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH
15 ml
2013 330 270 300 60 195 233 150 275 375
2014 225 435 435 120 345 270 255 210 165 225 435 540
2015 195 255 360 170 330 330 60 380 285 360 10
2016 530 650 370 750 495 695 370 345 45 165 165 330
2017 330 400 165
MONTHLY AVERAGE SALES 320 402.5 366.25 275 341.25 382 208.75 302.5 195 251.25 340 261.25
DISPERSION 131.1964176 159.3933813 47.87679501 276.9927797 106.2647049 183.9959239 115.8865286 65.43126164 136.381817 62.18671482 104.4629121 196.7350693
 Rol level can set at 320 units

RECOMMENDATIONS TO OPTIMIZE ROUTE COVERAGE PLAN
 According to existing route coverage plan of East midnapur distribution the total distance travel by all the
vehicles to cater all MSR-HQs is 1220 Km and number of vehicles are four. If we follow the suggested route
optimization model which is described above , the total distance can be reduced to 610 km and number of
required vehicles becoming only two . so there is a significant savings in distance that will reduce the outbound
transportation cost of Midnapur depot. As the number of vehicles get reduced , simultaneously the vehicle
capacity need to be enhanced that acts as a constraint for feasibility of this plan . To overcome this , TATA or
MAHINDRA pick up van can be sourced to replace existing TATA 207 .
 We can also consider Chandipur as the depot which will only serve East Midnapur . According to my analysis, if
we consider Chandipur as the depot for East Midnapur distribution , the total travel distance to cater all the MSR
HQs only 645 km with four routes and four TATA 207 vehicles. The detail Route coverage plan considering
Chandipur as depot is described above.
 Route coverage plans for South 24 parganas and Howrah are described above , these plans will ensure
streamlined and fast transit of outbound laden.
 As carmozyme is a fast moving product , maintaining proper ROL level is very crucial that will ensure the
product availability in the customer space. In this project ROL is defined in a way which is slightly different from
the present day practice.

CONCLUSIONS
Increasing the penetration and responsiveness in customer space by keeping the overall cost low is the main aim of
any supply chain. As we know Transportation accounts up to 50% of total logistics cost in a supply chain. So there is
need of smart route optimization plan that will ensure the rational supply chain . To make a supply chain more lean
,we need to locate depot/ warehouse/ plant more strategically , we should employ mathematical approach in route
selection model. In this project report I tried to employ different mathematical theory in real life situation and I found
impressive outcomes.
The meaning of inventory is nothing but the asset in the form of raw materials , WIP, or finished goods to a business
house with the sole purpose being sold to customers. If inventory is too low , its obvious that holding is also low but
product availability is adversely affected. For large inventory holding cost becoming high with the improvement in
product availability. A adequate inventory is required in a supply chain which will not affect the holding cost and
product availability. So ROL level of each product line should be defined in a proper manner in all depots.

REFERENCES
 Supply Chain Management ( Fifth Edition ) , Authors : Sunil Chopra , Peter Meindi, D.V kalra
 Operations Management , Author : Norman Gaither
 Production and operation management , Author : S.N Chary
 Communication Systems , Author : R.P singh and S.D sapre.

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