LLSMS2033 INTERNATIONAL SUPPLY CHAIN MANAGEMENT 1(7)

UCL/LSM/OIS/AGRELL-CHEVALIER 10.06.2015
Name: Prog:

LLSMS2033
EXAMEN 10.06.2015

Instructors: Per AGRELL UCL/LSM/OIS

Result :
Question 1 2 Total
Score
Total 50 50 100

INSTRUCTIONS
1. Write your name on each submitted page.
2. Do not unstaple the exam paper.
3. Only answer one question per page.
4. Read all questions carefully. Explain any introduced assumptions.
5. Allowed material: open books, open notes. No computer,
smartphone or other editing or communication device.
LLSMS2033 INTERNATIONAL SUPPLY CHAIN MANAGEMENT 2(7)
UCL/LSM/OIS/AGRELL-CHEVALIER 10.06.2015
Name: Prog:

QUESTION 1 50 p

A supply chain of low-cost steel plants (iron bars and rods for construction and infrastructure)
consists of a set of plants k = 1,…,K in China serving a set of clients i = 1,..., I in Europe.

The variable production cost per ton at factory k is ck [EUR]. The annual processing capacity of
plant k is Wk [ton]. The forecasted demand of l is hl [ton]. The fixed cost of production at k is given
as fk [EUR]. The transportation in China is made by rail to a local port, chosen from a set i = 1,…,I.
After ocean freight in large vessels, the goods arrive at a port in Europe, chosen from a set j =
1,…,J. The annual transport capacity (loading) at port i is Ui [ton] and for port j , Vj [ton],
respectively. The last stretch from the port in Europe to the client is handled by rail transport.

The rail transport cost in China is known as a [EUR/ton-km] for the distance ski [km] between a
plant k and a post location i. Analogously, in Europe, the rail transport cost is b [EUR/ton-km]
for a distance of rjl [km] between any European port j and a final client l. There is no fixed cost per
port, the overall port capacity in both China and Europe exceeds the total demand and there is a rail
connection from each client and plant to any candidate port. A plant in China can only be assigned
to a single export port; a port can handle multiple plants. In Europe, clients can be served
simultaneously by multiple ports.

The maritime transport cost is piecewise linear function G(v) where v is the annual volume, such that
G is positive, increasing and concave. The function is illustrated in Fig 1 below.

G(v)

v
v1

The coefficients for the G function vary by port but the break point is identical (shift of vessel type):
let the initial cost per ton be g ij for freight between ports i and j up to v1 tons. The marginal cost per
additional tonnage above v1 tons between ports i and j is given as dij.

The firm’s strategic supply chain network planning aims at a minimization of the expected total cost
for production and transport, while serving all current clients. The firm has no experience in
mathematical modeling and hires you as independent counsel.

a) Assuming that the firm desires a model using exactly one port in China and one
destination port in Europe, formulate the supply chain network problem in the long run
as a linear program.

b) Relax the assumption of one port on each side and formulate the MIP finding the
optimal number and location of the export and import ports as well as the production
network.

c) As a consultant, which model would you select for the firm and why?
LLSMS2033 INTERNATIONAL SUPPLY CHAIN MANAGEMENT 3(7)
UCL/LSM/OIS/AGRELL-CHEVALIER 10.06.2015
Name: Prog:
LLSMS2033 INTERNATIONAL SUPPLY CHAIN MANAGEMENT 4(7)
UCL/LSM/OIS/AGRELL-CHEVALIER 10.06.2015
Name: Prog:
LLSMS2033 INTERNATIONAL SUPPLY CHAIN MANAGEMENT 5(7)
UCL/LSM/OIS/AGRELL-CHEVALIER 10.06.2015
Name: Prog:

QUESTION 2 50 p

The map below shows a view of Bigrivercity

5km

2  km

2  km

5km
As you notice there is a large river crossing the city with a single bridge at the western side of the
city. The bridge is 100m long.

a) A taxi company is requesting your help. Supposing the origin and destinations are uniformly
distributed over the city, what would be the average distance that a taxi would drive with a
passenger?
b) The taxis are run in the following way: if a passenger is waiting on the same side of the
bridge where the taxi just finished its ride, the taxi will immediately go to fetch that new
passenger, else the taxi will go to the middle of city on the side of the river where he just
finished his ride and wait there. What is the distance that the taxi will drive empty in each
case?
c) Give advantages and disadvantages of operating taxis in this way (especially about the fact
that they would never cross the bridge empty).
d) Supposing that during the afternoon taxis travel at an average speed of 20km/h, and that the
demand for taxi services arrive following a spatially distributed Poisson process of rate
5/h.km2 for the entire city. How many vehicles would you advice the taxi company to
operate?
LLSMS2033 INTERNATIONAL SUPPLY CHAIN MANAGEMENT 6(7)
UCL/LSM/OIS/AGRELL-CHEVALIER 10.06.2015
Name: Prog:
LLSMS2033 INTERNATIONAL SUPPLY CHAIN MANAGEMENT 7(7)
UCL/LSM/OIS/AGRELL-CHEVALIER 10.06.2015
Name: Prog: