Simplified Systematic Network Planning – step 2

STEP 2: DEFINE THE VARIABLES
In Step 2 of Simplified SNP, the planner adapts an existing model to the needs of the problem at hand. The planner summarizes these tasks on the Variables Summary Sheet.

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This step involves:

• Choosing or specifying design characteristics of the model and its parameters, including a network diagram to visualize the model’s scope
• Identifying data elements and their sources
• Defining relevant constraints
• Documenting assumptions
• Writing any formulas or algebraic expressions that will be used and formulating the model

For MTT, the network will consist of:

• One raw material supplier, six other bottlers, six MTT plants, and 42 branch distribution centers. These can each be seen in the network diagram (overleaf) using an adaptation of industry-standard operation process charting symbols.
• All transportation lanes between locations are potentially active. Certain products are produced in certain plants and cross docked through other plants. In this way, a branch can receive product from any plant (also shown on the diagram).

The model will include all juice products, both purchased and manufactured, measured in cases. Results will be based on 12 months of historical demand in weekly buckets. Resources to be modeled include: manufacturing lines, transportation, and storage. Data about products will come from the Demand Planning information system. Data about resources will be manually entered. Manufacturing cost data will come from records in the ERP system. Other cost data will come from various sources.

Constraints specify limitations on the various resources being modeled. For example, manufacturing lines cannot run more than 140 hours per week and must run at least 80 hours. Assumptions clarify model scope, simplifications, and the manner in which some variable will be treated. For example, raw material has infinite capacity, i.e. no limitations. Where formulas can be used to express costs or resource performance, they are given. Thus, if X1, X2, X3, X4 are trip frequencies for each lane, the transportation cost is defined as:

Transportation cost = X1*(2-way private fleet cost) +X2*(One way incentive for common carrier use) +X3*(Backhaul Factor) +X4*(Reverse logistics factor, i.e. container and damaged goods return)

This formula shows that the planner is using a weighted average approach to estimate a single transportation cost for each lane, rather than modeling each kind of transportation as a separate resource on each lane. The latter approach would significantly increase the complexity of the model without significantly increasing the precision of the results.

Key parameters for each manufacturing plant are summarized in a table. In the MTT example, the parameters include number of lines, maximum and minimum capacities expressed in maximum and minimum hours of operation, and pallets of storage capacity. For instance, P1 (Jonesville) has six manufacturing lines and their line speeds are their demonstrated speeds, meaning that the modeler will use the line speeds in cases per hour normally used by the production planners when scheduling each line.