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Oct 28, 2019 at 11:21 AM

Internal Procurement Vs External Procurement: Trade off Analysis with SNP Optimizer?

190 Views Last edit Oct 31, 2019 at 02:28 AM 3 rev

Dears,

I have one destination with 3 sources in my model for SNP (optimizer).

Source 1: PDS at another location and T-Lane to Destination with lead time of 24 hours and variable cost 0 (prio) with finite capacity. Trans Cost 0, Trans Duration 0.

Source 2: PDS at another location and T-Lane to Destination with lead time of 24 hours and variable cost 1 with finite capacity. Trans Cost 0, Trans Duration 0.

Source 3: An external supplier (import) with lead time of 1440 hours and trans. cost x (I am playing around with this). Infinite capacity.

There is no minimum lot size in MAT1 or TLane or PDS at any of the 3 locations.

There are costs for product storage and safety stock violation maintained for the said locations

There are penalties for delay and non delivery maintained in for the said locations

How do I ensure that Inhouse capacity is fully exhausted before SNP proposes external vendors as source of supply?

Costs in Material x Loc Master?

Penalties in Material x Loc Mater?

Costs in Prod specific T-Lanes?

Costs in PDS?

I cannot change durations (lead time inhouse or external in PDS and T-Lane).

My Observations

When I put a high cost on T-Lane from External Vendor to Destination (demand source), ALL purchase requisitions are pushed out to end of horizon.

When I enter a low cost on T-Lane from External Vendor to Destination (demand source), I do not see any predictable pattern of source of supply determination. In house capacity is not fully utilized and external procurement is also proposed in various buckets.

SNP Optimizer is Linear.

Thanks

Amit