Problem $1.$ A company located in Riyadh would like to decide on the best route$/$mode

to choose for a new product. They estimate that $15,000$ boxes can fit onto a single ship

ping container, and have forecasted a monthly demand of $50,000$ units with a $($monthly$)$

standard deviation of $4,000$ units. Each unit costs $$20$ to purchase from the vendor which

is located in Chattanooga, Tennessee in the US$.$

The following transportation options to Riyadh have been identified:

$1.$ Chattanooga $->$ US Ports: Alternatives are:

$$ By truck to the Port of Savannah $($in Savannah, Georgia$)$ with a cost of $4\mathrm{.}33$

cents per unit, an average transit time of $2$ days, and a standard deviation of

$1$ day

$$ By truck to the Port of Charleston $($in Charleston, South Carolina$)$ with a

cost of $4\mathrm{.}33$ cents per unit, an average transit time of $1$ day, and a standard

deviation of $2$ days

$2.$ US Ports $->$ Saudi Ports: Alternatives are:

$$ By ship from the Port of Charleston to Jeddah Islamic Port $($in Jeddah, Saudi

Arabia$)$ with a cost of $$1,500$ per container, an average transit time of $18$ days,

and a standard deviation of $5$ days

$$ By ship from the Port of Charleston to King Abdulaziz Port $($in Dammam,

Saudi Arabia$)$ with a cost of $$1,600$ per container, an average transit time of

$25$ days, and a standard deviation of $3$ days

$$ By ship from the Port of Savannah to King Abdulaziz Port $($in Dammam,

Saudi Arabia$)$ with a cost of $$1,650$ per container, an average transit time of

$22$ days, and a standard deviation of $3$ days

$3.$ Saudi Ports $->$ Riyadh: Alternatives are:

$$ By rail from Dammam to Riyadh with a cost of $2$ cents per unit, an average

transit time of $1$ day, and a standard deviation of $1$ days

$$ By truck from Dammam to Riyadh with a cost of $3$ cents per unit, an average

transit time of $1$ day, and a standard deviation of $0$ days

$$ By truck from Jeddah to Riyadh with a cost of $$700$ per container, an average

transit time of $2$ days, and a standard deviation of $1$ days

ISE$472$: Homework $3$

The company uses a holding interest rate of $25\%,$ and has determined that a service level

of $98\%($z $=2\mathrm{.}05)$ is appropriate for this item. Furthermore, it costs them about $$3000$

to place an order $($this includes any fixed transportation costs required$).$ You can assume

$310$ working days per year.

The company would like to select the best route for these shipments taking into account

the total logistics cost$,$ as well as the lead time variability. Conduct an analysis to deter

mine the best route choice. Round your answers to two decimal places, and present your

results in the same way it was covered in class. Your analysis should show the following

details:

$1.$ the operational network $($use CH for Chattanooga, SV for Savannah, CS for Charleston,

JD for Jeddah, DM for Dammam, and RY for Riyadh and indicate cost, transit time

mean, and standard deviation on each arc$),$

$2.$ the strategic network,

$3.$ detailed computations for at least one route $($you can show just the final numbers

for other routes similar to what was shown in class$)$; I strongly encourage the

use of Excel here to reduce the work required and to ensure accuracy as

rounding could lead to slightly different results and conclusions,

$4.$ the logistics cost of shipping one box of this item using the best route.