Scribd Logo
Upload

Welcome to Scribd!

  • 1K views

    Supply Chain Management: Strategy, Planning, and Operation: Seventh Edition, Global Edition

    Uploaded by

    munira

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Supply Chain Management: Strategy, Planning, and Operation: Seventh Edition, Global Edition

    Uploaded by

    munira
    1K views20 pages

    Original Title

    PPT_05

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    1K views20 pages

    Supply Chain Management: Strategy, Planning, and Operation: Seventh Edition, Global Edition

    Uploaded by

    munira

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 20

    Supply Chain Management: Strategy,

    Planning, and Operation


    Seventh Edition, Global Edition

    Chapter 5
    Network Design in the
    Supply Chain

    Copyright © 2019 Pearson Education, Ltd.


    Learning Objectives (1 of 2)
    5.1 Understand the role of network design in a supply chain.
    5.2 Identify factors influencing supply chain network design
    decisions.
    5.3 Discuss a framework for making network design decisions.
    5.4 Develop an optimization model to design an regional network
    configuration.

    Copyright © 2019 Pearson Education, Ltd.


    The Role of Network Design (1 of 2)
    • Network design decisions
    – How many manufacturing plants, production lines,
    distribution centers, cross-docking facilities?
    – Where should facilities be located?
    – How much capacity at each facility?
    – Which products?
    – What markets?

    Copyright © 2019 Pearson Education, Ltd.


    The Role of Network Design (2 of 2)
    • Revisit design decisions after market changes, mergers, or
    factor cost changes

    Copyright © 2019 Pearson Education, Ltd.


    Factors Influencing Network Design
    Decisions (1 of 2)
    • Strategic Factors
    • Competitive Factors
    – Positive externalities
    – Locating to split the market
    • Political Factors
    • Infrastructure Factors

    Copyright © 2019 Pearson Education, Ltd.


    Factors Influencing Network Design
    Decisions (2 of 2)
    • Customer Response Time and Service Level
    • Total Logistics Cost
    • Macroeconomic Factors
    – Tariffs and tax incentives
    – Exchange-rate and demand risk

    Copyright © 2019 Pearson Education, Ltd.


    Competitive Factors
    • Locating to split the market
    – Locate to capture largest market share

    Figure 5-1 Two Firms Locating on a Line

    1– b – a 1 b – a
    d1  a  and d 2 
    2 2

    Copyright © 2019 Pearson Education, Ltd.


    Framework for Network Design
    Decisions (1 of 4)
    • Maximize the overall profitability of the supply chain network
    while providing customers with the appropriate responsiveness
    • Many trade-offs during network design
    • Network design models used
    – to decide on locations and capacities
    – to assign current demand to facilities and identify
    transportation lanes

    Copyright © 2019 Pearson Education, Ltd.


    Figure 5-2 Framework for Network Design
    Decisions

    Copyright © 2019 Pearson Education, Ltd.


    Framework for Network Design
    Decisions (2 of 4)
    • Phase I: Define a Supply Chain Strategy/Design
    – Clear definition of the firm’s competitive strategy
    – Forecast the likely evolution of global competition
    – Identify constraints on available capital
    – Determine broad supply strategy

    Copyright © 2019 Pearson Education, Ltd.


    Framework for Network Design
    Decisions (3 of 4)
    • Phase II: Define the Regional Facility Configuration
    – Forecast of the demand by country or region
    – Identify fixed and variable costs, economies of scale or
    scope
    – Identify regional tariffs, requirements for local production,
    tax incentives, and export or import restrictions
    – Identify competitors
    – Identify demand risk, exchange-rate risk, political risk

    Copyright © 2019 Pearson Education, Ltd.


    Framework for Network Design
    Decisions (4 of 4)
    • Phase III: Select a Set of Desirable Potential Sites
    – Hard infrastructure requirements
    – Soft infrastructure requirements
    • Phase IV: Location Choices and Market Allocation

    Copyright © 2019 Pearson Education, Ltd.


    Capacitated Plant Location Model (1 of 9)
    n = number of potential plant locations/capacity
    m = number of markets or demand points
    Dj = annual demand from market j

    Ki = potential capacity of plant i

    fi = annualized fixed cost of keeping plant i open

    cij = cost of producing and shipping one unit from plant i to market j
    (cost includes production, inventory, transportation, and tariffs)
    yi = 1 if plant i is open, 0 otherwise

    xij = quantity shipped from plant i to market j

    Copyright © 2019 Pearson Education, Ltd.


    Capacitated Plant Location Model (2 of 9)

    n n m
    Min  fi y i   cij xij
    i 1 i 1 j 1

    Subject to

    x
    i 1
    ij  D j for j  1, , m
    m

    x
    j 1
    ij  K i y i for i  1, , n

    y i   0,1 for i  1, , n, xij  0

    Copyright © 2019 Pearson Education, Ltd.


    Capacitated Plant Location Model (3 of 9)

    Figure 5-4 Spreadsheet Area for Decision Variables for SunOil

    Copyright © 2019 Pearson Education, Ltd.


    Capacitated Plant Location Model (4 of 9)

    Figure 5-5 Spreadsheet Area for Constraints and Objective Function


    for SunOil

    Copyright © 2019 Pearson Education, Ltd.


    Capacitated Plant Location Model (5 of 9)

    Cell Cell Formula Equation Copied To


    B28 =B9 − SUM(B14:B18) 5.1 C28:F28
    B22 = G14 * H4 + H14 * J4  SUM  B14 : F14 
    = G 14 times H 4 + H 14 times J 4 minus SUM of B 14:F14
    5.2 B23:B26
    B31 =SUMPRODUCT(B14:F18,B4:F8) + Objective –
    SUMPRODUCT(G14:G18,G4:G8) + Function
    SUMPRODUCT(H14:H18,I4:I8)

    Figure 5-5 [Continued]

    Copyright © 2019 Pearson Education, Ltd.


    Capacitated Plant Location Model (6 of 9)
    • Constraints

    B14:H18  0  All decision variables are nonnegative


     m

    B22:B26  0 K i y i   xij  0 for i  1,,5 
     j=1 
     n

    B28:F28  0 D j   xij  0 for j  1,,5 
     i=1 
    G14:H18 binary  Location variable y i are binary; that is, 0 or 1

    Copyright © 2019 Pearson Education, Ltd.


    Capacitated Plant Location Model (7 of 9)

    Figure 5-6 Using Solver to Set Regional Configuration for SunOil


    Copyright © 2019 Pearson Education, Ltd.
    Capacitated Plant Location Model (8 of 9)

    Figure 5-7 Optimal Regional Network Configuration for SunOil


    Copyright © 2019 Pearson Education, Ltd.

    You might also like