03-09-2012, 02:56 PM
Network models for Supply Chain Design
1Network models.ppt (Size: 210.5 KB / Downloads: 42)
Network design decision
Facility role; production, storage, cross-docking, processes performed and products produced (flexibility)
Toyota before ’97, factories serving local needs. In Asian crisis late ‘90s, Asian factory experienced idle capacity that could not be used to produce for other markets. Afterwards, Toyoda added flexibility to their plants so that they can serve other markets.
Facility location
Very costly to open or close a plant
Toyota opened its first US plant in Lexington, Kentucky in ’88. This decision provided Toyota a low cost production option, especially when yen is strengthened against dollar, and responsiveness.
Amazon had to increase the number of warehouses to 6 to be cost effective in supplying books throughout US.
Facility capacity
Allocating too little or too much capacity is costly
Capacity decisions would not change for years.
Facility allocation to markets and supply sources
has Significant impact on performance
Must be reconsidered on a regular basis
Amazon had to consider new allocations as it increased the number of facilities in order to reduce the costs
Factors influencing network design decisions
Customer response time and local presence
Convenience stores must locate close to customer while the discount stores do not need to be close, customers are ready to travel to buy larger quantities with lower prices.
With faster transportation options, facilities can be consolidated and away from customers.
Logistics and facility costs;
Inventory, transportation and facility cost should be considered together
SC Network design problem
Network design models can be used to locate facility and decide capacity, which won’t change in years. These models can also be used to assign current demand to available facilities and to the available transportation options, at least on an annual base.
Information for network configuration decision; Location of supply sources, markets, and potential sites for facilities, demand forecast by markets, facility, labor, and material cost by site, transportation cost between sites, inventory costs for each site, sale price of product for each regions, desired response time and other service factors, taxes, tariff.
Output; number of facilities in each region, what markets that the facilities will serve.