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Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Learning Objectives
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Network Design Decisions
Facility role
• Facility location
Where should facilities be located?
• Capacity allocation
How much capacity at each facility?
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Factors Influencing
Network Design Decisions
Strategic factors
• Technological factors
• Macroeconomic factors
Tariffs and tax incentives
Exchange-rate and demand risk
Freight and fuel costs
• Political
Contd…
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Factors Influencing
Network Design Decisions
Infrastructure factors
• Competitive factors
Positive externalities between firms
Locating to split the market
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Framework for Network Design Decisions
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Socio Economic Factors in Choice of
Facility Location
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Framework for Network Design Decisions
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Framework for Network Design Decisions
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Framework for Network Design Decisions
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Models for Facility Location and Capacity
Allocation
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Models for Facility Location and Capacity
Allocation
Important information
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Phase II: Network Optimization Models
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Plant Location Model
åx ij
= K i yi for i = 1,...,n
j=1
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Plant Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Plant Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Phase III: Gravity Location Models
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Gravity Location Model
(x – x ) + ( y – y )
2 2
dn = n n
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Gravity Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Gravity Location Model
Transportation Coordinates
Cost Quantity in
Sources/Markets $/Ton Mile (Fn) Tons (Dn) xn yn
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Gravity Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Gravity Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Gravity Location Model
k k
Dn Fn xn Dn Fn yn
å d å d
x¢ = n=1
k
n
and y¢ = n=1
k
n
Dn Fn Dn Fn
å d å d
n=1 n n=1 n
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Phase IV: Network Optimization Models
Demand City
Table 5-2
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Network Optimization Models
K i = Capacity of factory i
cij = Cost of producing and shipping one unit from factory i to market j
n m
Min cij xij
i 1 j 1 subject to
n
x
i 1
ij D j for j 1,...,m
m
x
j 1
ij K i for i 1,...,n
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Network Optimization Models
TelecomOne Baltimore 0 8 2
Memphis 10 0 12
Wichita 0 0 0
Cheyenne 6 7 0
Table 5-3
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Plant Location Model
n n m
Minå f i yi + å åc x ij ij
i=1 i=1 j=1
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Plant Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Plant Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Plant Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Plant Location Model
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Model with Single Sourcing
åx ij
= 1 for j = 1,...,m
i=1
m
åD x i ij
£ K i yi for i = 1,...,n
j=1
xij , yi Î {0,1}
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Model with Single Sourcing
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Capacitated Model with Single Sourcing
Cheyenne Closed 0 0 0 0 0 0
Memphis Open 10 8 0 0 0 0
Wichita Open 0 0 14 0 7 0
Table 5-4
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Locating Plants and Warehouses
Simultaneously
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Locating Plants and Warehouses
Simultaneously
• Model inputs
m = Number of markets or demand points
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Locating Plants and Warehouses
Simultaneously
subject to
åx hi
£ Sh for h = 1,...,l åx ej
£ We ye for e = 1,...,t
i=1 j=1
l t t
åx hi
– å xie ³ 0 for i = 1,...,n åx ej
= D j for j = 1,...,m
h=1 e=1 e=1
t
åx ie
£ Ki yi for i = 1,...,n yi , ye Î {0,1}, xej , xie , xhi ³ 0
e=1
n m
åx ie
– å xej ³ 0 for e = 1,...,t
i=1 j=1
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Accounting for Taxes, Tariffs, and
Customer Requirements
åx ij
£ D j for j = 1,...,m
i=1
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Making Network Design Decisions in
Practice
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra
Summary of Learning Objectives
Supply Chain Management: Strategy, Planning, and Operation, 5/e Authors: Sunil Chopra, Peter Meindl and D. V. Kalra