Comilla University

Department of Management Studies

Course Title: Supply Chain Management
Course Code: 412

Assignment No: 07

Submitted to:
Md. Anamul Hoque
Lecturer
Department of Management Studies

Comilla University

Submitted by:

Abul Hasnat Emon

ID: 11705002

Department of Management Studies,

ComillaUniversity.

DATE OF SUBMISSION: December 6, 2020.

 Chapter -04
Designing Distribution Networks and Application to Online Sales

Distribution Network Design

The graph illustrates the

correlation between a
number of facilities and the desired response time. Answer time is the amount of time it takes to
accept an order from a client. Only a few locations that may be far from the consumer are
expected by businesses that target consumers that can accept a long response time. Such
businesses should concentrate on increasing each location's capacity. Companies that target
clients that prioritize fast reaction times, on the other hand, need to locate facilities close to them.
These businesses, each with a low capacity, must have several facilities. Therefore the number of
facilities needed in the network shown in Figure 4.1 increases the customer's demand for a
decrease in response time.

2
The graph shows the relation between the number of facilities and inventory costs. As the
number of facilities in a supply chain grows, the inventory and associated inventory expenditures
also increase. To reduce inventory costs, companies strive to simplify and limit the number of
facilities in their chain network.

The graph showing the relationship between number pf facilities and transportation cost.
Inbound transportation costs are the costs incurred in bringing material into a facility. Outbound
transportation costs are the costs of sending material out of a facility. Outbound transportation
costs per unit tend to be higher than inbound costs because inbound lot sizes are typically larger.
Increasing the number of warehouse locations decreases the average outbound distance to the
consumer and makes outbound transportation distance a smaller fraction of the total distance
traveled by the product. Thus, as long as inbound transportation economies of scale are
maintained, increasing the number of facilities decrease total transportation cost, as shown in
figure 4-3.

3
The figure shows the relationship between the number of pf installations and the cost of the
facility. If the number of facilities is decreased, the cost of the facility decreases because the
consolidation of facilities enables an organization to take advantage of economies of scale.

The graph shows the

difference in cost and response time of logistics with the number of facilities. Complete logistics
for a supply chain network are the amount of inventory, storage, and facility costs. If the number
of facilities grows, the overall cost of logistics first decreases and then rises, as seen in figure
4.5.At least the amount of facilities that reduce the total cost of logistics should be accessible to
any organization. If a company wishes to further reduce its client's response time, it can have to
increase the number of facilities beyond the point of reducing logistics costs. A organization can
only add facilities above the cost-minimizing stage if managers are assured that additional

facilities would raise revenues.