Ch4

role of network design : is to revisit design decisions after market changes-1

Facility role - facility location – capacity location – market and supply allocation

Factors Influencing Network Design Decisions:

 Strategic Factors: Market demand, cost considerations,
technological advancements, regulatory requirements, and
competitive positioning.
 Technological Factors: Scalability, reliability, security,
compatibility, and adaptability to emerging technologies.
 Macroeconomic Factors: Tariffs, tax incentives, exchange rates,
freight and fuel costs.
 Political Factors: Government regulations, policies, trade
agreements, geopolitical stability, and national security
concerns.
 Infrastructure Factors: Available physical space, power supply,
network connectivity options, existing infrastructure, and
environmental considerations.
 Competitive Factors: Market positioning, differentiation,
customer demands, pricing strategies, and the need for
innovation.
 Customer Response: Time, local presence, accessibility,
scalability, and meeting customer expectations.
 Logistics and Facility Costs: Transportation expenses,
warehouse and storage costs, labor costs, proximity to
suppliers and customers, and overall operational efficiency.

Framework for Network

Design Decisions
Phase I: Define a Supply Chain Strategy/Design –
Clear definition of the firm’s competitive strategy ❖
The capabilities the supply chain network must have ❖
Determine broad supply strategy (stages and outsourcing) ❖
Forecast the likely evolution of global competition ❖
Identify constraints on available capital ❖
Phase II: Define the Regional Facility Configuration ❖ Objective: identify regions where
facilities will be located, and facilities’ roles and capacities ❖ Forecast of the demand by
country or region (homogeneous vs heterogenous) ❖ Economies of scale or scope (high
technology items with low transportation cost) ❖ Identify demand risk, exchange-rate
risk, political risk, tariffs, requirements for local production, tax incentives, and export or
import restrictions ❖ Identify competitors (close or far

Phase III: Select a Set of Desirable Potential Sites ❖ Hard infrastructure requirements –
(suppliers, transportation, communication, etc.) ❖ Soft infrastructure requirements
(skilled workforce, community receptivity) – Phase IV: Location Choices – Objective:
select precise location and capacity

1. The role of network design is to revisit design decisions after:

a) Market changes
b) Technological advancements
c) Regulatory requirements
d) Competitive positioning
2. Which of the following factors influences network design
decisions?
a) Market demand
b) Exchange rates
c) Government regulations
d) All of the above
3. Scalability, reliability, and security are examples of:
a) Strategic factors
b) Technological factors
c) Macroeconomic factors
d) Political factors
4. Tariffs, tax incentives, and freight costs are examples of:
a) Strategic factors
b) Technological factors
c) Macroeconomic factors
d) Infrastructure factors
5. Availability of physical space and power supply are examples of:
a) Strategic factors
b) Technological factors
c) Macroeconomic factors
d) Infrastructure factors
6. Customer demands, pricing strategies, and market positioning
are examples of:
a) Strategic factors
b) Technological factors
c) Macroeconomic factors
d) Competitive factors
7. Which phase of the network design framework involves
defining a supply chain strategy/design?
a) Phase I
b) Phase II
c) Phase III
d) Phase IV
8. Which phase of the network design framework involves
selecting a set of desirable potential sites?
a) Phase I
b) Phase II
c) Phase III
d) Phase IV
9. The objective of defining the regional facility configuration is to
identify:
a) Regions where facilities will be located
b) Available capital constraints
c) Competitors
d) Demand risk
10.Which factor is NOT considered when selecting precise location
and capacity?
a) Hard infrastructure requirements
b) Soft infrastructure requirements
c) Demand risk
d) Skilled workforce
11.The framework for network design decisions includes how
many phases?
a) 2
b) 3
c) 4
d) 5
12.Which phase involves forecasting the likely evolution of global
competition?
 a) Phase I
b) Phase II
c) Phase III
d) Phase IV
13.Which factor is NOT considered in selecting a set of desirable
potential sites?
a) Skilled workforce
b) Hard infrastructure requirements
c) Soft infrastructure requirements
d) Competitive positioning
14.Which factor is NOT considered in the phase of defining the
regional facility configuration?
a) Demand by country or region
b) Exchange-rate risk
c) Political risk
d) Tariffs
15.Which of the following is NOT an example of a strategic factor
influencing network design decisions?
a) Market demand
b) Cost considerations
c) Skilled workforce availability
d) Technological advancements
:answers to the 15 multiple-choice questions

a) Market changes .1

d) All of the above .2

b) Technological factors .3

c) Macroeconomic factors .4

d) Infrastructure factors .5

d) Competitive factors .6

a) Phase I .7

c) Phase III .8

a) Regions where facilities will be located .9

c) Demand risk .10

c) 4 .11
a) Phase I .12

d) Competitive positioning .13

d) Tariffs .14

c) Skilled workforce availability .15