Chapter3

NetworkPlanning

3.1WhyNetworkPlanning?Findtherightbalancebetweeninventory,transportationandmanufacturingcosts,Matchsupplyanddemandunderuncertaintybypositioningandmanaginginventoryeffectively,Utilizeresourceseffectivelybysourcingproductsfromthemostappropriatemanufacturingfacility

ThreeHierarchicalStepsNetworkdesignNumber,locationsandsizeofmanufacturingplantsandwarehousesAssignmentofretailoutletstowarehousesMajorsourcingdecisionsTypicalplanninghorizonisafewyears.Inventorypositioning:IdentifyingstockingpointsSelectingfacilitiesthatwillproducetostockandthuskeepinventoryFacilitiesthatwillproducetoorderandhencekeepnoinventoryRelatedtotheinventorymanagementstrategiesResourceallocation:DeterminewhetherproductionandpackagingofdifferentproductsisdoneattherightfacilityWhatshouldbetheplantssourcingstrategies?Howmuchcapacityeachplantshouldhavetomeetseasonaldemand?

3.2NetworkDesignPhysicalconfigurationandinfrastructureofthesupplychain.Astrategicdecisionwithlong-lastingeffectsonthefirm.Decisionsrelatingtoplantandwarehouselocationaswellasdistributionandsourcing

ReevaluationofInfrastructureChangesin:demandpatternsproductmixproductionprocessessourcingstrategiescostofrunningfacilities.Mergersandacquisitionsmaymandatetheintegrationofdifferentlogisticsnetworks

KeyStrategicDecisionsDeterminingtheappropriatenumberoffacilitiessuchasplantsandwarehouses.Determiningthelocationofeachfacility.Determiningthesizeofeachfacility.Allocatingspaceforproductsineachfacility.Determiningsourcingrequirements.Determiningdistributionstrategies,i.e.,theallocationofcustomerstowarehouse

ObjectiveandTrade-OffsObjective:Designorreconfigurethelogisticsnetworkinordertominimizeannualsystem-widecostsubjecttoavarietyofservicelevelrequirementsIncreasingthenumberof