Transcript Narrative Information Processing in Electronic Medical Report

Design in the Supply Chain
Spring, 2014
Supply Chain Management:
Strategy, Planning, and Operation
Chapter 5
Byung-Hyun Ha
Contents
 Role of network design in supply chain
 Factors influencing network design decisions
 Framework for network design decisions
 Models for facility location and capacity allocation
 Role of IT in network design
 Distribution network in practice
1
Role of Network Design in Supply Chain
 Implementing planned network type
 Facility role
• e.g., Toyota, Honda
 Flexibility costs!
 Facility location
• e.g., Toyota assembly plant in U.S. when Yen strengthened
 Capacity allocation
• Allocating much vs. less
 Capacity costs!
 Market and supply allocation
 Never-ending efforts due to change
 Firms grow or shrink.
 Companies merge.
2
Factors Influencing Design Decision
 Strategic factors
 Efficiency vs. responsiveness
 Possible strategic roles of various facilities
• Offshore facility
• Low-cost facility for export production
• Source facility
• Low-cost facility for global production
• Server facility
• Regional production facility
• Contributor facility
• Regional production facility with development skills
• Outpost facility
• Regional production facility built to gain local skills
• Lead facility
• Facility that leads in development and process technologies
3
Factors Influencing Design Decision
 Technological factors
 Macroeconomic factors
 Tariffs and tax incentives
• e.g., free trade zone
 Exchange rate and demand risk
 Overcapacity costs!
 Political factors
 Infrastructure factors
4
Factors Influencing Design Decision
 Competitive factors
 Hotelling’s law (http://en.wikipedia.org/wiki/Hotelling's_law)
• Competing on distance?
• Competing on price?
 Social cost or benefit?
a
b
 Customer response time and local presence
 Logistics and facility costs
 Total logistics costs = inventory + transportation + facility costs
• Minimum cost network regarding responsiveness
5
A Framework for Network Design Decisions
COMPETITIVE STRATEGY
INTERNAL CONSTRAINTS
Capital, growth strategy,
existing network
PRODUCTION TECHNOLOGIES
Cost, Scale/Scope impact, support
required, flexibility
COMPETITIVE
ENVIRONMENT
GLOBAL COMPETITION
PHASE I
Supply Chain
Strategy
PHASE II
Regional Facility
Configuration
REGIONAL DEMAND
Size, growth, homogeneity,
local specifications
POLITICAL, EXCHANGE
RATE AND DEMAND RISK
PHASE III
Desirable Sites
PRODUCTION METHODS
Skill needs, response time
FACTOR COSTS
Labor, materials, site specific
TARIFFS AND TAX
INCENTIVES
PHASE IV
Location Choices
AVAILABLE
INFRASTRUCTURE
LOGISTICS COSTS
Transport, inventory, coordination
6
Facility Location and Capacity Allocation
 Phase II: Capacitated plant location model
 Input
•
•
•
•
•
•
n: number of plants
m: number of markets
Dj: annual demand from market j
Ki: potential capacity of plant i
fi: annualized fixed cost of plant i
cij: cost of producing and shipping
one unit from plant i to market j
 Decision
• xij: quantity shipped from plant i to j
• yi = 1, if plant i is open; 0, otherwise
n
n
m
min.  f i yi   cij xij
i 1
i 1 j 1
n
s.t.
x
ij
 Dj ,
ij
 Di yi , i  1,  , n
i 1
n
x
i 1
j  1,  , m
yi  {0,1}
 Objective
• min. (total fixed and variable costs)
7
Facility Location and Capacity Allocation
 Phase III: Gravity location model
 Input
•
•
•
•
n: number of markets and supply sources
(xi, yi): location of either market or supply source i
Fi: cost of shipping one unit for one mile to or from location i
Di: quantity to be shipped to or from location i
 Decision
• (x, y): facility location
• di: distance to or from location i
d i  ( x  xi ) 2  ( y  yi ) 2
 Objective
n
min. TC   d i Di Fi
i 1
 Iterative method for the optimal location
• Weber problem
• http://en.wikipedia.org/wiki/Weber_problem
8
Facility Location and Capacity Allocation
 Phase III: Gravity location model (cont’d)
 Example of Table 5-1
9
Facility Location and Capacity Allocation
 Phase IV: Demand allocation
 Input
•
•
•
•
•
n: number of plants
m: number of markets
Dj: annual demand from market j
Ki: capacity of plant i
cij: cost of producing and shipping
one unit from plant i to market j
 Decision
• xij: quantity shipped from plant i to j
 Objective
• min. (total variable costs)
n
m
min.  cij xij
i 1 j 1
n
s.t.
x
ij
 Dj ,
ij
 K i , i  1,  , n
i 1
n
x
i 1
j  1,  , m
xij  0
10
Facility Location and Capacity Allocation
 Phase IV: Locating plant with single source
 Input
•
•
•
•
•
•
n: number of plants
m: number of markets
Dj: annual demand from market j
Ki: potential capacity of plant i
fi: annualized fixed cost of plant i
cij: cost of producing and shipping
one unit from plant i to market j
 Decision
n
n
m
min.  f i yi   D j cij zij
i 1
i 1 j 1
n
s.t .
z
i 1
ij
 1,
n
D z
i 1
j ij
j  1,, m
 K i yi , i  1, , n
yi , zij  {0,1}
• yi = 1, if plant i is open; 0, otherwise
• zij = 1, if market j is supplied by plant i; 0, otherwise
 Objective
• min. (total fixed and variable costs)
11
Facility Location and Capacity Allocation
 Other models
 Locating plants and warehouses simultaneously
 Accounting for taxes, tariffs, and customer requirements
 ...
12
Role of IT in Network Design
 Network design solutions




Making the modeling of the network design problems easier
Containing high-performance optimization technologies
Allowing for “what-if” scenarios
Interfacing with planning and operational software
 Decision-support systems!
13
Distribution Network in Practice
 Do not underestimate the life span of facilities
 Do not underestimate the cultural implications
 e.g., Ford Lincoln Mark VIII
 Do not ignore quality of life issues
 Focus on tariffs and tax incentives when locating
facilities
14