LSCM 360 - Warehouse Slides & Example

LSCM 360 - Warehouse Slides & Example - Distribution...

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Unformatted text preview: Distribution Center, Distribution Center, Warehouse, and Plant Location Warehouse, and Plant Location 8-2 Network Design (redesign) Considerations Changing Customer Service Requirements Customers business changes New supply chain partners Shifting Locations of Customer and/or Supply Markets Geographic markets and global competition Change in Corporate Ownership Mergers, consolidations, and divestures. Cost Pressures Competitive Capabilities Can you compete with customer service capabilities? Corporate Organizational Change Downsizing and strategic changes 8-3 Facility Location Considerations Natural Resources & Suppliers Weight-losing or weight gaining products Environment Population Market for Goods Labor Taxes and Subsidies Tax-free bonds, city/state competitive strategy Operational Costs Transportation Rail, intermodal, international, local congestion Benefits of International Locations Specialized Location Characteristics (FTZs) 8-4 Choosing Site Location 1) Optimization Models Based on precise mathematical procedures guaranteed to find the best solution from among a number of feasible solutions. Useful in linking facilities in a network. Defines optimum distribution patterns. Modern computers facilitate LP modeling. 8-5 2) GIS Mapping 8-6 3) Simulation Models Develop a model of a real system and conduct experiments with this model. Can test the effect of various locations on costs and profitability. Does not guarantee an optimum solution but evaluates through the iterative process. 8-7 4) Heuristic Models A model that can provide a good approximation to the least-cost location in a complex decision problem. Reduces problems to a manageable size. 8-8 5) Grid Systems (Gravity Models) Facility or Plant Location based on least-cost position for moving inbound materials and outbound product within a geographic grid. Idea of to find the geographic point where transportation costs are minimized. Tends to pull the location of a facility toward the higher rated areas. A production plant will tend to be nearer the market, reducing the overall transportation of the higher rated finished goods in favor of increasing transportation of lower rated raw materials (implications?). 8-9 Gravity Model Formula Simple Form C= center of mass (ton mile or $ / ton mile) Di = distance from point 0 to location of finished good i. Mi = weight of finished goods sold in market = m i m i i M M D C 1 1 8-10 Example 1 Gravity Model Based on Distance (Warehouse Serving 5 Retail Stores) 8-11 Example 1 Continued: Weighted Gravity Model (Warehouse Serving 5 Retail Stores) Store North location East location Mo. volume (tons) North x volume East x volume 1 3 1 3 (3x3)=9 (1x3)=3 2 3 3 5 (3x5)=15 (3x5)=15 3 2 4 4 (2x4)=8 (4x4)=16 4 1 2 2 (1x2)=2 (2x2)=4 5 3 6 6 (3x6)=18 (6x6)=36 Total 20 52 74 Weighted average 2.6 3.7 8-12...
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LSCM 360 - Warehouse Slides & Example - Distribution...

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