Issues relating to the costs of land and the availability of needed utilities

Issues relating to the costs of land and the

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Issues relating to the costs of land and the availability of needed utilities are considered. Also, the availability and expense of utilities such as electrical power, sewage, and industrial waste disposal will need to be factored into the decision making process.In some cases, location selection may be based upon company or CEO preference to an area. Locating near the competition and/or common access with other firms to benefits such as a skilled labor supply, excellent marketing resources, or proximity to key supplier industries is also a determinant. (Pages 519-523)7. What is the difference between a regional/national location decision, and in what ways do the determinants of each differ?Answer: A special case exists for applying the grid technique to the location of a warehouse in a city. The situation’s uniqueness comes from the blanket rate structure, which applies the same rate from an origin to any point within the city or commercial zone. Thus, any location within a city’s commercial zone incurs the same inbound transportation cost from a company’s mix of suppliers used; that is, the cost of moving supplies to a warehouse within the same city does not affect the location decision. Since the supply volumes moving into the warehouse do not affect the location decision, the least-cost warehouse location within a city considers the cost of moving finished goods from the warehouse to the customers. (Pages 537-538)8. What are the principal types of modeling techniques that apply to the task of logistics/supply chain network design and facility location? What are the strengths and limitations of each?Answer: The modeling approaches are classified as: optimizing, heuristic, or simulation. Optimizing models seek the “best” answer given the way in which the problem is formulated. Linear programming and mathematical programming provides the optimum distribution of products among plants, warehouses, and markets. They are optimizing approaches. Advantages of optimizing models are as follows:12-16IM Supply Chain Management: A Logistics Perspective
Supply Chain Network Analysis and DesignInstructor’s Manual Chapter 12The user is guaranteed to have the best solution possible for a given set of assumptions and data.Many complex model structures can be handled correctly.The analysis and evaluation of all alternatives that are generated result in a more efficient analysis.Reliable run-to-run comparisons can be made, since the “best” solution is guaranteed for each run.Cost or profit savings between the optimum and heuristic solution can be significant.However, an optimization technique, linear programming, is limited due to the need for the problem formulation to be deterministic and capable of linear approximation. Also, linear programming does not allow for consideration of fixed as well as variable costs of operating logistics facilities.Simulation models develops a computer representation of a logistics system, manipulates key variables and provides logistics managers with a helpful test medium for evaluating alternative logistics strategies. Although simulation models are not designed to produce optimum solutions, they are very capable in terms of their ability to incorporate relativelycomprehensive and detailed problem descriptions. However, extensive data collection and mathematical relationships are required.Heuristic models do not generate a “best” solution, but produce a good first approximation. These models are used for warehouse location, truck routing, and warehouse product layout. They help to reduce a problem to a manageable size and

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