lecture5-SupplyChain_NetworkDesign

# Finished goods dc local dc cross dock local dc cross

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Finished Goods DC Local DC Cross-Dock Local DC Cross-Dock Local DC Cross-Dock Customer 2 DC Store 1 Store 2 Store 2 Store 3 Store 3 5-14

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15 Gravity Methods for Location Ton Mile-Center Solution x,y: Warehouse Coordinates x i , y i : Coordinates of delivery location i d i : Distance (miles) to delivery location i F i : Transportation cost per unit of demand per mile for location i D i : Demand units at location i n i i i i n i i i i i n i i i i n i i i i i d d d d F x D y y x x d F D F y D y F D i x i i 1 1 1 1 2 2 ) ( ) ( Min n i i i i F D d 1 5-15
16 Location Model Based on Rectilinear Distance (Manhattan Distance) 5-16

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17 Network Optimization Models Allocating demand to production facilities Locating facilities and allocating capacity Which plants to establish? How to configure the network? Key Costs : Fixed facility cost Transportation cost Production cost Inventory cost Coordination cost 5-17
18 Demand Allocation Model Which market is served by which plant? Which supply sources are used by a plant? x ij = Quantity shipped from plant site i to customer j 0 ,..., 1 , ,..., 1 , . . 1 1 1 1  x K x D x x c ij i m j ij j n i ij n i m j ij ij n i m j t s Min 5-18

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