OUTLINE Questions? Comments? Quiz Results Return Quiz Chapter 5
Network Design - goal A manager's goal when locating facilities and allocating capacity and demand should be: maximize the overall profitability of the supply chain provide customers with the appropriate responsiveness
Network Design – Location and capacity Models of supply chains are used to decide on: locations where facilities will be established the capacity to be assigned to each facility which market each facility should service Managers must make this decision considering a time horizon over which locations and capacities will not be altered (typically in years).
Network Design – Demand Allocation Models of supply chains are also used to decide on: assigning current demand to the available facilities identifying lanes along which product will be transported Managers must consider this decision at least on an annual basis as demand, prices, and tariffs change
Network Design – Required Information Location of supply sources and markets Location of potential facility sites Demand forecast by market Facility, labor, and material costs by site Transportation costs between each pair of sites Inventory costs by site as well as a function of quantity Sale price of product in different regions Taxes and tariffs as product is moved between locations Desired response time and other service factors
Example – Capacity and Selection
Gravity location model
Network optimization model
Taxes Corporations in the US (and most countries) pay federal income taxes Depending on which state you are incorporated in, you also pay state income tax State Income tax is a deductible expense for calculating federal tax, but not the other way around. Look up state taxes on line Look at your ISE460 text for federal taxes but use the new ones (what do you think of them?)