1. OUTLINE
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Article discussion (Amazon and Whole Foods)
Example projects
Chapter 5

2. Example projects from previous classes
a mechanical pencil grip that also stores lead inside.
Prepared food delivery to students
Smart Lens is unique because it provides the wearer with zoom capabilities for long range targets, night vision, recording capabilities, autofocusing capabilities, and image projection.
FitFone, a cross between a phone accessory and a workout enhancement

3. Performance – Uncertainties – Rate of innovation
What do you think Western Union thought of the telephone in 1876?
______________________________________________
1981 – Bill Gates thought ________  memory ought to be enough for anybody Engineer’s comment at the Advanced Computing Systems Division of IBM, 1968, about the microchip________________
A Yale University management professor: “The concept of reliable overnight delivery service is interesting and well-formed, but in order to earn better than a 'C,' the idea must be feasible." Who do you think had written that paper?_____________
 ”We don't like their sound, and guitar music is on the way out." - Decca Recording Co. rejecting the __________________, 1962.
How long do you think it took the inventor of xerography to convince a company to develop a commercial copier?________ 3

4. Performance – Uncertainties – Rate of innovation
This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." - Western Union internal memo,   “640K ought to be enough for anybody." - Bill Gates, "But what is it good for?" - Engineer at the Advanced Computing Systems Division of IBM, 1968, commenting on the microchip.
The concept is interesting and well-formed, but in order to earn better than a 'C,' the idea must be feasible." - A Yale University management professor in response to Fred Smith's paper proposing reliable overnight delivery service. (Smith went on to found Federal Express Corp.)
 ”We don't like their sound, and guitar music is on the way out." - Decca Recording Co. rejecting the Beatles, Chester A. Carlson 1938 to 1957 (Haloid to what became Xerox) 4

5. Network Design - goal
A manager's goals when locating facilities and allocating capacity and demand should be:
maxi­mize the overall profitability of the supply chain
provide customers with the appropriate responsiveness

6. 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).

7. 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

8. 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

9. Example – Capacity and Selection

10. Gravity location model

11. Network optimization model

13. 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. (now only for corporations)
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?)