1. OUTLINE
Questions? Comments?
Quiz Results
Return Quiz
Chapter 5

2. 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

3. 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).

4. 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

5. 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

6. Example – Capacity and Selection

7. Gravity location model

8. Network optimization model

10. 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?)