SUPPLY CHAIN

MANAGEMENT
Dr. Le Thi Diem Chau
Dept. of Industrial and Systems Engineering
Email: [email protected]
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Contents
• Building a Strategic Framework to Analyze
Supply Chains
• Designing the Supply Chain Network
• Planning and Coordinating Demand and
Supply chain in a Supply Chain
• Planning and Managing Inventories in a
Supply Chain
• Designing and Planning Transportation
Networks
• Managing Cross-Functional Drivers in a
Supply Chain
• Information Technology in a Supply Chain

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❑ Designing distribution networks and

applications to OMNI-Channel retailing

Introduction ❑ Network designing in the supply chain

Part II. Designing The Supply Chain
Network ❑ Designing global supply chain

networks

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TOPIC 5.
NETWORK DESIGN IN THE
SUPPLY CHAIN
Dr. Le Thi Diem Chau
Dept. of Industrial and Systems Engineering
Email: [email protected]
Section
• The Role of Network Design in the Supply Chain
1

• Factors Influencing Network Design Decisions

2

• Framework for Network Design Decisions

3

• Models for Designing a Regional Network Configuration

4

• Models for Identifying Potential Sites in a Region

5
• Models for Demand Allocation and Plant Location
6
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The Role of
Network Design in ❑ Supply chain network design decisions:
the Supply Chain ▪ Facility role:
What role should each facility play? What
processes are performed at each facility?
▪ Facility location:
Where should facilities be located?
▪ Capacity allocation:
How much capacity should be allocated to
each facility?
▪ Market and supply allocation:
What markets should each facility serve?
Which supply sources should feed each
facility?
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Factors Influencing Network Design Decisions
▪ Strategic Factors
▪ Competitive Factors
− positive externalities between firms
− locating to split the market
▪ Political Factors
▪ Infrastructure Factors
▪ Customer Response Time and Service Level
▪ Total Logistics Costs
▪ Macroeconomic Factors
− tariffs and tax incentives
− exchange-rate and demand risk
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Framework
for Network
Design
Decisions

20XX SAMPLE FOOTER TEXT 8

Phase 1: Define a Supply Chain
Strategy/Design
• Objective: to define a firm’s broad supply chain design
• includes determining the stages in the supply chain and whether
each supply chain function will be performed in-house or outsourced

Start: definition Next

• Firm’s competitive strategy • Forecast the likely evolution

• Supply chain strategy of global and local
competition
• Identify the existing network,
constraints on available
capital

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Phase 2: Define the Regional Facility
Configuration
• Objective: to identify regions where facilities will be located, their
potential roles, and their approximate capacity

2.1 Start 2.2 Next

• a forecast of the demand by • identify fixed and variable costs
country or region • identify regional tariffs, any
− a measure of the size of the requirements for
demand local production, tax incentives,
− a determination of the and any export or import
homogeneity or variability of restrictions for
customer each market

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Phase 3: Select a Set of Desirable
Potential Sites
• Objective: to select a set of desirable potential sites within each region
where facilities are to be located

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Phase 4: Location Choices and
Market Allocation
• Objective: to select, from among the potential sites, a precise location
and capacity allocation for each facility

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Models for Designing a Regional
Network Configuration
• Inputs required:
− demand,
− desired response time,
− fixed cost of opening a facility,
− variable cost of labor and material,
− inventory holding cost,
− transportation cost between every pair of regions,
− sale price of product,
− taxes and tariffs,
− and potential facility capacity.
• The various costs along with taxes and tariffs are combined to obtain the annualized
fixed cost of opening a facility in each region
• The variable cost of serving one unit of demand in a region from another region
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Models for Designing a Regional
Network Configuration
• Data: Cost Data (in Thousands of Dollars) and Demand Data (in
Millions of Units) for SunOil
• SunOil is considering two plant sizes in each location

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Models for Designing a Regional
Network Configuration
• Capacitated Plant Location Model
− assume that all demand must be met and taxes on earnings are
ignored
− Objective: minimize the cost of meeting global demand

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Models for Designing a Regional
Network Configuration
• Capacitated Plant Location Model
Parameter:

Decision variables:

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Models for Designing a Regional
Network Configuration
• Capacitated Plant Location Model

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Models for Designing a Regional
Network Configuration
• Capacitated Plant Location Model: Accounting for Taxes, Tariffs,
and Customer Requirements

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Models for Designing a Regional
Network Configuration
• Capacitated Plant Location Model: Accounting for Taxes, Tariffs,
and Customer Requirements

Figure 5-6 Using Solver to Set

Regional Configuration for SunOil
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Models for Identifying Potential Sites
in a Region
• Gravity location models are used to find locations that minimize the cost of
transporting raw materials from suppliers and finished goods to the markets served
• Gravity models assume that both the markets and the supply sources can be located
as grid points on a plane.
• All distances are calculated as the geometric distance between two points on the
plane.
• These models also assume that the transportation cost grows linearly with the
quantity shipped.
• Inputs required:
− demand at the markets served,
− supply quantity from each supply source,
− coordinate location of each market served and supply source,
− transportation cost per unit from each supply source to the facility and from the
facility to each market
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Models for Identifying Potential Sites
in a Region
• Data:

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Models for Identifying Potential Sites
in a Region
• Data:

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Models for Identifying Potential Sites
in a Region

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Models for Identifying Potential Sites
in a Region

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Models for Identifying Potential Sites
in a Region

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Models for Identifying Potential Sites
in a Region

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Models for Demand Allocation and
Plant Location (tương tự mh trên)
• Inputs required:
− Demand at each market,
− desired response time,
− fixed cost of opening a facility,
− variable cost of labor and material,
− inventory holding cost,
− transportation cost between between every potential location and market,
− sale price of product,
− taxes and tariffs,
− and potential facility capacity.
• The various costs along with taxes and tariffs are combined to obtain the annualized
fixed cost of opening a facility in each location
• The variable cost of serving one unit of demand in each market from each potential
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Models for Allocating Demand to
Existing Production Facilities
• TelecomOne has a total production capacity of 71,000 units per month
and a total demand of 32,000 units per month, whereas HighOptic has
a production capacity of 51,000 units per month and a demand of
24,000 units per month.
• Each year, managers in both companies must decide how to allocate
the demand to their production facilities as demand and costs change

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Models for Allocating Demand to
Existing Production Facilities

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Models for Allocating Demand to
Existing Production Facilities

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Models for Allocating Demand to
Existing Production Facilities

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Locating Plants: The capacitated
plant location model

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Locating Plants: The capacitated
plant location model
Decision variables:

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Locating Plants: The capacitated plant
location model with single sourcing
Decision variables:

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Locating Plants and Warehouse
simultaneously

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Locating Plants and Warehouse
simultaneously
▪ Assumed that units have been appropriately adjusted such that one unit of
input from a supply source produces one unit of the finished product.
▪ The model requires the following inputs:

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Locating Plants and Warehouse simultaneously

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Locating Plants and Warehouse simultaneously
Decision variables:

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Locating Plants and Warehouse simultaneously

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Locating Plants and Warehouse simultaneously

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Locating Plants and Warehouse simultaneously

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Locating Plants and Warehouse simultaneously
Accounting for Taxes, Tariffs, and Customer Requirements

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Locating Plants and Warehouse simultaneously
Accounting for Taxes, Tariffs, and Customer Requirements

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 THANK YOU
Dr. Le Thi Diem Chau
SUPPLY CHAIN MANAGEMENT

[email protected]
https://orcid.org/my-orcid?orcid=0000-
0003-4045-0981

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