1 / 46

Supply Chain Management

Supply Chain Management. Facility Location Techniques. Facilities. Plants Warehouses Distribution centers Service centers Retail operations Public Service Facilities. Types Of Facilities. Heavy manufacturing auto plants, steel mills, chemical plants Light industry

arden-joyce
Download Presentation

Supply Chain Management

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Supply Chain Management Facility Location Techniques

  2. Facilities • Plants • Warehouses • Distribution centers • Service centers • Retail operations • Public Service Facilities

  3. Types Of Facilities • Heavy manufacturing • auto plants, steel mills, chemical plants • Light industry • small components manufacturing, assembly • Warehouse & distribution centers • Retail & service • Public sector

  4. Factors In Heavy Manufacturing Location • Construction costs • Land costs • Raw material & finished goods shipment modes • Proximity to raw materials • Utilities • Labor availability

  5. Factors In Light Industry Location • Construction costs • Land costs • Easily accessible geographic region • Education & training capabilities

  6. Factors In Warehouse Location • Transportation costs • Proximity to markets

  7. Factors In Retail Location • Proximity to customers • Location is everything

  8. Government stability Government regulations Political & economic systems Economic stability & growth Exchange rates Culture Climate Export import regulations Duties & tariffs Raw material availability Number and proximity of suppliers Transportation & distribution system Labor cost & education Available technology Commercial travel Technical expertise Cross-border trade regulations Group trade agreements Global Location Factors

  9. Labor (availability, education, cost & unions) Proximity of customers Number of customers Construction/leasing costs Land costs Modes and quality of transportation Transportation costs Incentive packages Governmental regulations Environmental regulations Raw material availability Commercial travel Climate Infrastructure Quality of life Regional Location Factors 1

  10. Community government Local business regulations Government services Business climate Community services Taxes Availability of sites Financial Services Community inducements Proximity of suppliers Education system Regional Location Factors 2

  11. Customer base Construction/leasing cost Land cost Site size Transportation Utilities Zoning restrictions Traffic Safety/security Competition Area business climate Income level Site Location Factors

  12. Location Incentives • Tax credits • Relaxed government regulation • Job training • Infrastructure improvement • Money

  13. Location Analysis Selected Techniques & Models • Location Rating Factor • Median Location • Center-of-Gravity • Load-Distance • Transportation Model • p-Center Model

  14. Location Rating Factor • Identify important factors • Weight factors (0.00 - 1.00) • Subjectively score each factor (0 - 100) • Sum weighted scores

  15. Location Factor Example Scores (0 to 100) Weight Site 1 Site 2 Location Factor Site 3 Labor pool and climate Proximity to suppliers Wage rates Community environment Proximity to customers Shipping modes Air service .30 .20 .15 .15 .10 .05 .05 80 100 60 75 65 85 50 65 91 95 80 90 92 65 90 75 72 80 95 65 90

  16. Location Factor Example Weighted Scores Site 1 Site 2 Location Factor Site 3 Labor pool and climate Proximity to suppliers Wage rates Community environment Proximity to customers Shipping modes Air service Total Score 24.00 20.00 9.00 11.25 6.50 4.25 2.50 77.50 19.50 18.20 14.25 12.00 9.00 4.60 3.25 80.80 27.00 15.00 10.80 12.00 9.50 3.25 4.50 *82.05

  17. Single Facility Location (SFL) • Let wi = the interaction between the new facility and customer i • Let di(x,y) = the travel distance from customer location i to any location (x,y) • The SFL Model

  18. Distance Measures • Using the Rectilinear Distance measure • di(x,y) = |ai - x| + |bi - y| • Using the Euclidean Distance measure • di(x,y) = [(ai - x)2 + (bi - y)2]1/2 • Using the Squared Euclidean Distance measure (Used in Center of Gravity!) • di(x,y) = {[(ai - x)2 + (bi - y)2]1/2}2

  19. SFL with Rectilinear Distance: Median Problem • Place Existing Facilities in a Non-Decreasing Order of the Coordinates (x and y, separately) • Find the Cumulative Sum of the Weights and obtain the Median • The Coordinate which corresponds to the Cumulative Sum of the Weights just Exceeding the Median point is the Median Location for the New Facility

  20. Example • Suppose four hospitals are located within a city at A(10,6), B(8,5), C(4,3), and D(15,6). Locate a centralized blood-bank facility at (x, y) that will serve the hospitals. The number of deliveries to be made per year between the blood-bank and each hospital is estimated to be 350, 900, 420, and 1350, respectively.

  21. Solution For x*: Hospital ai wiwi C 4 420 420 B 8 900 1320 A 10 350 1670 D 15 1350 3020 Median 3020/2 = 1510 x* = 10

  22. Solution For y*: Hospital bi wiwi C 3 420 420 B 5 900 1320 A,D 6 350+1350 3020 Then, y* = 6

  23. SFL with Squared Euclidean Distance: Center-of-Gravity Problem • Locate facility at center of geographic area • Based on weight & distance traveled • Establish grid-map of area • Identify coordinates & weights shipped for each location

  24. n n   xiWi yiWi i = 1 i = 1 x = y = n n   Wi Wi i = 1 i = 1 Grid-Map And Coordinates y 2 (x2, y2), W2 y2 1 (x1, y1), W1 y1 where, x, y = coordinates of the new facility at center of gravity xi, yi= coordinates of existing facility i Wi = annual weight shipped from facility i 3 (x3, y3), W3 y3 x1 x2 x3 x

  25. 700 600 500 400 300 200 100 x 100 200 300 400 500 600 700 Center-of-Gravity Example A B C D X 200 100 250 500 Y 200 500 600 300 Wt 75 105 135 60 y C B o Center D A 0

  26. n  xiWi i = 1 (200)(75) + (100)(105) + (250)(135) + (500)(60) x = n 75 + 105 + 135 + 60  Wi i = 1 n  yiWi i = 1 (200)(75) + (500)(105) + (600)(135) + (300)(60) y = n 75 + 105 + 135 + 60  Wi i = 1 Calculating Center-of-Gravity = 238 = = = 444

  27. Load-Distance Technique • Compute (Load x Distance) for each site • Choose site with lowest (Load x Distance) • Distance can be actual or straight-line

  28. n  li di LD = i = 1 Load-Distance Calculations where, LD = the load-distance value li = the load expressed as a weight, number of trips or units being shipped from the proposed site and location i di = the distance between the proposed site and location i di = (xi - x)2 + (yi - y)2 where, (x,y) = coordinates of proposed site (xi , yi) = coordinates of existing facility

  29. Load-Distance Example Suppliers A B C D X 200 100 250 500 Y 200 500 600 300 Wt 75 105 135 60 Potential Sites Site X Y 1 360 180 2 420 450 3 250 400 Compute distance from each site to each supplier = 161.2 Site 1 dA = (xA - x1)2 + (yA - y1)2 = (200-360)2 + (200-180)2 = 412.3 dB = (xB - x1)2 + (yB - y1)2 = (100-360)2 + (500-180)2 dC = 434.2 dD = 184.4

  30. Site 2 dA = 333 dB = 323.9 dC = 226.7 dD = 170 Site 3 dA = 206.2 dB = 180.4 dC = 200 dD = 269.3 Compute load-distance n  li di LD = i = 1 Site 1 = (75)(161.2) + (105)(412.3) + (135)(434.2) + (60)(434.4) = 125,063 Site 2 = (75)(333) + (105)(323.9) + (135)(226.7) + (60)(170) = 99,789 Site 3 = (75)(206.2) + (105)(180.3) + (135)(200) + (60)(269.3) = 77,555* * Choose site 3

  31. Transportation Model • M different sources • N different customers • Si represents the capacity at source i • Dj represents the demand of customer j • cij is the cost per unit to produce the product at source i and send it to customer j

  32. Transportation Model • xij = number of units to be shipped from source i to customer j • The objective is to determine the minimum cost production and distribution plan for a given set of facilities

  33. Mathematical Formulation of the Transportation model

  34. The Transportation Model • Ship items at lowest cost • Sources have fixed supplies • Destinations have fixed demand 1

  35. Transportation Problem Grain Elevator Supply 1. Kansas City 150 2. Omaha 175 3. Des Moines 275 600 tons Mill Demand A. Chicago 200 B. St. Louis 100 C. Cincinnati 300 600 tons 2

  36. Shipping Cost Table Mill Grain Chicago St. Louis Cincinnati Elevator A B C Kansas City $6 $8 $10 Omaha 7 11 11 Des Moines 4 5 12 3

  37. The Transportation Tableau To Chicago St. Louis Cincinnati Supply From 6 8 10 150 Kansas City 7 11 11 175 Omaha 4 5 12 275 Des Moines Demand 200 100 300 600 4

  38. Network Of Routes 4 Des Moines (275) Chicago (200) 12 5 7 11 Omaha (175) Cincinnati (300) 11 10 6 Kansas City (150) St. Louis (100) 8 5

  39. Solving Transportation Problems • Manual methods • Stepping-stone • Modified distribution (MODI) • Computer solution • Excel • POM for Windows 6

  40. Solution For Grain Shipment Mill Elevator Chicago St. Louis Cincinnati Supply Shipped Kansas City 25 0 125 150 150 Omaha 0 0 175 175 175 Des Moines 175 100 0 275 275 Demand 200 100 300 600 Shipped 200 100 300 Cost 4525 7

  41. A Solution 8

  42. Unbalanced Problems Location Capacity(tons) A. Charlotte 90 B. Raleigh 50 C. Lexington 80 D. Danville 60 280 Location Demand (tons) 1. Richmond 120 2. Winston-Salem 100 3. Durham 110 330 9

  43. Shipping Costs To From 1 2 3 A $70 $100 $50 B 120 90 40 C 70 30 110 D 90 50 70 10

  44. Transportation Solution Tableau To Winston- Salem Richmond Durham Supply From 500 100 50 90 90 Charlotte 120 90 40 30 20 50 Raleigh 70 50 110 80 80 Lexington 90 50 70 Danville 40 20 60 Demand 120 100 110 Cost 15900 11

  45. Public Service Facility Location Model: p-Center Model Let : yi = 1, if a facility is opened at site j; 0, otherwise xij = 1, if people at location j are assigned to the facility at site i; 0, otherwise w = the maximum distance between any customer and the serving (closest) facility

  46. p-Center Model • for every customer j = 1, … , N • for every site i = 1, … , M • for every customer j = 1, … , N

More Related