1 / 23

ISEN 601 Location Logistics

ISEN 601 Location Logistics. Dr. Gary M. Gaukler Fall 2011. Facility Location and SCM. Goal of supply chain management: Produce and distribute the right quantities to the right locations at the right time

kory
Download Presentation

ISEN 601 Location Logistics

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. ISEN 601Location Logistics Dr. Gary M. Gaukler Fall 2011

  2. Facility Location and SCM • Goal of supply chain management: Produce and distribute • the right quantities • to the right locations • at the right time while minimizing system wide costs and satisfying customer service level requirements

  3. Facility Location and SCM • SCM encompasses: • Financial transactions • Physical storage & transportation • Information management • Supply chain flows: • We are mostly concerned with the physical flows in this course

  4. Facility Location and SCM • Generic sample supply chain:

  5. Facility Location and SCM • In this course: Facility location = Location of distribution facilities • e.g.: where to place a new DC in continental US? • Hence we will talk about demand at a facility, and the facility’s distance to the customer etc.

  6. Facility Location and SCM • Facility Location plays an important role in designing the supply chain: • Where to place plants, warehouses, etc. • Supply chain designs change: • New markets • Changes in customer demand • New technologies • Facility location is an important and recurring activity!

  7. ProLogis: Industrial Real Estate

  8. Aside: ProLogis

  9. Facility Location • What metrics do we use? How do we decide whether one location is better than another? • Hard Soft

  10. Facility Location • In our mathematical analyses, we will disregard the soft factors • Use soft factors ahead of time to pare down the candidate set, or • Use soft factors to decide among multiple solutions • It’s important to understand that our mathematical methods are just onetool that should be used to do facility location • Our methods do not provide the answer • Examples: • Google server farm location • Toyota truck assembly plant location

  11. Facility Location • So why bother with quantitative models at all?

  12. Facility Location - Tradeoffs • Number of facilities vs. response time

  13. Facility Location - Tradeoffs • Number of facilities vs. inventory cost

  14. Facility Location - Tradeoffs • Number of facilities vs. transportation cost

  15. Setup of a Facility Location Problem • Locate new facilities • Considering: • Interaction with existing facilities • Customer demands • Customer locations • Potential locations of new facilities • Capacity considerations • Focus on “where to put the new facility”

  16. Classes of Facility Location Problems • Continuous Location Models • Customers anywhere on plane • New facilities anywhere on plane • Demand point = aggregated area demand • Distance calculations important • Euclidean distance • Rectilinear distance • In general, “quick and dirty” models

  17. Classes of Facility Location Problems • Continuous Location Models • Single Facility Minisum • Minimize sum of weighted distances from NF to customers • Single Facility Minimax • Minimize maximum weighted distance from NF to customers

  18. Classes of Facility Location Problems • Continuous Location Models • Multi-facility Minisum • Like SFMS, but place more than one NF • Location-Allocation • Like MFMS, but also determine optimal interaction between NFs

  19. Classes of Facility Location Problems • Network Location Models • Customers are on network nodes • NFs located on network nodes • Distances implicitly given by network • Network = tree or general network • Types of models: • Covering (“each customer is within 2 hours of a warehouse”) • Center (~ minimax principle) • Median (~ minisum principle)

  20. Classes of Facility Location Problems • Discrete Location Models • Uncapacitated / capacitated warehouse location models • Candidate NF locations • Facilities can split demand • Cost of opening warehouse vs. service coverage

  21. Single Facility Minisum • Ex: locating a machine in a shop, locating a warehouse in a sales region • Objective: minimize total cost • Total cost depends on location of NF • Notation: • m existing facilities, with facility j located at Pj = (aj, bj) • X location of NF, X = (x,y)

  22. Single Facility Minisum • Notation: • tj = number trips per month between j and NF • vj = avg velocity between j and NF • cj = cost of transportation per unit time • d(X,Pj) = distance between j and NF • So, monthly cost of moving material between j and NF is:

  23. Single Facility Minisum • Define: • Weight wj = cost of interaction per unit distance • So, total cost is: • Goal:

More Related