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Supply Chain Management: Logistics Network Design - UNB

Supply Chain Management: Logistics NetworkDesignDonglei of Business Administration, University of New Brunswick, NB Canada FrederictonE3B 9Y2 Donglei Du (UNB)SCM1 / 67 Table of contents I1 IntroductionThe Logistics NetworkMajor Steps in Network Design2A Facility Location Problem3 Optimial Distribution and outsourcing4 Maximum flow problem5 Network synthesis problemOffline versionOnline versionDonglei Du (UNB)SCM2 / 67 Section 1 IntroductionDonglei Du (UNB)SCM3 / 67 Subsection 1 The Logistics NetworkDonglei Du (UNB)SCM4 / 67 The Logistics Network IThe objective of this chapter is to present some issues involvedin the Design and configuration of the Logistics these are strategic decisions because they have along-standing effect on the Logistics Network consists of:Facilities:Plants/Vendors PortsWarehouseRetailers/Distribution CentersCustomersRaw materials and finished products that flow between Du (UNB)SCM5 / 67 The Logistics Network IIplantswarehousesretailerscustomersInve ntory &warehousing costsTransportationcostTransportationcos tTransportationcostTypical Logistics ConfigurationInventory &warehousing costsProduction/purchase costsDonglei Du (UNB)SCM6 / 67 Key Strategic Decisions in the Logistics Network IAssuming that plants and retailer locations are fixed, weconcentrate on the following strategic decisions in terms the optimal number, location, and size of warehousesDetermine optimal sourcing strategyWhich plant/v

through the warehouse Fixed Cost: All costs that are not proportional to the amount of material the ows through the warehouse. It is typically proportional to warehouse space size (or warehouse capacity) but in a nonlinear way. 000,20 000,40 000,60 000,80 000, 100 000, 150 1200 800 Warehouse capacity cost Donglei Du (UNB) SCM 18 / 67

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