Case: The Bis Corporation
Network Planning
Dr A. Agarwal
The Bis Corporation is a company that produces and distribute paints. Currently, eight manufacturing plants located in cities such as Atlanta and Denver serve about 2000 retails stores including home Depot, Walmart as well Bis owned stores.
Distribution System
The current distribution system is a singletier network where all products are shipped from the plants to 17 warehouses, located all over the United States, and from there to retail accounts.
Company History
The company was established in 1964 as a family venture and grew in the 1970s and 1980s at a fairly steady rate. Bis is now owned by 12 shareholders and run by newly appointed CEO.
Supply Chain Management
Bis produces and sells about 4,000 different SKUs and a similar price and the gross margin in the paint industry is about 20%. Despite high profitability, the new CEO is concerned that supply chain is not the most efficient one. Inbound truck utilization, inventory turns and service levels are just too low.
Current Distribution Strategy
Produce and store at the manufacturing plants Pick, load and ship to a warehouse centres. Unload and store at the warehouse Pick ,load, and deliver to stores.
Points need to be addressed
What is the best network configuration that the Bis corporation should use? Given the new network configuration, where should the company position inventory? How much? Which plant should produce which product?
Todays session
How a company can develop a model representing its logistics network. How a company can validate this model. How aggregating customers and products affects the accuracy of the model. How a company decides on where to position inventory. How a company knows whether, when, and where to expand its production capacity.
Why Supply Chain and Logistics Management One of the most important challenge in organized retail in India is faced by ? Poor supply chain and logistics management.
Importance of Supply Chain and Logistics Management
The importance can be understood by the fact that the logistics management cost component in India is as high as 7% -10% against the global average of 4% - 5% of the total retail price.
Future of Supply Chain and Logistics Management
Therefore, the margins in the retail sector can be improved by 3% - 5% by just improving the supply chain and logistics management.
Future of Supply Chain and Logistics Management
In India, with demand for end-to-end logistics solutions far outstripping supply, the logistics market for organized retail is pegged at $50 million and is growing at 16%.
Future of Supply Chain and Logistics Management
It is expected to reach $120-$130 million by 2010-2011. Organized retail on the other hand is growing at 400% and is expected to reach around $30 billion by 2010-2011.
The Logistics Network
The Logistics Network consists of: Facilities: Vendors, Manufacturing Centers, Warehouse/ Distribution Centers, and Customers Raw materials and finished products that flow between the facilities.
Sources: plants vendors ports
Regional Warehouses: stocking points
Field Warehouses: stocking points
Customers, demand centers sinks
Movement of Materials within Factories
The typical locations from/to which material is moved:
Incoming Vehicles Receiving Dock Quality Control Warehouse
Supply
Work Center
Inventory & warehousing costs Transportation costs Inventory & warehousing costs
Other Work Centers
Packaging
Finished Goods
Production/ purchase costs
Transportation costs
Shipping
Shipping Dock
Outgoing Vehicles
Why Network Planning?
Find the right balance between inventory, transportation and manufacturing costs, Match supply and demand under uncertainty by positioning and managing inventory effectively, Utilize resources effectively by sourcing products from the most appropriate manufacturing facility
Three Hierarchical Steps
Network design
Number, locations and size of manufacturing plants and warehouses Assignment of retail outlets to warehouses Major sourcing decisions Typical planning horizon is a few years.
Inventory positioning:
Identifying stocking points Selecting facilities that will produce to stock and thus keep inventory Facilities that will produce to order and hence keep no inventory Related to the inventory management strategies
Resource allocation:
Determine whether production and packaging of different products is done at the right facility What should be the plants sourcing strategies? How much capacity each plant should have to meet seasonal demand?
Network Design
determines physical configuration and infrastructure of the supply chain. is a strategic decision with long-lasting effects on the firm. involves decisions relating to plant and warehouse location as well as distribution and sourcing
Reevaluation of Infrastructure
Changes in:
demand patterns product mix production processes sourcing strategies cost of running facilities.
Mergers and acquisitions may mandate the integration of different logistics networks
Strategic Decisions
Determining the appropriate number of facilities such as plants and warehouses. Determining the location of each facility. Determining the size of each facility. Allotting space for products in each facility. Determining sourcing requirements. Determining distribution strategies, that is, the allocation of customers to each warehouse.
Objective of Logistics Management
is to design or re-configure the logistics network in order to minimize annual systemwide cost, including production and purchasing costs, inventory holding costs, facility costs (storage, handling, and fixed costs) and transportation costs, subject to a variety of service level requirements
Warehouse location decision
A firm must balance the cost of opening new warehouses with the advantages of being close to the customer.
Network Design Tools: Major Components
Mapping Mapping allows you to visualize your supply chain and solutions Mapping the solutions allows you to better understand different scenarios Color coding, sizing, and utilization indicators allow for further analysis Data Data specifies the costs of your supply chain The baseline cost data should match your accounting data The output data allows you to quantify changes to the supply chain Engine Optimization Techniques
Data collection for Network Design 1. Locations of customers, retailers, existing warehouses and distribution centres, manufacturing facilities, and suppliers. 2. All products including volumes, and special transport modes (e.g. refrigerated). 3. Annual demand for each product by customer location.
Data Collection
5. Warehousing costs including labour, inventory carrying charges, and fixed operating costs 6. Shipment sizes and frequencies for customer delivery 7. Order processing costs 8. Customer service requirements and goals 9. Production and sourcing costs and capacities.
Data Aggregation
Amount of data involved in any optimization model is overhelming. A typical soft drink distribution system has between 10,000 and 120,000 accounts (customers). In a retail logistics network, such as Wal-Mart or JC Penney, the number of items that flow through the network is in the thousands or even hundreds of thousands.
An essential first step is data aggregation Customers
Grid network Clustering technique
Items
Distribution pattern Product type
Logistics Network Design
Logistics Network Design
Too Much Information
Customers and Geo-coding Sales data is typically collected on a bycustomer basis Network planning is facilitated if sales data is in a geographic database rather than accounting database 1. Distances 2. Transportation costs New technology exists for Geocoding the data based on Geographic Information System (GIS)
Aggregating Customers
Customers located in close proximity are aggregated using a grid network or clustering techniques. All customers within a single cell or a single cluster are replaced by a single customer located at the centroid of the cell or cluster. We refer to a cell or a cluster as a customer zone.
Impact of Aggregating Customers
The customer zone balances Loss of accuracy due to over aggregation Needless complexity What effects the efficiency of the aggregation? The number of aggregated points, that is the number of different zones The distribution of customers in each zone.
Why Aggregate?
The cost of obtaining and processing data The form in which data is available The size of the resulting location model The accuracy of forecast demand
Historical Data for the two customers Year 2004 Avg. STD.D Coeff. Annual ev. of Var. Dema nd 22.346 28.549 19.567 25.457 24.237 4.658 0.192 17.835 21.765 19.875 24.346 20.905 3.427 40.181 50.314 39.442 49.803 45.142 6.757 0.173 0.150 2005 2006 2007
Recommended Approach
Use at least 300 aggregated points Make sure each zone has an equal amount of total demand Place the aggregated point at the center of the zone In this case, the error is typically no more than 1%
Cust. A Cust. B Total
The variability faced by the aggregated customer, measured using either the standard deviation or the coefficient of variation, is smaller than the combined variabilities faced by the two existing customers
Testing Customer Aggregation
1 Plant; 1 Product Considering transportation costs only Customer data
Original Data had 18,000 5-digit zip code ship-to locations Aggregated Data had 800 3-digit ship-to locations Total demand was the same in both cases
Comparing Output
Total Cost:$5,796,000 Total Customers: 18,000 Total Cost:$5,793,000 Total Customers: 800
Cost Difference < 0.05%
Product Grouping
Companies may have hundreds to thousands of individual items in their production line
Variations in product models and style Same products are packaged in many sizes
Aggregating Items/Products
Items are aggregated into a reasonable number of products groups based on
Distribution Pattern: All products picked up at the same source and destined to the same customers are aggregated together. Product Type: In many cases, products might simply be variations in product models or style or might differ only in the type of packaging.
Collecting all data and analyzing it is impractical for so many product groups
A Strategy for Product Aggregation
Place all SKUs into a source-group
A source group is a group of SKUs all sourced from the same place(s)
Test Case for Product Aggregation
5 Plants 25 Potential Warehouse Locations Distance-based Service Constraints Inventory Holding Costs Fixed Warehouse Costs Product Aggregation
46 Original products 4 Aggregated products Aggregated products were created using weighted averages
Within each of the source-groups, aggregate the SKUs by similar logistics characteristics
Weight Volume Holding Cost
Sample Aggregation Test: Product Aggregation
Total Cost:$104,564,000 Total Products: 46 Total Cost:$104,599,000 Total Products: 4
Transportation Rates
The next step in constructing an effective distribution network design model is to estimate transportation cost. An important characteristics of most transportation rates, including truck, rail, and others, is that the rates are almost linear with distance but not with volume.
Cost Difference: 0.03%
Transportation Costs associated with an internal fleet
Estimating transportation costs for company-owned trucks is typically quite simple. It involves annual costs per truck, annual mileage per truck, annual amount delivered, and the trucks effective capacity. All this information can be used to easily calculate cost per mile per SKU.
Transportation Costs associated with an external fleet
Incorporating transportation rates for an external fleet into the model is more complex. Two modes of transportation: truck load (TL), and less than truck load (LTL)
Transportation cost related to TL
The country is divided into zones. The carriers provide zone-to-zone table costs. This database provided the costs per mile per truckload between any two zones.
For Example
To calculate TL cost from one city A of one zone Z1 to another city B of second zone Z2, one needs to get the cost per mile for this pair and multiply it by the distance between the two cities (A and B). TL cost structure is not symmetric. Cost is more for moving A to B than from B to A.
Transportation cost related to LTL
In the LTL industry, the rates typically belong to one of three basic types of freight rates:
Class (Standard Rates that can be found for almost all products or commodities) Exception (Specialized rates used to provide either less expensive rate or commodityspecific rates ) Commodity
Industry Benchmarks: Transportation Costs
Transportation Rates (typical values)
Truck Load: $0.10 per ton-mile LTL: $0.31 per ton-mile Small Package: 3X LTL rates- more for express Rail: 50-80% of TL rates
LTL Freight Rates
Each shipment is given a class ranging from 500 to 50 The higher the class the greater the relative charge for transporting the commodity. A number of factors are involved in determining a products specific class. These include
Density Ease or difficulty of handling Liability for damage
Other Issues
Mileage Estimation
Street Network Straight line distances
This is of course an underestimate of the road distance. To estimate the road distance we multiply the straight line distance by a scale factor, . Typically =1.3.
Mileage Estimation
Straight line distances
Example: Suppose we want to estimate the distance between two points a and b where Lona and Lata are the longitude and latitude of the point a and similarly for b. Then
Mileage Estimation
Straight line distances: The previous equation is accurate only for short distances; otherwise we use
lat - lat b lon - lonb Dab = 2(69) sin1 sin a + cos(lata ) cos(latb ) sin a 2 2
2 2
This is of course an underestimate of the road distance. To estimate the road distance we multiply Dab by a scale factor, . Typically = 1.3 or 1.14.
Dab = 69 (lona lonb ) + (lat a latb )
where Dab is the straight line distance (miles) from a to b.
Warehousing
Warehousing is the management of materials while they are in storage. Warehousing activities include: Storing Dispersing Ordering Accounting
Warehousing
Record keeping within warehousing requires a stock record for each item that is carried in inventories. The individual item is called a stockkeeping unit (SKU). Stock records are running accounts that show: On-hand balance Receipts and expected receipts Disbursements, promises, and allocations
Warehouse Costs
Warehouse Costs
Facility costs 1. Fixed costs; not proportional to the amount of material the flows through the warehouse 2. Handling costs; labor costs, utility costs 3. Storage costs; proportional to the inventory level Facilities capacities
How to measure storage costs? Define Inventory turnover ratio
=
Annual sales Average inventory level
In our case it is the ratio of the total flow through the warehouse to the average inventory level. If the ratio is then the average inventory level is total flow divided by . Multiplying the average inventory level by the inventory holding cost gives the annual storage costs.
Warehouse Costs
Fixed costs is a function of warehouse capacity
Other Issues
Future demand Facility costs
Fixed costs; not proportional to the amount of material the flows through the warehouse Handling costs; labor costs, utility costs Storage costs; proportional to the inventory level
Facilities capacities
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Warehouse Capacities
Required storage space is about twice the average inventory level.
Warehouse Capacities
A multiple factor of 3 to product space to account for access and handling space Example
Annual flow is 1,000 units; inventory turnover rate is 10.0. Then, the average inventory level is about 100 units. If each unit takes 10 ft2, the required space for the product is 2,000 ft2. The total space required for the warehouse is about 6,000 ft2.
Industry Benchmarks: Number of Distribution Centers
Pharmaceuticals Food Companies Chemicals
Warehouse Locations
When locating new facilities such as warehouses, a number of requirements have to be satisfied: 1. Geographical and infrastructure conditions 2. Natural resources and labor availability
Avg. # of WH
3
- High margin product - Service not important (or easy to ship express) - Inventory expensive relative to transportation
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- Low margin product - Service very important - Outbound transportation expensive relative to inbound
3. Local industry and tax regulations 4. Public interest As a result, there is only a limited number of locations that would meet all the requirements. These are the potential location sites for the new facilities.
Service Level Requirements
Example
Maximum distance Proportion of customers whose distance to their assigned warehouse is no more than a given distance. For example, we might require that 95 percent of the customers be situated within 200 miles of the warehouse serving them.
Future Demands
Decision regarding the number, location, and size of warehouse have an impact on the firm for at least the next three to five years.
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Minimize the cost of your logistics network without compromising service levels
$90 $80 $70
The Impact of Increasing the Number of Warehouses
Improve service level due to reduction of average service time to customers Increase inventory costs due to a larger safety stock
Optimal Number of Warehouses
Cost (millions $)
$60 $50 $40 $30 $20 $10 $Total Cost Transportation Cost Fixed Cost Inventory Cost
Increase overhead and set-up costs Reduce transportation costs in a certain range Reduce outbound transportation costs Increase inbound transportation costs
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Number of Warehouses
Components of Customer Service which are influenced by the structure of the distribution network
Response Time Product Variety Product Availability Customer Experience Order Visibility Returnability
A Typical Network Design Model
Several products are produced at several plants. Each plant has a known production capacity. There is a known demand for each product at each customer zone. The demand is satisfied by shipping the products via regional distribution centers. There may be an upper bound on total throughput at each distribution center.
A Typical Location Model
There may be an upper bound on the distance between a distribution center and a market area served by it A set of potential location sites for the new facilities was identified Costs:
Set-up costs Transportation cost is proportional to the distance Storage and handling costs Production/supply costs
Complexity of Network Design Problems
Location problems are, in general, very difficult problems. The complexity increases with
the number of customers, the number of products, the number of potential locations for warehouses, and the number of warehouses located.
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Solution Techniques
Mathematical optimization techniques:
Exact algorithms: find optimal solutions Heuristics: find good solutions, not necessarily optimal
Heuristics and the Need for Exact Algorithms
Single product Two plants p1 and p2
Plant P1 has an annual capacity of 200,000 units. Plant p2 has an annual capacity of 60,000 units.
Simulation models: provide a mechanism to evaluate specified design alternatives created by the designer.
The two plants have the same production costs. There are two warehouses w1 and w2 with identical warehouse handling costs. There are three markets areas c1,c2 and c3 with demands of 50,000, 100,000 and 50,000, respectively.
Heuristics and the Need for Exact Algorithms
Table 1 Distribution costs per unit
Facility Warehouse W1 W2 P1 0 5 P2 4 2 C1 3 2 C2 4 1 C3 5 2
Why Optimization Matters?
$0
Cap = 200,000
$5 $4
$3 $4 $5 $2 $2 $1 $2
D = 50,000
D = 100,000
Cap = 60,000
D = 50,000
Production costs are the same, warehousing costs are the same
Traditional Approach #1:
Assign each market to closet WH. Then assign each plant based on cost.
D = 50,000 Cap = 200,000
$5 x 140,000 $2 x 50,000 $1 x 100,000 $2 x 50,000
Example - Heuristics 1
Heuristic 1: For each market we choose the cheapest warehouse to source demand. Thus, c1, c2 and c3 would be supplied by w2. Now for every warehouse choose the cheapest plant, i.e., get 60,000 units from p2 and the remaining 140,000 from p1. The total cost is: 250000 + 1100000 + 2*50000 + 260000 + 5140000 = 1,120,000.
D = 100,000
Cap = 60,000
$2 x 60,000
D = 50,000
Total Costs = $1,120,000
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Traditional Approach #2:
Assign each market based on total landed cost
Traditional Approach #2:
Assign each market based on total landed cost
$0
Cap = 200,000
$5 $4
$3 $4 $5 $2 $2 $1 $2
D = 50,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $3 $7 $7 $4
$0
Cap = 200,000
$5
$3 $4 $5 $2 $2 $1 $2
D = 50,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $3 $7 $7 $4
D = 100,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $4 $6 $8 $3
D = 100,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $4 $6 $8 $3
$4
Cap = 60,000
Cap = 60,000
D = 50,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $5 $7 $9 $4
D = 50,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $5 $7 $9 $4
Market #1 is served by WH1, Markets 2 and 3 are served by WH2
Traditional Approach #2:
Assign each market based on total landed cost
The H Example - Heuristics 2 Approach
Heuristic 2: For each market area, choose the warehouse such that the total costs to get delivery from the warehouse is the cheapest, that is, consider the source and the distribution. Thus, for market area c1, consider the paths p1w1c1, p1w2c1, p2 w1c1, p2w2c1. Of these the cheapest is p1w1c1 and so choose w1 for c1. Similarly, choose w2 for c2 and w2 for c3. The total cost for this strategy is 920,000.
$0 x 50,000
Cap = 200,000
$3 x 50,000
D = 50,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $3 $7 $7 $4
$5 x 90,000 $1 x 100,000 $2 x 50,000
D = 100,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $4 $6 $8 $3
Cap = 60,000
$2 x 60,000
D = 50,000
P1 to WH1 P1 to WH2 P2 to WH1 P2 to WH 2 $5 $7 $9 $4
Total Cost = $920,000
What is the LP?
min
What is the LP?
: 0 x 1pw + 5 x 1pw + 4 x 2pw + 2 x 2pw2 + 3 x 1wm + 4 x 1wm ,1 ,2 ,1 , ,1 ,2
wm wm + 5 x 1wm + 2 x 2 ,1 + 2 x 2 , 3 ,3
Let : xijpw = the flow from plant i to warehouse j x wm = the flow from warehouse j to market k jk
s.t.
x 2pw + x 2pw2 60 , 000 ,1 , x 1pw + x 2pw = x 1wm + x 1wm + x 1wm ,1 ,1 ,1 ,2 ,3
wm wm x 1pw + x 2pw2 = x 2wm + x 2 , 2 + x 2 , 3 ,2 , ,1
x 1wm + x 2wm = 50 , 000 ,1 ,1 x 1wm + x 2wm2 = 100 , 000 ,2 , x 1wm + x 2wm2 = 50 , 000 ,3 , All flows non - negative
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Example Optimal Solution
The problem described earlier can be framed as the following linear programming problem. Let x(p1,w1), x(p1,w2), x(p2,w1) and x(p2,w2) be the flows from the plants to the warehouses. x(w1,c1), x(w1,c2), x(w1,c3) be the flows from the warehouse w1 to customer zones c1, c2 and c3. x(w2,c1), x(w2,c2), x(w2,c3) be the flows from warehouse w2 to customer zones c1, c2 and c3
Example Optimal Solution
The problem we want to solve is:
min 0x(p1,w1) + 5x(p1,w2) + 4x(p2,w1) + 2x(p2,w2) + 3x(w1,c1) + 4x(w1,c2) + 5x(w1,c3) + 2x(w2,c1) + 2x(w2,c3)
subject to the following constraints:
x(p2,w1) + x(p2,w2) 60000 x(p1,w1) + x(p2,w1) = x(w1,c1) + x(w1,c2) + x(w1,c3) x(p1,w2) + x(p2,w2) = x(w2,c1) + x(w2,c2) + x(w2,c3) x(w1,c1) + x(w2,c1) = 50000 x(w1,c2) + x(w2,c2) = 100000 x(w1,c3) + x(w2,c3) = 50000
all flows greater than or equal to zero.
The Optimal Strategy
Table 2 Distribution strategy
Facility Warehouse W1 W2 P1 140000 0 P2 0 60000 C1 50000 0 C2 40000 60000 C3 50000 0
Total Cost from plant to warehouse=0x140+2x60=120
W1 P1 P2 Requirement W2 Capacity 200 60
60
0
140
5 2
60
4
140
The total cost for the optimal strategy is 740,000.
Total Cost =3x50+4x40+5x50+1x60=620
C1 W1 W2 Demand 3
50
Simulation Models and Optimization Techniques
Optimization techniques deal with static models:
C2 4
40
C3 5
50
Supply 140 1. Deal with averages. 60 2. Does not take into account changes over time Simulation takes into account the dynamics of the system
2 50
1
60
2 50
100
Total Cost=120+620=740,000
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Simulation Models and Optimization Techniques
Simulation models allow for a micro-level analysis: 1. Individual ordering pattern analysis 2. Transportation rates structure 3. Specific inventory policies 4. Inter-warehouse movement of inventory 5. Unlimited number of products, plants, warehouses and customers
Simulation Models and Optimization Techniques The main disadvantage of a simulation model is that it fails to support warehouse location decisions; only a limited number of alternatives are considered The nature of location decisions is that they are taken when only limited information is available on customers, demands, inventory policies, etc, thus preventing the use of micro level analysis.
Recommended approach
Use an optimization model first to solve the problem at the macro level, taking into account the most important cost components 1. Aggregate customers located in close proximity 2. Estimate total distance traveled by radial distance to the market area 3. Estimate inventory costs using the EOQ model Use a simulation model to evaluate optimal solutions generated in the first phase.
Supply Chain Benefits and Drawbacks Table 1
Problem
Large inventories Long lead times Large number of parts Cost Quality Variability
Potential Improvement
Smaller, more frequent deliveries Delayed differentiation Disintermediation Modular Outsourcing Shorter lead times, better forecasts
Benefits
Reduced holding costs Quick response
Possible Drawbacks
Traffic congestion Increased costs May not be feasible May need absorb functions Less variety Loss of control Less variety
Fewer parts Simpler ordering Reduced cost, higher quality Able to match supply and demand
FACILITIES LOCATION
When does a location decision arise? Steps in the facility location study Qualitative Facility location techniques Quantitative Facility location techniques Case Examples
Facility Location
Location of Facilities is a problem associated with the planning phase of a factory or even a service sector
Facility Location is first planning activity. It is vital decision so that no change is needed for years to come
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Why it is so difficult
Uncertainty in future Complexity and conflicting factors associated with the site selection Constraints and limitations of resources to produce a site
Example
Two site locations for a new factory Site A is nearer to market but far from the raw material location; site B is otherwise, Site A is in rural location with cheap availability of labor; site B is in urban location with better availability of power Question: Which site should be selected?
Considerations in Plant Location
No plant can be located at a place, which fulfills all the criteria of perfect location. Some factors are to be compromised to take advantage of the other factors If raw material is quite bulky and difficult to transport, the plant must be located near to raw material resource: Jamshedpur, Bokaro, Rourkela, NTPC
Following considerations are needed in a plant location:
Nearness to raw material source Nearness to market or consumer Good transportation facility Availability of fuel and power Availability of water Cheap availability of land Suitable climatic conditions Construction cost Taxes and Government regulations Waste disposal and environment regulations
Comparative Study of rural and urban site
Factors Land availability Connectivity Labour Communication network W ages Power W ater Supporting Industries Market Training facility Security Expansion Taxes Government support Union problem W aste disposal Environment constraints Financial Incentives Urban less high less better high better good near by near by available better difficult more less more difficult more less Sub-urban moderate good moderate good moderate moderate moderate near by moderate available moderate moderate moderate moderate moderate moderate moderate moderate Rural plenty less plenty poor less poor poor far far not av ailable poor easy less more less easy less more
Insights
Urban and rural site have their own strengths and weaknesses A compromise could be the sub-urban site which are located near big cities. Examples of sub-urban sites are Faridabad, Gurgaon, Sahibabad, Naini etc.
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Selection of Site for XYZ company
Scoring scheme Comparison Score If the factor X scores a major factor as compared to factor Y X3 If the factor Y scores a major factor as compared to factor X Y3 If the factor X scores a medium as compared to factor Y X2 If the factor Y scores a medium as compared to factor X Y2 If the factor X scores a minor as compared to factor Y X1 If the factor Y scores a minor as compared to factor X Y1
Factors A B C D E F G H I
Factors identified for site selection Description Nearness to market Transport facility and logistics support Availability of water Adequacy in labor availability Quality of life Competition in local market Nearness to market Incentive from financial institutions Cost of land
B A3 B
C A1 C2 C
D A3 B1 C2 D
E A3 B3 C2 D3 E
F F2 F3 F2 F3 E2 F
G A2 G1 G2 G2 G2 F1 G
H A2 H2 H1 H2 H3 F3 H2 H
I A3 I1 C2 I2 I2 I1 I1 H3 I Total
Scores Percentage 17 0.218 4 0.051 8 0.103 3 0.038 2 0.026 14 0.179 7 0.090 13 0.167 10 0.128 78 1
A Sites City1 City2 City3 City4 City5 0.218 70 40 100 70 55
B 0.051 75 80 90 100 80
C 0.103 80 80 80 45 80
D 0.038 65 60 70 80 70
E 0.026 25 20 30 100 50
F 0.179 65 90 85 40 30
G 0.090 90 80 60 95 30
H 0.167 90 70 90 50 30
Weights 0.128 80 75.445 80 65.48 90 85.24 70 63.71 60 48.51
Inventory Positioning and Logistics Cooperation
Managing inventory in complex supply chain is typically difficult. Managing inventory has a significant impact on the customer service level and supply chain systemwide cost.
Types of form of Inventory
Raw material inventory Work-in-process (WIP) inventory Finished product inventory
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Managing Inventory
Make-to-order Make-to-stock
Thank You !
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