IIM Raipur
26 September 2017
1.96
=
1.96
Upper = +
Facility role
What role, what processes?
Facility location
Where should facilities be located?
Capacity allocation
How much capacity at each facility?
Strategic factors
Technological factors
Macroeconomic factors
Tariffs and tax incentives
Exchange-rate and demand risk
Freight and fuel costs
Political
Infrastructure factors
Competitive factors
Gopal Kumar (IIM Raipur) SCMA 26 September 2017 6/24
The Cost-Response Time Frontier
.
Local FG
Hi
Mix
Regional FG
Local WIP
Cost Central FG
Central WIP
Low
Low Response Time Hi
.
Response
Time
Number of Facilities
Customer
DC
Customer
DC
Customer
DC
Customer
DC
Customer
DC
Inventory
Facility costs
Costs
Transportation
Number of facilities
Total Costs
Cost of Operations
Percent Service
Level Within
Promised Time
Facilities
Inventory
Transportation
Labor
Number of Facilities
Key Costs:
subject to
n
x ij
= D j for j = 1,...,m
i=1
m
x ij
= K i yi for i = 1,...,n
j=1
Thanks!